- Special Academic Support

Do you need this or any other assignment done for you from scratch?

We assure you a quality paper that is 100% free from plagiarism and AI.

You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Introduction

Background to the Study

There is a consensus among economists and academicians that a new wave of economic revolution is happening as countries position themselves to exploit opportunities created by rapid technological advancements in business (Brunet-Thornton & Martinez, 2018; Lardy, 2019). Countries with advanced economies, such as the United States (US) and Germany, are already poised to be leaders in this next phase of tech-based economic revolution because they are pioneers in the global Information Communications Technology (ICT) space (Oberheitmann et al., 2020). Germany has its Industry 4.0 plan, which seeks to integrate the Internet of Things (IoT) and Internet of Services (IoS) capabilities in its manufacturing processes to remain competitive (Matt et al., 2020). Comparatively, the US has introduced the Industrial Internet Platform (IIP), which champions an America-centric approach to economic development (Kheng, 2021). Indeed, it seeks to promote American interests in global trade as new competitors emerge and wrestle for global dominance. At the same time, Singapore has introduced the Smart Nation economic blueprint, while the United Kingdom (UK), in collaboration with its European partners, has also developed the Factory of the Future economic blueprint to compete with its western peers (Kheng, 2021). The development of these above-mentioned economic blueprints suggests that the global economic system is about to pivot from an era characterized by mass production to a new one defined by the adoption of smart and efficient production processes.

Major differences between the current and future economic models are expected. The new model is expected to be characterized by low-volume operations and the development of customer-centric products and services (Lardy, 2019), while the current system is based on the production of high volume goods and services. To implement the new system, countries are encouraging the deployment of smart production technologies, use of intelligent machines and the powerful data analytical programs to carry out production functions (Oberheitmann et al., 2020). Experts estimate that this trend is likely to add between $10 trillion to $15 trillion dollars to the global Gross Domestic Product (GDP) when a majority of companies adopt ICT in their economic models (Kheng, 2021). To this end, various national visions of economic transformation aim to streamline their industries to reap the benefits of this anticipated change.

In 2015, under the leadership of Premier Li, the Chinese government introduced a plan to modernize the countrys economy by the year 2025 (Economy, 2018). A government policy known as Made in China 2025 was the product and it is aimed at securing the position of the Peoples Republic of China as a global economic powerhouse by encouraging investments in domestic technologies to compete with advanced countries, such as the United States (US) and Germany (Economy, 2018). Its goals align with a commitment to reduce the nations reliance on foreign technology by nurturing domestic capabilities, especially in impactful sectors of ICT, such as Artificial Intelligence (AI) and 5G (Tong & Wan, 2017). At a high level of economic planning, the existence of the Made in China 2025 blueprint means that the government is looking to exploit future economic opportunities by enhancing Chinas competitiveness in the global economy. Consequently, the development of the countrys industrial sector, through ICT adoption, has become one of the priority areas for the government.

The Chinese government sees the Made in China 2025 vision as its best roadmap to integrate its economy into the global system, thereby allowing it to cooperate with advanced economies that primarily dominate this market (Tong & Wan, 2017). Essentially, the Made in China 2025 plan is designed to move China from a low-cost manufacturing economy to one of the most advanced in the globe (Cheng et al., 2021). The success of the concept is rooted in three key pillars. The first one is the elimination of all obstructions preventing the seamless flow of technology from developed nations to China (Tong & Wan, 2017). The second goal of the economic plan is strengthening Chinas position as a global manufacturing hub by strengthening its accountability standards to attract more foreign investments (Cheng et al., 2021). However, given that new entrants in the global manufacturing sector, such as Vietnam and Cambodia, are competing for the same space, China is expecting to join advanced economies in becoming an advanced economy (Ling, 2017). Alternatively, the governments Made in China 2025 plan involves simplifying administrative procedures that undermine the completion of business contracts agreements in the country (Cheng et al., 2021). This plan is aimed at simplifying business processes, especially for foreign companies intending to do business in China.

