4IR in Emerging Markets
The Fourth Industrial Revolution sees Asia as one of the strong players in digital revolution. Here’s a quick look at how emerging markets such as China as well as India meld the physical, digital and biological worlds to capitalise the potential of 4IR.
As we approach our centenary in 2020, Asia will remain at the forefront of global economic growth over the next few decades as the major player in the digital revolution. With its huge potential especially in the labour sector, the largest and most populous continent will be the driving force behind the Fourth Industrial Revolution (4IR).
Here, we take a look at how emerging markets like China and India come to terms with forging the bridge between physical, digital and biological worlds.
As aptly reported by asiasociety.org, on the back of the United States economic collapse in 2008, as the American real estate bubble began to burst after a sharp decline in housing prices contributed to the collapse of the economy almost affecting half of the American states. The alternative was China – with huge potentials in investments, technology and manufacturing to do business as it filled the void left by America in the wake of the crisis.
Low cost manufacturing has put China on the world map as American-based companies began relocating their factories to the socialist state, due to cheap labour. By 2010, China became the second largest economy in the world as compared to their ranking in the 1980’s. As quoted by The Diplomat, China is rapidly moving into medium to high-tech manufacturing as its labour costs have risen.
Apart from being a major player in the manufacturing sector, China is also thriving in other sectors such as logistics, technology and medicine, as the world shifts attention towards the Fourth Industrial Revolution (4IR). China is seen as the centre of development and is targeted to lead Asia in embracing the 4IR. A fact supported by many reports including an article by the World Economic Forum, Embracing New Tech, Innovation, China Poised to Thrive in Fourth Industrial Revolution.
Some of the consensus tabled include opening a centre for the 4IR in Beijing, making it the third centre in its global network. The centre will collaborate on common issues as well as join projects with its other centres in San Francisco and Tokyo.
To get the ball rolling, a new community was launched in collaboration with tech-savvy factories to help peers in the industry master the complexities of 4IR. Governments and private-sector leaders will also play an active role in developing a framework to help cities prepare for the 4IR.
After taking critical steps to spur a recovery in their economy, the United States is on a slow climb out from their economic crisis, with projected GDP growth expected to be at 2.3 per cent in 2019 from three per cent in 2018, as reported in thebalance.com.
Despite the slowdown in the American economy, other emerging markets in Asia has seen a boom especially in the manufacturing sector. Markets in Southeast Asia, such as Singapore, Thailand, Vietnam and Malaysia, have been on the upward trend for the past decade and may continue to prosper especially in the technology sector.
With Singapore seen as a strong financial hub in Southeast Asia, along with Thailand, Vietnam and Malaysia will continue to tussle for production superiority especially in the low-cost manufacturing sector.
‘Mighty Five’ or MITI-V, which was coined by Deloitte not too long ago in 2016, predicted that economies such as Thailand, India, Vietnam, Malaysia and Indonesia will inherit China’s position as the next hub for low-cost manufacturing.
But it is India that will slowly take over China’s position in the not too distant future, as the global hub for business, expertise, trade and manufacturing.
Manufacturing experts see a variety of areas as important for low-cost manufacturing competitiveness: young populations, low labour costs, a supportive policy environment, good quality infrastructure, availability of engineers, a minimum level of education for all workers, economic growth and a large internal consumer market.
The different economies all have their distinct advantages and disadvantages but China’s equally giant neighbour to the west stands out from the crowd. ‘My opinion is that India has the potential to be the next hub for low-cost manufacturing,’ says Dr Jing Bing Zhang, research director of IDC Worldwide Robotics.
Zhang sees India as being the next centre for electronics assembly. A good example is Chinese consumer appliances giant Huawei, which in September last year announced that it would manufacture three million smartphones a year in India. Foxconn, the Apple supplier, has also joined the bandwagon and is projected to commence a USD10 billion iPhone manufacturing plant in India early this year.
According to Zhang, India’s strengths are its mixture of high and low-skilled labour, and the potential to sell to its huge market of 1.2 billion consumers. Although much of the population is poor, their incomes are rising.
‘India has a large base of university graduates. This is very important. You still require manufacturing engineers; you also need design engineers. You need supervisors. And India has a large base of well-educated graduates. They compare very nicely to other countries in the MITI-V,’ says Zhang in an interview with The Diplomat.
In a Nutshell
4IR will not only push the boundaries set by Asian economies but forge a competitive environment between them which can only bring exponential changes in the long term. For decades, Western economies especially those in Europe were seen as countries with leading technologies that have the expertise to create sustainable living and implement positive changes, but that’s not the case anymore.
The Industrial Revolution is in its fourth cycle and with the convergence of artificial intelligence (AI), Internet of Things (Iot) and big data across industries, the gain of efficiency is the driving factor behind the rise of 4IR and China along with other emerging markets in Asia are in the centre of it.
Photo by Matteo Catanese on Unsplash