Lack of innovation hampering China's industrial transition, says report

Low level of innovation is affecting the Chinese manufacturing industry's ability to grow from "big" to "strong", according to an industrial report released on Tuesday.

According to the report by the Liaowang Institution, a domestic research organization under the Xinhua News Agency, a large number of core technologies being used in manufacturing are imported.

Innovation, which is marked by self-developed technologies, will become a major factor that will drive manufacturing, to be in line with China's policy to develop the industry by 2025, said Wu Liang, president of the Liaowang Institution.

The report, based on a survey conducted since May, covered 93 large manufacturing companies in China's major manufacturing hubs of Shandong, Liaoning, Zhejiang and Guangdong provinces.

"Some large manufacturing companies have not invested a lot in research and development, resulting in less competitiveness in innovation," said Wu.

According to Wu, China's rate of transformation of scientific and technological achievements is about 10 percent, far less than that of the developed countries, which is about 40 percent.

Citing the automobile industry, which relies mainly on import of automatic gearbox equipment, Wu said major components and technologies in China's high-end equipment manufacturing industry are imported.

"Chinese companies need to boost investment in research and development, especially amid the country's implementation of the 'Made-in-China 2025' strategy," said Wu.

To help transform China from "a factory for the world" into a world manufacturing power, the State Council, or the cabinet, unveiled the "Made in China 2025" plan in May, laying out strategies for switching from low-end processing to more value-added production.

Under the plan, domestic manufacturers are encouraged to make technological breakthroughs in a number of emerging industries from numerical control tools and robotics to aerospace equipment and new-energy vehicles.

Dong Mingzhu, president of Gree Electric Appliances Co, one of the leading home appliance makers, said Chinese manufacturers should not rely on labor-intensive manufacturing for sustained growth.

"Domestic manufacturers should introduce advanced technologies and adopt an innovative approach to drive business growth," said Dong, during an industrial forum, which was held in Zhuhai, Guangdong province, on Tuesday.

Over the past few years, development of core technologies had helped ensure the Guangdong-based company to diversify its products and grow its business amid falling global demand, according to Dong.

"Gree was considered a traditional home appliance manufacturer, which is marked by labor-intensive processing and lower industrial value. But we have adopted a proactive approach to investing in technology and research, which helped make us competitive in the global market," said Dong.

With sales of more than 140 billion yuan ($21.96 billion) in 2014, Gree is now among the Fortune 500 companies.