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Looking Beyond COVID-19: Going for Industry 4.0 in China

Shaun Brodie • 4/2/2020
Industry 4.0, the latest revolution in the manufacturing industry, is where factories integrate production machines, wireless connectivity and sensors and link these to a system platform ecosystem that can oversee the whole production line process and execute decisions autonomously.

Industry 1.0, 2.0, 3.0 and 4.0
 

Looking Beyond COVID-19: Going for Industry 4.0 in China

Source: Spectral Engines, Cushman & Wakefield Research

Following the COVID-19 outbreak, supply chains in China have experienced enormous stress. Production and the goods distribution network have been interrupted by factories in the region closing on a huge scale and transportation linkages being severed to contain the virus.

With temporary production stoppages and longer lead times to receive essential raw materials and parts, manufacturing performance in China over the outbreak period has taken a hit. As evidenced by official numbers, factory activity in China contracted at the fastest pace on record in February this year.

Given the COVID-19 impact, in the mid- to long-term future, we expect many manufacturers operating in China to adopt Industry 4.0 operating procedures to become more agile and mitigate production and distribution shortfalls should an event like this ever happen again.

The Industry 4.0 ecosystem

Looking Beyond COVID-19: Going for Industry 4.0 in China

Source: researchgate.net, Cushman & Wakefield Research

Just as more manufacturing plants in China are expected to adopt Industry 4.0, so too do we expect the logistics industry in China (and premium warehouses in the region in particular) to do so in the form of Logistics 4.0. With Logistics 4.0 fully integrated with Industry 4.0, the region’s logistics industry (and premium logistics warehouses specifically) will be smarter, more connected, and more technologically advanced.

The Logistics 4.0 ecosystem 

Looking Beyond COVID-19: Going for Industry 4.0 in China

Source: Semantic Scholar, Cushman & Wakefield Research

China premium logistics warehouses: Stock, supply, vacancy and rental (Q4 2019)

Looking Beyond COVID-19: Going for Industry 4.0 in China

Source: Cushman & Wakefield Research

Today, the fourth industrial revolution is underway and many manufacturing plants and premium logistics warehouses in China have already adopted Industry 4.0 and Logistics 4.0, respectively. Given the impact the COVID-19 outbreak has had on manufacturing and supply chains within the country, we do expect many more factories and logistics warehouses to follow and implement Industry 4.0 and Logistics 4.0 technology and systems, respectively. By doing this, China’s manufacturing and supply chains will be able to better ensure that goods and products make their way from production facilities to customers in the most efficient manner under any situation and at any time.

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