The Made in China 2025 plan is elaborate and expected to be complete after the completion of three phases. The first one is set to run until 2025 and its milestone is Chinas full entry into the ranks of strong industrialized nations (Cheng et al., 2021). The second phase of the economic blueprint is expected to be completed in 2035 and will be characterized by the attainment of a mean level of production that is similar to those of advanced nations (Li & Pogodin, 2019). The third stage should be complete in 2049, at the 100-year anniversary of the plan, and will be characterized by Chinas ascent as the worlds dominant global manufacturing hub (Li & Pogodin, 2019). Therefore, based on the ambitious nature of this economic plan, the Made in China 2025 blueprint is a government-based economic policy for the advancement of the Chinese economy.

Research Problem

The government of China introduced a raft of measures to protect its economy from the ravaging effects of the COVID pandemic but it is yet to be established whether these techniques have been successful, or not. If unsuccessful, the Chinese economy would be negatively affected because SMEs will be unable to recover on time and play their role in supporting the economy (Ertel, 2021). However, if they succeed, the role of the SME sector in supporting the countrys economic growth will be cemented (Wang et al., 2020). Currently, the impact of government intervention on SME development is still unclear.

The Chinese Premier recently acknowledged that the restart of the Chinese SME sector is important to the recovery of the economy (Holzmann & Kärnfelt, 2020; Lardy, 2019). However, statistics show that up to 60% of SMEs that closed down due to the pandemic have not reopened, while 95% of major corporations have done so (Holzmann & Kärnfelt, 2020). The Premier further admitted that if the economic system collapses, a domino effect will be realized and many sectors of the economy will be negatively affected (Holzmann & Kärnfelt, 2020). Analysts predict that the labor market would be the first to feel the effects because people would be unable to keep their jobs (Wang et al., 2020). Additionally, those who can hold on to theirs will be unable to meet their credit and financial obligations due to economic underperformance, thereby creating a knock-on effect on other sectors of the economy. Indeed, if people are unable to pay their mortgages, their homes may be auctioned, thereby increasing the probability of witnessing a banking collapse (Su et al., 2020). These statements mean that the collapse of the SME sector could have far-reaching implications on the social, economic, and political life of China.

The Chinese SME sector remains fragile and vulnerable in a post-COVID world but the government continues to invest many of its resources towards supporting large multinationals mostly because of their significant contribution to the countrys GDP (Wang et al., 2020). However, the GDP of China is equally dependent on the success of the SME sector, meaning that they also need government support in the same manner as multinationals do. Statistics that support this statement suggest that up to 85% of Chinese SMEs could be bankrupt in three months due to the ravaging effects of the COVID-19 pandemic if they do not receive government support (Wang et al., 2020). Some of the worst affected sectors of the economy have taken significant hits from the pandemic. For example, the catering industry in China has contracted by more than 45% since the outbreak started (Holzmann & Kärnfelt, 2020). The negative outcomes reported in this sector are an indicator of the struggles that Chinese SMEs are experiencing in todays volatile business environment (Su et al., 2020). A 30% drop in the number of new business registrations in China further highlights this problem (Holzmann & Kärnfelt, 2020). These statistics only highlight the effects of the pandemic on registered SMEs; unregistered ones could have been worse affected by the pandemic. Unlike giant multinationals that have sufficient cash reserves to protect themselves from the ravages of COVID-19, SMEs have insufficient insulation from unforeseen economic shocks (Su et al., 2020). Therefore, they remain volatile and unstable in a business environment characterized by uncertainties.

The slow pace of recovery for the SME sector highlights challenges that firms are experiencing today. Given the implications of Made in China 2025 on the Chinese economy, the recovery of the SME sector cannot be overstated. This is because about 50% of all cash revenues collected by the Chinese government come from the sector (Holzmann & Kärnfelt, 2020). At the same time, SMEs account for 80% of jobs in China (Holzmann & Kärnfelt, 2020). In this regard, the industry is a catalyst of the countrys economy and one of the key growth drivers for the growing Chinese Middle Class. Therefore, if a large-scale liquidation event happens because of the environment created by the COVID-19 pandemic, the economy of China could be negatively affected through job cuts and SME collapses, thereby affecting millions of livelihoods.

