The keywords are "flour", "smart manufacturing", and "going upstairs..." Hold 25%! Shanghai launches a defense war for its manufacturing industry, relocating to other cities | defense war | intelligent manufacturing | industrial upgrading | proportion | 25% | Singapore | manufacturing | Shanghai

After 7 years, in the three-year action plan for promoting high-quality development of the manufacturing industry in Shanghai issued last month, the proportion of industrial added value to GDP should reach over 25%.

The last time I mentioned it was in 2016. The 13th Five Year Plan for the Transformation and Upgrading of Shanghai's Manufacturing Industry, issued that year, clearly stated that by the end of the 13th Five Year Plan, the proportion of manufacturing industry would be maintained at around 25%.

The subtlety lies in the wording stated in the "14th Five Year Plan" for the development of advanced manufacturing industry in Shanghai in July 2021: "Maintain a proportion of manufacturing industry that is in line with Shanghai's urban functions and high-quality development."

Turning around and clarifying 25% again this year, it demonstrates Shanghai's increasingly clear and firm approach to high-quality development. So, why is the red line for the proportion of manufacturing crucial? What will we rely on to hold on?

"Flour"

Deqi Medicine almost ran away. With the increase of research and development pipelines, the original Zhangjiang 1000 square meter laboratory is no longer sufficient. Starting from 2021, Deqi Pharmaceuticals has been searching for larger laboratories in Zhangjiang, Jinqiao, and Waigaoqiao, but they have been unable to find them for a long time, and the company's senior management has considered relocating. At a critical moment, well-known real estate consulting firms promptly took action, searched the resource library, and helped find a 3900 square meter expandable area in the Zhangjiang Science City area. Deqi Pharmaceutical finally breathed a sigh of relief, and Shanghai's position as its headquarters has temporarily stabilized.

Deqi is lucky, but Zhang Wei, Deputy Director of Shanghai Investment Promotion Service Center, unfortunately saw the loss. He admitted that in the past few years, some synthetic biology and cell therapy pharmaceutical projects incubated in Shanghai had manufacturing spillovers due to the difficulty in obtaining high-quality space carriers in the later stage.

The leading domestic refrigeration compressor industry leader, Haili Group, has also experienced pain. Around 2016, due to the lack of expansion space and high human resource costs in Shanghai, some of Haili's production capacity in Shanghai was transferred to Sichuan, Jiangxi, and even overseas.

These real cases of enterprises reveal the pain of Shanghai: doing industry in international big cities has high costs.

Does Shanghai insist on manufacturing? The idea of "de manufacturing" was once prevalent. However, from global experience, some cities blindly developing the service industry have already shown the consequences of hollowing out.

The World Bank research team has conducted research and found that in mega cities like Shanghai, the proportion of manufacturing should be between 25% and 30%. Although the cost of industrial development in international major cities is not low, the cost of not doing so is even greater.

So Singapore is "clear headed on earth". In Singapore, there is a booming sound of machines in buildings that appear to be office buildings. The local area imports components from Guangdong, China, assembles them into integrated circuit specific welding machines, and then sells them to the world. We must maintain the 25% red line no matter what, because Singapore understands that only with manufacturing can there be research and development; Only with manufacturing can the productive service industry flourish; Only with manufacturing can employment be stabilized.

Singapore, with every inch of land and every inch of gold, can hold onto manufacturing, but Shanghai has no reason not to. Who will guard it? The modernization of Shanghai's industrial system is a heavy responsibility.

During the "Thirteenth Five-Year Plan" period, Shanghai focused on six key industries such as aerospace and automobiles, but by the end of the "Thirteenth Five-Year Plan" period, led by the national strategy, Shanghai carried out a leading layout and innovatively proposed the "36" industrial layout. "3" is the three leading industries of integrated circuit, biomedicine and artificial intelligence, and "6" is the six key industries of electronic information, life and health, automobile, high-end equipment, advanced materials and fashion consumption. Since 2021, Shanghai has been planning to launch four new tracks and five future industries. The four new tracks refer to the digital economy, green low-carbon, meta-universe, and intelligent terminals; the five future industries refer to future health, future intelligence, future energy, future space, and future materials. Coupled with the acceleration of the two major transformations of digitalization and greening of traditional industries, Shanghai's modern industrial system has been continuously consolidated, forming the current "2" pattern.

In Shanghai, limited land resources are a pain point that cannot be avoided when doing manufacturing, that is, there is only so much "flour" in total. Who are we making "bread" for?

But the "3+6" representing Shanghai's industry today, the "4" representing tomorrow, and the "5" representing the day after tomorrow seem to have given answers - connotation, intensification, and high quality, which are the only three benchmarks given to "flour" by the industry and planning departments.

"Intelligent Manufacturing"

Holding onto 25% is not easy, "smart manufacturing" may be a way out.

Haili's plot has undergone a reversal. In the almost empty Shanghai factory, Haili has built four intelligent production lines in place to produce more high-end new energy vehicle air conditioning compressors. "Intelligent factories have freed themselves from dependence on land and human resources, and instead have high stickiness to knowledge and skilled talents, finance, and industrial chain ecology, which can only be achieved in Shanghai," said Wu Chunping, Deputy Director of the Intelligent Manufacturing Promotion Department of the Municipal Commission of Economy and Information Technology.

