Hitachi seeks to help Chinese manufacturers develop production using information technology and infrastructure expertise as the old labor-intensive model reaches its limit.
The Japanese industrial conglomerate will offer solutions for every stage of manufacturers' operations, beginning by optimizing the way to source parts and materials. Robotics, automation technology and digital control of inventory and logistics cut costs in production and distribution. Hitachi will also offer cutting-edge environmental technology to reduce smoke emissions, treat wastewater and prevent the release of volatile organic compounds and other pollutants.
China emerged as a manufacturing powerhouse on the back of ample cheap labor, offering mass production to companies from around the world. But that labor-intensive model is beginning to hit constraints as personnel costs skyrocket and environmental concerns rise.
Beijing in May unveiled the "Made in China 2025" initiative, looking to bring China's manufacturing in line with that in advanced nations in 10 years. The government has started strengthening policies to push rapid upgrades in the IT, machinery, infrastructure and other advanced sectors.
Hitachi looks with its new business to take advantage of that initiative, and intends going forward to grow its ability to respond to Chinese manufacturers' demand for development. Hitachi itself is adding researchers and technicians at its bases across China. Core research and development staff is up to 3,000, 30% above the fiscal 2013 level. The company plans also to team with China's industry and IT ministry to help grow production efficiency at businesses in the country.
"Hitachi is one of a small number of companies that works in both infrastructure and IT -- there is a great deal we can contribute," said Kenichi Kokubo, chief executive for China. Despite growing fears of an economic deceleration, "China remains our largest and most important overseas market," he said.