Research Aim

The aim of this investigation is to understand the implications of the Made in China 2025 concept on the performance of SMEs in China. The findings of this investigation are expected to be relevant to a post-COVID world, thereby necessitating the importance of understanding how the COVID-19 pandemic has affected SME performance vis-à-vis the implications of Made in China 2025 on the economy. The research objectives are as follows:

Research Objectives

Four objectives guide this investigation. They are aimed at understanding the implications of Made in China 2025 on the growth and integration of SMEs into the global manufacturing system and to identify opportunities that the COVID-19 pandemic poses to SMEs as listed below.

To understand how the Made it in China 2025 concept has affected the growth and development of SMEs in China
To compare Chinas Made it in China 2025 and Germanys Industry 4.0 economic plans
To estimate the impact that the Made it in China 2025 concept has had on the integration of SMEs into the global manufacturing system
To identify opportunities that the COVID-19 pandemic poses to the adoption of Made in China 2025 concept in the Chinese SME sector

Research Questions

How has the Made it in China 2025 concept affected the growth and development of SMEs?
How do the Made it in China 2025 and Industry 4.0 concepts compare?
What impact has the Made it in China 2025 concept had on the integration of SMEs into the global manufacturing system?
What opportunities will the Covid-19 pandemic pose to the adoption of Made in China 2025 concept on the Chinese SME sector?

Significance of Study

As highlighted in this paper, countries are positioning themselves in the global marketplace to exploit new models of economic development (Wang & Chebo, 2021). The next wave of economic growth is expected to be characterized by technological advancements in different ICT fields, such as AI, machine learning, and the growth and development of the 5G network (Flyverbom et al., 2019). From this background, countries are investing in the development of new strategies for industrialization to exploit opportunities that may emerge from the technological change described above. Motivated by the actions of their developed counterparts, developing and emerging economies are hastening their industrialization processes and perfecting their developmental plans to also exploit opportunities that are associated with the new wave of technological development.

This study will be critical in developing competitive advantages across nations based on the role played by technological advancements in improving their competitive positions. Relative to this statement, the United Nations (2020) says that a countrys technocrats engineer the prosperity of a nation. Therefore, economic modeling is important in securing the developmental objectives of a country. In the context of this investigation, the competitiveness of a country is based on its pace of innovation and adoption of new technologies. The growing competition for economic dominance that exists among nations affirms the importance of country-specific policy initiatives to develop the global economy because most nations are engaged in processes that are set to improve their domestic competitiveness, which is akin to global competitiveness (Alexandru-Mircea & Marilena-Oana, 2018). These processes are described by the creation and retention of new knowledge, while competitive advantages are sustained through the development of highly localized processes. However, variations in national culture, ability to absorb new technology, and human capital requirements play a critical role in determining a nations competitiveness.

Structure of Paper

This paper has five key chapters outlining different stages of data collection, analysis, and presentation of findings. The first chapter presents the background of the research topic, including the aim and objectives that are to be fulfilled at the end of the investigation. The second chapter contains a review of the extant literature to understand the current state of research on the subject area. The third chapter will be the methodology section, which contains the justification for selecting different research approaches. These details will form the basis for the development of chapter four of the study, which will be a presentation of the findings. Key insights generated from the current review will be detailed in this section of the paper and the main findings summarized in the fifth chapter of the study, which is the conclusion section that also contains recommendations of the study.

Literature Review

This chapter is an analysis of extant literature on the present subject area. Key sections of this chapter explore existing knowledge that discusses the Made in China 2025 plan, vis-à-vis other economic models pursued by other countries. In this regard, the main areas discussed in this chapter include conditions for the establishment of the Made in China 2025 plan, its priority areas, how it compares with other existing models, and the moderating role that the COVID-19 pandemic will have on the performance of the SME sector. However, before delving into the details of this analysis, it is first, important to understand the contextual factors affecting the performance of emerging economies in the current economic environment.

