Made in Dongguan: From Factory of the World to Hi-Tech Innovator

In 1995, Nokia, the once global mobile phone giant, got its foot in the door of China by setting up a joint venture in Nancheng, Dongguan, to build a Nokia mobile phone manufacturing base. That year was also hailed as the “first year of China’s mobile phone era.” During the past several decades, there have been no other cities that have closely witnessed the rapid evolution of the global mobile phone industry, in the same way that Dongguan has. Rapid changes took place in the industrial ecology system of this very city.

In 2019, Nokia concluded its curtain as the Nancheng base is about to be re-planned, while Dongguan’s electronic information industry has particularly developed with Huawei, OPPO and VIVO—three major smartphone brands in Dongguan, whose market shares enter the world’s top five. Last year, Dongguan’s mobile phone output covered China’s 70+ percent, and the world’s 20+ percent, which means that one in every four mobile phones across the world is from Dongguan, according to the statement of Dongguan’s Mayor Xiao Yafei, disclosed at China’s 23rd Development Forum last March.

After relocating twice last year, Huawei has moved over 12,600 people from Shenzhen to Dongguan. With the giant tech companies’ investment, Dongguan earned its fame in a more widespread extent, and though it has long been known as the world’s manufacturing hub, the booming smartphone industry is a clear signal reaffirming its ambition to transform from a world factory to a high-quality goods supplier, on the global stage with improved R&D ability.

Despite the fact that “Made in China” products were widely perceived as goods without brand and core competence, which was especially felt in Dongguan—a city clustering with numerous factories and manual labors—in line with the central government’s policy of supply-side structural reform, now Dongguan has significantly changed its reputation and landscape of its industry from low-end to high quality.

Last October, Dongguan’s Standards and Industry Integration Promotion Association was set up as the first standard enacting and identifying institution of this city. The association guides enterprises from each industry of Dongguan to form their own industrial group standard by which they will abide. This has two major advantages: first, the quality of the enterprise will increasingly improve as the participating company will abide by the standard they are involved in enacting; second, when the institution uses standard identification, they can help consumers to recognize quality products and know the standard of their goods, therefore helping Dongguan products to be more transparent and cutting-edge in the market.

SKYROCKETING DEVELOPMENT OF TECHNOLOGY
The “middle and low-end manufacturing” of Dongguan started in the 1980s, after the Reform and Open-up policy, and grew explosively after China’s entry into the World Trade Organization in 2001. Before the financial crisis in 2008, enterprises in Dongguan adopted major OEM (original equipment manufacturer) production mode. In that sense, they were just the factories of the global trade. But in 2017, manufacturing trade accounted for less than 30 percent of total imports and exports, down from nearly 60 percent in the peak period, according to the Caijing Magazine’s report. That means Dongguan had to shift from the previous reliance on the “OEM mode.”

With the idea of moving away from OEM mode, companies in Dongguan are able to leverage their strength in manufacturing to make a brand. For instance, making materials for astronaut use can be an extremely highly demanding job, and what do you know—there’s one Dongguan diaper company in Chashan Town doing this.

Since there is no defecation system in a spacesuit, using diapers is still the major way for astronauts to “use the bathroom.” The super-absorbent fabric used in disposable diapers, which can hold up to 400 times its weight, was developed so astronauts could stay on spacewalks and extravehicular activity without interruption. The brand is known as Yinyin Diaper and its high quality super-absorbent fabric has aroused China Aerospace Academy’s attention.

After passing strict testing and examination, Yinyin has been chosen by the nation for supplying portable sanitary products for astronauts in Shenzhou Spaceship-series. Interestingly, Yinyin now uses this feat to market their astronaut-quality diapers for babies, and they are well reviewed.

Not only is craftsmanship necessary for companies to thrive, but also the ambition to map out long-term plans in the high-tech industry. Dongguan’s companies are certainly taking the lead. Take 5G for example. It is an amazing new technology of joint innovation and international cooperation. In April, 2019, a hospital in Guangzhou launched chest surgery with the use of 5G technology, a great attempt of using fascinating technology to enable speeds far exceeding the current 4G network. The operation, connected live to another hospital in northern Guangdong’s remote Yangshan County, promoted the use of advanced 5G technology in the medical field. Also, as the latest major transport project in the Guangdong-Hong Kong-Macao Greater Bay Area, Nansha Bridge connecting Dongguan and Guangzhou began providing 4G and 5G services on the day it opened.

