Jinjiang Pioneer in Private Firm Digital Upgrade

Shoppers look at sportswear made by Anta Group at a department store in Beijing. A variety of test laboratories have been set up in the company to test the performance of its clothing and footwear products. JIANG DONG/CHINA DAILY

Jinjiang, a county-level city in Fujian province, is home to some of the country's most renowned private companies such as Panpan Foods, Anta Group and 361 Degrees.

As the competition in traditional industries continues to intensify, such companies have embarked on a path of digital and intelligent transition in recent years, so as to pursue sustainable growth.

In a production workshop at Panpan, freshly baked rolls are neatly arranged on a conveyor belt, giving off a sweet aroma. After cooling, they will be automatically transported to packaging machines.

A worker surnamed Lu told China Daily that the company has promoted smart manufacturing for more than four years, and now all the bakery workshops have been equipped with smart devices.

"The move has brought us so much convenience. In the past, we had to put flour, sugar and other ingredients into the molds ourselves, but now the devices take care of all these tasks. The uniformity of production has been significantly improved," said Lu.

Lu also said that after each stage of production there will be devices to test the quality of the baked goods, as well as to remove defective output, so as to minimize wastage of materials.

Meanwhile, all the smart devices have been connected to an online platform, through which workers can get a clear picture of workshop production progress, energy consumption and temperature.

"When electrical hazards or other accidents occur, the platform can also send out prompt alarm messages," said Lu.

Based on the data collected by the platform, Panpan has continued to optimize its production model and gradually applied smart devices to the production of other goods such as beverages and other baked goods.

Cai Jinchai, president of Panpan Foods, said this transition is crucial for the company to reduce costs and increase production efficiency.

The company has so far witnessed a nearly 40 percent drop in its labor costs. Workers needn't undergo long-term training anymore and three days are enough for them to become familiar with operation of the devices.

In addition, the timeliness of order fulfillment and product qualification rates have increased by 15 percent and 18 percent, respectively.

Cai said Panpan will continue to increase investment in innovation and give a bigger play to new quality productive forces.

"At a time when consumption is relatively weak, traditional companies like us must better utilize emerging technologies to empower industrial transformation and upgrading," said Cai.

Similarly, sportswear giant 361 Degrees has introduced a smart garment production system. Not only did the company make its production equipment — such as irons and sewing machines — easier to operate, but it also placed a roller chain above the workers.

"We have hung a lot of hangers on the roller chain. When a worker finishes a step, they only need to put the garment back on the hanger and press the control button. The roller chain will automatically transfer the garment to the next operation station," said a person in charge.

She said all the hangers have been equipped with smart chips, which record both the progress of garment production and the workload of employees. As a result, there has been a significant decline in the company's management costs.

In addition to empowering manufacturing, Jinjiang-based companies have also utilized smart devices to carry out product testing and shorten the product development life cycle.

Anta Group is among them. A variety of test laboratories have been set up in the company to test the performance of its clothing and footwear products.

A spokesman for the company said these labs not only import advanced devices from abroad, but also develop new devices themselves.

"For example, we recently launched a device that could test the effect of sneakers on running performance, marking a major breakthrough in the sector," said the spokesman.

He said the device can simulate different running forms and gather a number of key data points, such as sole deformation and stress distribution. Researchers can also easily change the testing parameters by adjusting temperature, humidity and running surfaces.

The smart devices have helped the company develop many iconic products, such as weight-lifting shoes and "Anta Membrane" — a high-performance waterproof material.

"We are currently building a new research and development center, which will be put into use in 2027.We will be able to conduct more diverse product testing by then," he added.

The company invested more than 1.6 billion yuan ($225.25 million) in R&D last year, and by 2030, the cumulative investment is expected to surpass 20 billion yuan.

Their moves conform to China's action plan for digital transition of manufacturing, which was reviewed and approved by the State Council, the country's Cabinet, in May.

According to the action plan, the digital transition of the manufacturing sector is crucial for China to promote new industrialization and build a modern industrial system.

The country will step up the development and application of core technologies, as well as further improve industry standards. Efforts will also be intensified to advance equipment upgrading in factories.

Meanwhile, the action plan said China will strive to optimize its public service platforms and carry out a long-term mechanism to advance the digital transition of small and medium-sized companies.

Based on the characteristics of different subsectors of manufacturing, the country also plans to develop a series of more customized and specific measures.

Xiao Fangzu, deputy director of Jinjiang's development and reform bureau, said the city is giving sound support for the digital and intelligent transition of traditional private companies.

"Large companies have the ability to develop or introduce cutting-edge technologies on their own, but SMEs usually lack such ability and don't have enough money for innovation," said Xiao.

Therefore, the local government has worked with famous universities such as Hong Kong Polytechnic University to build scientific research platforms, aimed at providing SMEs with more talent and smart devices.

"We expect the city's traditional industries to further embrace innovation, and we will continue to transform scientific research results into practical applications," he added.

Liu Chunsheng, an associate professor at Central University of Finance and Economics' school of international trade and economics, said it is of great significance for traditional private firms to pursue digital transition.

Liu said digital transition could help such companies optimize their production process and improve key indicators, including production efficiency. Meanwhile, both the companies' management and resource allocation are expected to be further refined.

"Technologies such as big data and artificial intelligence enable private companies to quickly obtain market data, better tap into new markets and develop more diversified products and services. As a result, both their customer satisfaction and loyalty could be significantly enhanced," said Liu.

However, there still exist some challenges that hinder private firms from carrying out digital transition.

Liu said one major problem is that some private companies lack a proper understanding of digital transition and are thus not very willing to make such changes. In addition, they sometimes lack the necessary funds, talent and technologies.

"Therefore, local governments should provide companies with more financial subsidies and tax incentives. Special service platforms should also be in place to offer technical consultation and cultivate talent for them," said Liu, adding that Jinjiang has set a good example in this regard.

Private companies also need to formulate long-term plans for digital transition, so as to accomplish their objectives in an orderly manner.

In addition, digital transition will inevitably result in the reduction of traditional jobs, but it will also create multiple new jobs, such as data analysts and AI engineers.

Companies should strengthen employee training and help them adapt to new positions, while local governments must pay more attention to nurturing students' digital skills in vocational schools, Liu added.