Trajectory of Economic Development for Emerging Economies

The science of economic management is at the center of the quest for improved economic performance by many emerging economies. The adoption of new technologies and the re-evaluation of industrial structures are common strategies adopted by organizations to realize improved economic performance in the nations (Ligang et al., 2019). However, for many developing countries, the same plan cannot be copied because most governments are focused on promoting sustainable development, which is a complex idea that has to be balanced against present and future needs of development (United Nations, 2020). Research studies suggest that the adoption of sustainable development is similar to a shift from a quantitative to qualitative understanding of economic development and management (Cheng et al., 2021). The integration of ICT in economic management follows this path of analysis.

In the past decade, the adoption of technology-based tools in promoting economic development has happened due to the combination of digital and non-digital products and services in manufacturing (Ligang et al., 2019). The service industry is one area where technology has been deeply integrated with real-life business problems to create better systems of service delivery. This has happened through increased rates of information exchange, high levels of coordination across departments, and the enhancement of processing speeds (Cheng et al., 2021). In this regard, technology emerges as an important tool for saving resources and promoting sustainable development in an economy. In this regard, most emerging economies have to contend with the need to evaluate different economic variables to find the right balance to cope with the demand for a high-mix-low-volume production model, which is central to the realization of lean manufacturing systems (Mittal et al., 2019). Figure 2.1 below shows different elements that have to be included in this plan.

Figure 2.1 Considerations in economic model planning (Source: Kheng, 2021)

The diagram above shows different factors that an emerging economy has to consider when developing their economic plans. They include aspects of networked production systems, semantic objects, IoT, optimized ecosystem, high-value workforce, and the development of a reconfigurable high-mix-low-volume production model (Kheng, 2021).

The current manufacturing system used by many emerging economies is characterized by highly reconfigurable systems that operate at the product process level (Zheng & Ming, 2017). This has been made possible through improvements on business process engineering activities, which have reconfigured system processes across various levels of production (Zheng & Ming, 2017). For example, under this plan, the Enterprise Resource Planning (ERP) technique has been improved to include resource planning and operational management activities through an elaborate and interlinked system of production aimed at promoting efficiency (Kheng, 2021). Production systems, which are designed to handle dispatch issues and scheduling arrangements, support manufacturing execution functions have been enhanced in the same manner (Kheng, 2021). Monitoring and execution functions of the manufacturing process have been deployed to enhance real-time processes as well. Sensory and actuation functions are also engaged in the use of sensory data to optimize production processes (Kheng, 2021). The final layer of the production system is defined by systems where the actual production process happens, as highlighted in figure 2.2 below.

Figure 2.2 Layers of production (Source: Kheng, 2021)

Based on the structure of the above-mentioned pyramid, although different traditional production processes operate in an interlinked fashion, most of them work in silos meaning that there is minimal levels of coordination across different business divisions. Smart manufacturing strives to improve interconnectivity among these independently working silos to create better synchrony of production processes (Zheng & Ming, 2017). This process involves the inclusion of artificial intelligence and IoT capabilities to support the transition. However, some legacy systems may need to be maintained throughout transformation phase to support the entire transition given that not everything needs replacement in the transition to smart manufacturing (Kheng, 2021). It is projected that the use of the right cyber connectivity tools could help address the problem. The government of China conceptualized the Made in China 2025 plan under these conditions. They are further explained below.

Conditions for the Establishment of Made in China 2025 Plan

As highlighted above, emerging economies have to contend with unique challenges in modernizing their economies to become competitive in a fast-paced technological world. Particularly, this statement is true for China, which has already experienced much of the economic transformation that low-income nations yearn for but is yet to overcome the last hurdle towards becoming an advanced economy. This section of the review shows that two critical areas are important drivers for the transformation and the development of the Made in China 2025 plan reforming industrial systems and demographic changes in China. They are further explained below.