Exploring cutting-edge technology is a bold act. Although Huawei has achieved fruitful results in the study of the application of 5G technology, VIVO is not giving in, as it has established 5G laboratory as well as being the first one to realize 5G video call. Dongguan companies are racing to seize the opportunities of 5G development profit, with the aim to deliver quality services to consumers.

CREATED IN DONGGUAN
Dongguan has a well-rounded production chain and each town has a density of one of many dynamic industries—that makes 34 titles of provincial technical and innovative towns. These professional towns concentrate on their manufacturing characteristics, while promoting a transition from “Made in Dongguan” to “Created in Dongguan.”

CLOTHING INDUSTRY
HUMAN

Humen has developed into “China’s famous city of clothing.” Each year we see the Humen International Fashion Fair and Humen Fashion Week take place, attracting over 120,000 professional buyers and ordinary visitors from over 20 countries and regions, such as the United States, Russia and Dubai. The current trade fair transaction results were significant, with obvious innovative features and a rich fashion atmosphere. Humen Huanghe Clothing City is a large-scale comprehensive commercial center for middle-and high-grade fashion wholesale. Humen has built up some national clothing brands, and the most famous one is Yishion Clothing, with thousands of stores across the country.

MOLD INDUSTRY
CHANG’AN

In 2018, the industrial output value of metal molds of Chang’an reached 26.6 billion RMB. Chang’an holds more than 1,500 metal mold manufacturing enterprises, 200-300 automotive metal mold manufacturing enterprises, and six metal mold specialized markets. Famous giants such as GF Archimir from Switzerland, DMG from Germany, and Mitsubishi from Japan have set up their branches there. Chang’an is working hard to attract all kinds of mold enterprises, professional talents, and to improve mold manufacturing ability and technical level.

PACKAGING AND PRINTING INDUSTRY
QIAOTOU

Qiaotou is working on building the largest packaging and printing production base in Guangdong Province. Qiaotou has formulated the Development Plan of Environmental Protection Packaging Industry (2015-2020). It is introducing major projects of environmental protection packaging industry, both at home and abroad. Qiaotou has 371 environmentally-friendly packaging enterprises. The annual output value of the environmental protection packaging industry is more than 10 billion RMB. In order to promote the transformation and upgrading of bridgehead packaging enterprises to green packaging, Qiaotou Town has made great efforts to build a collaborative innovation center, which features 10 sub-centers under its jurisdiction.

PHOTOELECTRONIC COMMUNICATION INDUSTRY
QINGXI

In 2012, Qingxi Town won the title of “Photoelectronic Communication Industry Cluster.” The output value of photoelectronic communication industry cluster accounts for about 10 percent of the whole city, and occupies an important position in Dongguan electronic information industry. In 2014, Qingxi has attracted a new introduction of more than 10 billion RMB of major investment projects, which are all from the photoelectronic communications industry. The output value of this industry accounts for more than 50 percent of the total output value of the whole town, and the export of the industry accounts for more than 75 percent of the total export value of the entire town. The photoelectronic communication industry has become the leading industry, pillar industry and brand industry of Qingxi Town.

WOOL INDUSTRY
DALANG

Dalang is known for its woolen knitting industry and a multitude of superior technicians for clothing production. The town has over 3,000 knitting factories and a fully developed network covering all the parts involved, from research and design to the training of workers. Most of its sweaters are exported overseas, and Dalang International Woolen Knitwear Fair can be seen taking place every year. Knitting has become Dalang’s prime industry, having earned fame for China’s Woolen Sweater Town.

BRANDS AND PRODUCTS
Though Dongguan boasts plenty of manufacturers, those companies were required to alter their previous methods, due to lack of branding, channels and awareness to communicate with consumers. These things were done by their contract clients in the past, despite the good-quality, expensive, popular goods originally started with them. As a world factory, Dongguan has a large number of high-quality manufacturing plants. It can be challenging when they need to expand the market by themselves.