Shanghai's automotive industry has more say. Among the 100 intelligent manufacturing demonstration factories built in Shanghai, 22 are exclusively in the automotive industry, and SAIC Passenger Vehicle Lingang Base has been rated as a national benchmark intelligent factory. Due to its high level of intelligence, 8 automotive vehicle companies and 610 automotive parts companies in Shanghai contributed 20% of Shanghai's total industrial output value last year.

SAIC Passenger Car Lingang Smart Factory.

It is understood that the construction of smart factories in Shanghai was initiated in 2020, and by the end of last year, the goal of building 100 smart factories had been exceeded. But intelligent manufacturing requires long-term efforts. This year, Shanghai has taken advantage of the situation and outlined a battle plan to build an additional 200 municipal level intelligent factories and 20 municipal level benchmark factories by 2025.

The pioneers have tasted the sweetness. Jiangnan Shipbuilding Group has delivered an LNG dual fuel vehicle transport vessel capable of carrying 7800 domestically produced vehicles at once. Benefiting from new infrastructure and intelligent manufacturing, this "giant" has achieved supply chain collaboration with over ten thousand suppliers, and the operation and quality of over a thousand welding equipment have achieved millisecond level response; The SAIC transmission heat treatment workshop is equipped with a dedicated network, with equipment and facilities implementing "one object, one code", and 10 handling robots deployed in two tunnels. As a result, the original 45 operators in the workshop were reduced to 3 maintenance personnel, and the production capacity increased from 250 furnaces per day to 350 furnaces. The investment in intelligent manufacturing is not significant, but it immediately takes effect.

More and more "back waves" are becoming envious, changing from "asking me to turn" to "I want to turn". Since the end of last year, Shanghai has gradually publicized the recommended directory of certified intelligent factory evaluation and diagnosis institutions and key integrators, for nearly 10000 large-scale factories in Shanghai to connect with. The evaluation and diagnostic institution selected for the first batch of catalogs, China Telecom Shanghai Branch, was so busy that it took off. Three weeks after its announcement, it received over a hundred enterprises. These "moving troops" enterprises often have two main characteristics: more than 300 frontline production personnel, and a sales revenue of over 20 million yuan that year. They urgently need a transformation to achieve product innovation and operational optimization, helping to cross the threshold of growth.

Lingshu Intelligence is also in the recommended directory, and founder Guo Wenwei is right in his words. He said that through digital transformation, more and more middle and lower back manufacturing industries have achieved a "difficult leap", advancing from a "specialized, refined, unique, and new" small giant to a leading enterprise with an annual output value of 23 billion yuan. "This is a real growth rate that contributes to the added value of Shanghai's industry."

"Go upstairs"

Industrial development is another way to retain manufacturing.

In the past, industrial factories were mostly low and large flat floors. Nowadays, in areas such as Minhang, Jiading, and Lingang, buildings with six or seven floors or even higher are equipped with a comprehensive range of R&D, design, office requirements, and production capabilities for enterprises.

Shanghai Lingang Life Blue Bay is home to a concentration of biopharmaceutical companies.

The pioneer of this wave of industrial growth is Shenzhen. According to official data, the added value of Shenzhen's large-scale industries exceeded 1.1 trillion yuan last year, ranking first in the country. But in fact, the industrial land in Shenzhen is only 40.2% of that in Shanghai. The Shenzhen Quanzhi Science and Technology Innovation Park is China's first "industrial upstairs" project. The exterior of the building resembles a Grade A office building, but the floor height, column spacing, load, and even the layout of passenger and freight elevators inside all meet the standards of a factory building. At present, there are dozens of "industrial upstairs" projects in Shenzhen, with an average plot ratio of 4.2.

Shanghai is also making efforts to catch up. In the Jindiwei New Park, the most active industries for "going upstairs" include biopharmaceuticals, electronic information, inspection and testing, as well as lighter intelligent manufacturing, mostly belonging to the "precision small light" industry. "However, logically speaking, all industries can go upstairs, including automotive vehicles," said Gao Xiaowei, Assistant Dean of Jindiwei New Industry Research Institute.

To hold onto manufacturing, existing policies must solve the problem. The Municipal Commission of Economy and Information Technology introduced that in the "Several Measures for Promoting the Development of High end Manufacturing Industry in Shanghai" released in September last year, it encouraged the intensive use of industrial and research and development land, with a plot ratio of no less than 2.0 for industrial land and 3.0 for general research and development land, respectively. In addition, the Municipal Commission of Economy and Information Technology is working with the departments of ecological environment and planning resources to study and plan to allow pilot projects with low risk levels and low environmental pollution to be carried out on C65 land.

Various signs indicate that a determined battle to defend the manufacturing industry has begun. In this year's new version of the investment promotion policy, the most eye-catching one is undoubtedly targeting the three leading industries. By 2025, a total of 8 million square meters of carrier space, nests, and phoenixes will be allocated. Among them, biopharmaceuticals account for 5 million square meters and emphasize that they are standard factories with low cost, composite functions, and can be carried and occupied.

"With these carriers, biopharmaceutical companies that have relocated in the past few years are likely to return in bulk. They can fully achieve full chain functions in Shanghai, from research and development, small-scale testing, pilot testing to verification, large-scale production, headquarters office, etc." said Wang Dong, director of the Municipal Investment Promotion Service Center.