Reforming Industrial Systems

The collapse of the global financial system during the 2007/2008 economic crisis heralded a period where countries had to reevaluate their economic models to make them more resilient and responsive to macroeconomic shocks (Oberheitmann et al., 2020). Some of these nations re-launched their industrialization plans. For example, several countries in Europe adopted similar measures, while the US struggled with tackling domestic economic challenges, such as its ageing infrastructure (Alexandru-Mircea & Marilena-Oana, 2018). The biggest crisis to have affected Europe, since the 2007/2008 crisis, has been BREXIT, which refers to the exit of the UK from the European Union (EU) economic bloc. This one change meant that the European economy would become fragmented when different nations hold varied economic goals (Brunet-Thornton & Martinez, 2018). Coupled with the entry of immigrants into some EU countries, such as Germany, the grounds for the development of a complex EU economic integration plan have been created.

In the US, the trade conflict with China is one of the most impactful forces to have affected relations between both countries (McBride & Chatzky, 2019). Particularly, the quest by the US to pursue trade protectionism policies and disputes over currency exchange rates has undermined confidence in trade between the once cordial trade partners (McBride & Chatzky, 2019). These issues have created conditions for China to look for locally developed technological solutions for its rapidly growing economic enterprise because, based on the actions of the US, its foreign partners are becoming unreliable (McBride & Chatzky, 2019). From this background, the Made in China 2025 plan was conceptualized.

China has invested many resources in reforming its industrial systems to make it the global manufacturing powerhouse that it is intended to be according to the Made in China 2025 plan (Ligang et al., 2019). Particularly, there have been many investments made in expanding the countrys production capacities to become more competitive (McBride & Chatzky, 2019). However, if Chinas manufacturing capacity is compared to those from other advanced nations, it appears less competitive. At the same time, China is experiencing significant challenges sustaining its traditional low-cost production model because of increased labor costs, an imbalance between its demand and supply of raw material, changes in global supply systems, and trade disputes with its international partners (Ligang et al., 2019). These challenges are making it more difficult for China to maintain a high rate of economic development that would enable it to compete with its industrialized partners. Additionally, most South Asian countries are replicating the successful low-cost Chinese economic model, thereby becoming substitute-manufacturing hubs (Alexandru-Mircea & Marilena-Oana, 2018). The effect is that Chinas competitiveness in the Asian manufacturing sector is being undermined. These macroeconomic changes created the impetus for the development of the Made in China 2025 plan.

Demographic Changes in China

Unlike other economies around the world, Chinas population and its internal demographic characteristics have to be factored in economic and policy decisions. This is because the country is home to more than one billion people, which comprises of about 1/7 of the global population (Xinxin et al., 2016). Given that the US and other leading industrialized nations do not have the same number of people in their countries, the potential to flip the large Chinese population into a formidable market is attractive to policy developers who conceptualized the Made in China 2025 plan (Tong & Wan, 2017). There is precedent in understanding the impact that the Chinese population could have on markets and policy success because the current status of the Chinese economy as the worlds manufacturing center is partly informed by the countrys ability to provide low-cost labor from its massive population (Economy, 2018). This ability has turned out to be its main competitive edge in the global manufacturing space because several multinationals have relocated their production processes to China to exploit the demographic potential that exists in the region.

The consequence of integrating the large population of China into its economic system has led to the development of rapid socioeconomic changes across different cadres of the society (Xinxin et al., 2016). However, most of these changes have led to the development of an abrupt socioeconomic re-stratification of the people that has been characterized by the elevation of a large population of nationals from low to middle-income economic status (Xinxin et al., 2016). This change in economic fortunes has led to rapid demographic shifts because few people are willing to avail their labor cheaply, as was the case before (Tong & Wan, 2017). This statement explains part of the reason why Made in China 2025 was formed to align with Chinas readiness to advance its competitiveness in the global manufacturing sector. It also explains why the government is now focused on making the economy more technology-intensive as opposed to labor-intensive, as was the case before.