VIVO and OPPO
Apparently, a brand is a very distinctive type of information which can lead consumers to be fond of the product. Local companies have the desire to evolve into a leading innovation-driven brand. VIVO and OPPO, with their bombing advertisements on various media, as well as hiring famous young idols to endorse their brands so as to connect with young people, have been welcomed by the market as VIVO’s sales ranked the first and OPPO, the third, of China’s smartphone industry, according to the latest study by Sino Market Research, a leading research center of China.

Marco Polo
Marco Polo, a ceramic giant located in Dongguan, is a leading largescale architectural ceramics manufacturers and distributors. This group has positively incorporated “taking the substantive attitude and prioritizing innovation and artistic esthetics” into its operation concept and put a higher premium on product quality and brand image. It sponsored CBA (Chinese Basketball Association) basketball team from Guangdong and has won attention from a national media level.

Huajian Group
Headquartered in Dongguan, Huajian Group is among the world’s largest manufacturers of high-quality women’s shoes for many globally renowned brands. The group has created 6,000 new jobs in Ethiopia since 2011 when it began making investments in this country. Additionally, it has provided 30 million USD in foreign exchange earnings in 2017, accounting for 1 percent of the country’s foreign exchange reserve (2016-2017), according to statistics from IMF.

“The leatherworking technique that Ethiopian leather factories adopted in the past was outdated. With our cooperation, they can now match production to our demand while taking their technology to a higher level,” said Zhang Yunqi, Huajian’s deputy general manager.

Dongguan is harnessing the third-world market to fuel its own power. Dongguan Africa Industrial Investment Co., Ltd. (DAIICO) was founded in 2015. Fang Xibo, its chairman, is from Dongguan and has engaged in the furniture business in South Africa for around 20 years. The company has now set up six Dongguan Commodity South Africa Display Centers (SA Center) offering almost 100 jobs in the country.

ROBOTS AND REVOLUTIONARY CHANGES
Dongguan’s industry used to be labor-intensive. Millions of immigrant workers across the country came to find jobs in the production line, but as the young workers nowadays demand higher salaries and better treatment, businesses either closed down or moved their production facilities to locations with lower wages, as labor costs soared and losses mounted. The means of relying on humans were not sustainable, hence the era of robots.

In Songshan Lake’s High-tech Zone, the EAST Group, a leading power supply manufacturer, has set up an automatic SMT&AI (Surface Mount Technology & Auto Insert) production line, integrating the automatic numerical CMC (control machining center), management system and the automatic aging, testing and inspection system, which only requires 60 people to complete the same amount of work that used to require 800 people.

More and more manufacturing companies like EAST Group are replacing ordinary labor with robots. Dongguan knew its manufacturing sector needed an upgrade. Amid the growth of salary of workers, however, Dongguan has begun to change over to high-end manufacturing and use robots in workshops that were once teemed with workers. Machines have been replacing humans on the assembly line. Ever since 2014, Dongguan’s government has appointed the city as a trailblazer in the use of industrial robots in China. It’s playing an active part in the so-called “Made in China 2025” plan, a blueprint for upgrading the Chinese industry using advanced technology, in which it has enforced the subsidy to support the robot replacement program.

According to statistics from the Dongguan Municipal Bureau of Commerce, more than 5,000 OEM enterprises in Dongguan have become corporate enterprises, 65 percent of them have launched new domestic sales businesses, and 18.5 percent have acquired or created their own brands.

Borunte, an industrial robot manufacturer in Dongguan, released sales data for last March, claiming that 2,000 robots were shipped overseas, up 13 percent year-on-year, with high growth continued.

“In the past, we had to place the glass on the machine manually for polishing, but now the machine hands can do that. So, workers can move to new positions and learn new skills,” a salesman from Borunte said. “In the future, there will possibly be no people in the workshops, and the only people inside will be the ones who perform maintenance tasks.”

China has the largest market across the globe for industrial robots, as revealed by the International Federation of Robotics. China accounts for 30 percent of the total supply of industrial robots in recent years. With more and more robots put to use, it is predicted that by 2020, Dongguan will achieve higher efficiency in producing goods with better quality and stronger competence.

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