Broadly, the Made in China 2025 blueprint seeks to address most of the socioeconomic challenges that have arisen because of Chinas improved economic status. One of the ways it intends to address this issue is through the redistribution of profits to make it easier for segments of the population that have not experienced the benefits of economic development to do so (Economy, 2018). The blueprint contains several strategies for doing so, including instituting structural reforms, embracing innovation, promoting the development of the countryside, and promoting the Belt and Road initiative (Tong & Wan, 2017). These plans have been used to identify key priority areas as described below.

Priority Development Areas for Made in China 2025

The Made in China 2025 plan identifies various priority areas of development that should support the overall vision to make China an advanced economy. Updating energy conservation technologies in the automotive industry, promoting the development of New Generation Information Technology Industry (NGITI) to improve supply-side economics of production, modernizing aerospace technology, promoting innovation in shipbuilding, and updating railway transport technologies are some priority areas identified in this review that would highlight the core tenets of the Made in China 2025 plan. They are discussed below.

New Generation Information Technology Industry (NGITI)

New Generation Information Technology (NGITI) is one of the core pillars of the Made in China 2025 plan. NGITI refers to the use of advanced technological tools, such as integrated circuits and operating system software, to create a new infrastructure for guiding Chinas economic activities (Li & Pogodin, 2019). This plan has been designed to reform the structural supply-side economics of the Chinese manufacturing industry and aid in the production of quality products (Li & Pogodin, 2019). The Communist Party of China and the State Council are aggressively pushing for the completion of structural changes aimed at making the NGITI a success (Li & Pogodin, 2019). Their focus has mainly been on the fields of cloud computing and big data management, using AI and web-based tools (Grau & Wang, 2020). Based on its intensity and level of technological innovation, the NGITI part of the Made in China 2025 plan has become an essential part of the development of a sustainable model for the economic blueprint, which also considers the environmental sustainability of its proposed strategies. By venturing into other spheres and industries, the NGITI plan facilitates knowledge transfer across different economic sectors in China and improves efficiency to develop quality products across the board (Cheng et al., 2021). In line with the vision to make Chinas economy more sustainable, NGITI is regarded as a tool for promoting sustainable development in the overall plan.

Unlike other technology-based solutions integrated into the Made in China 2025 plan, NGITI not only emerges as a technology tool but a transitional development model for gathering, analyzing, and disseminating data (Li & Pogodin, 2019). It is associated with increased opportunities for reforming the Chinese economy and a tool for providing technical support in case a problem emerges (Grau & Wang, 2020). These benefits can be transferred to several industries and their subsectors through a complex open web-based model that integrates industry functions across business divisions (Cheng et al., 2021). Using a complex network system, resource allocation in China is likely to be rebalanced because NGITI is designed to affect different processes supporting local industries, such as marketing, accounting, total quality management, research and development (Cheng et al., 2021). Given that NGITIs reach can transcend different fields, the boundary separating production functions across different industries and product categories can be overlooked (Grau & Wang, 2020). However, researchers suggest that there are positive outcomes to be realized at the end of the process, including increased resource allocation priorities, upgraded system processes, and advanced levels of adopting sustainable development concepts (Cheng et al., 2021). Overall, NGITI is designed to address some of the systemic weaknesses affecting the Chinese manufacturing sector. Particularly, it is associated with heightened levels of information exchange and improved technological adoption (Grau & Wang, 2020) within the Made in China 2025 plan. The vision underpinning this change is rooted in the quest to use intelligent production systems to promote sustainable development.

Modernizing Aerospace Equipment and Technology

Under the Made in China 2025 plan, the Chinese government intends to have its commercial airline companies to supply at least 10% of the domestic market and 20% of the global market requirements by the year 2025 (Lee, 2018). This goal is formulated against the backdrop of Chinas outdated technology because experts estimate that the technology used in the Chinese aerospace sector is 20 years behind current trends (Lee, 2018). Under the Made in China 2025 plan, the government exp

Click Here To Order Now!