International Joint Conference - ICIEOM-ADINGOR-IISE-AIM-ASEM (IJC 2017)

Valencia, Spain, July 6-7, 2017

International Strategies Focused on Business

Digitalisation and Technology Adoption

Chuma RRPC1, Makiya IK2, Cesar, FIG3

Abstract

In the fourth industrial revolution, some principles are introduced for realignment
of operations management models, such as: interoperability, virtualization, real-
time change capacity, service-oriented operations, modularity and decentraliza-
tion. This new scenario leads to disruptive changes in business models, impacting
on the establishment of specific international strategies for a trajectory analysis of
different countries. This study aims to analyse the strategies focused on business
digitalisation, adopted by countries like Germany, USA, China and Brazil, as well
as the impact by technologies adoption. Therefore, this paper is based on an ex-
ploratory study and a comparative analytical framework of different international
strategies focused on some principles of fourth industrial revolution.

Keywords: International Strategies; Industry 4.0; Business Digitalisation;

1 Ricardo Roberto Pinheiro Carmasse Chuma (e-mail: ricardochuma@hotmail.com)

SB-LAB, School of Applied Sciences, UNICAMP, R. Pedro Zaccaria, 1300, CEP 13484-350,
Limeira, Brazil
2 Ieda Kanashiro Makiya (e-mail: iedakm@gmail.com)
SB-LAB, School of Applied Sciences, UNICAMP, R. Pedro Zaccaria, 1300, CEP 13484-350,
Limeira, Brazil
3 Francisco Ignacio Giocondo Cesar (e-mail: giocondo.cesar@gmail.com)
SB-LAB, School of Applied Sciences, UNICAMP, R. Pedro Zaccaria, 1300, CEP 13484-350,
Limeira, Brazil
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1 Introduction

The increasing digitization and interconnection of products, value chains and

business models characterize the Fourth Industrial Revolution, making the Indus-
trial Internet of Things (IoT) get more attention in practice and research over the
last years. Thus, in the future, businesses will establish global networks incorpo-
rating machinery, warehousing systems and production facilities in Cyber-
Physical Systems (CPS) (Hermann, M.; Pentek 2015). The application of these
systems provides intelligence and communication to artificial systems known as
"Smart Systems". According to Anderl (2014), "smart systems may be understood
as a consequent successor technology of mechatronic and adaptronic systems. The
main feature is the integration of cyber-physical systems for enabling inter-system
communication and self-controlled system operation". Therefore, a decision-
making can be made by the cyber-physical system based on production requisi-
tions in real time. In addition, machines will not only receive commands, but will
be able to provide information about their work cycle. Soon, the modules of the
intelligent factory will work in a decentralized way, improving the production
processes.
Venturelli (2016) points out that the technology behind such intelligent systems
is the "Big Data", a large database with information for decision making, but with
a big difference, the data in large quantity are dynamic, which analysis vary in real
time according to external changes, for example, a relation of consumption ac-
cording to a disclosure of a product on the internet, impacting on real time com-
mercialization in. These new patterns of consumption press for a change in supply
chain management involving new models of operations management, new forms
of distribution, and supply of services.
Germany proposed intelligent manufacturing as "Industrie 4.0" (I.4.0); China
also proposed “Made in China 2025”, aims to change manufacturing industry
(Wang 2016); in America, consortiums are investigating the possibility of further
industrial development on end-to-end automation basis, with the Internet as cen-
tral point (Bloem 2014). All of them belong to the transformation and upgrading
of the manufacturing strategy, and include the digital, networked, intelligent as
strategic support and strategic planning. Therefore, this study intends to approach
the strategies adopted by countries as EUA, Germany, Brazil e China.

2 Global Initiatives in Industry 4.0

Nowadays, industries must deal with increased competition, shifting market,

increased complexity of products and processes, increasing customer expectations,
as well as shorter technology and innovation cycles. Thus, flexibility and adapta-
bility turn out to be success factors. In this context, several initiatives and invest-
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ments are being made in various countries towards I. 4.0 and its technologies to
maintain and strengthen global competitiveness.
The consultant Roland Berger shows in Figure 2 the list of investments and ini-
tiatives for each country based on fourth industrial revolution.

Fig 1: Investments and world initiatives in Industry 4.0 Source: Roland Berger (2016).

The first and with the largest investment is China, which will invest 2.2 billion
dollars in 10 specific sectors; followed by the United States with two billion dol-
lars earmarked for high-quality manufacturing creations and to improve high posi-
tion in the global market; In third position is South Korea with 1.6 billion dollars
reserved for creation of manufacturing ecosystems based on new technology: the
Smart Factory; and fourth position is Japan with the goal of increasing the devel-
opment of robotic technologies.
All these initiatives are being promoted in the medium term by 2020 and will
involve companies and industries as well as research centers, technology centers
and universities.

2.1 Germany

Since 2006, the German government has been pursuing a High-Tech Strategy
geared towards interdepartmental coordination of research and innovation initia-
tives to secure Germany’s strong competitive position through technological in-
novation. The current movement is known as the High-Tech Strategy 2020 and
focuses on five priority areas: climate/energy, health/food, mobility, security and
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communication. The strategy revolves around several “strategic initiatives”

through which the Industry-Science Research Alliance is addressing concrete me-
dium-term scientific and technological development goals over a period of ten to
fifteen years. The initiatives have formulated concrete innovation strategies and
implementation roadmaps designed to make Germany a leader in supplying solu-
tions to global challenges (ACHATEC 2013).

2.2 China

Known as “Made in China 2025 plan”, it aims to remedy China’s manufactur-

ing problems with a comprehensive upgrading of the sector. The plan draws inspi-
ration from “Germany’s Industrie 4.0”, where China aims to make use of technol-
ogies like the Internet of Things, cloud computing and big data to upgrade its
manufacturing within 10 priority sectors:

Fig. 2: Strategic Sectors: priority sectors identified by Made in China 2025 plan. Source:
CKGSB Knowledge, 2015.

As shown in figure 2, these priorities include new advanced information tech-

nology; automated machine tools and robotics; aerospace and aeronautical equip-
ment; maritime equipment and high-tech shipping; modern rail transport equip-
ment; new-energy vehicles and equipment; power equipment; agricultural
equipment; new materials and biopharma advanced medical products (Lee 2015).
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2.3 United States

In United States, in 2011, President Barack Obama announced the formation of

AMP "Advanced Manufacturing Partnership", bringing together industry, univer-
sities and Federal government to invest in emerging technologies that will create
high-quality industrial jobs and increase global competitiveness (Kurfuss 2014).
Based on political opportunities and the needs of the United States (from an eco-
nomic and national security point of view), the Director of the AMP, produced a
final report entitled "Capturing Domestic Competitive Advantage in Advanced
Manufacturing", which was adopted by "President's Council of Advisors on Sci-
ence and Technology "(PCAST). The report has 16 key recommendations whose
are divided into three key areas: (1) capacity building for innovations, (2)
strengthening the talent chain, which focuses on the development of the workforce
for the needs of the next (3) improving business environment, which addresses is-
sues such as tax reform, rationalization of regulatory policy, improvement of trade
policies and the upgrading of energy policies (Report to the President -
Accelerating U.S. Advanced Manufacturing, 2014).

2.4 Brazil

In Brazil, National Confederation of Industry (Confederação Nacional das In-

dústrias - CNI) concluded the first national survey on the adoption of digital tech-
nologies related to the I.4.0 approach (Afonso 2016). The survey - conducted with
2,225 companies of all sizes between January 4 and 13, 2016 - identified the adop-
tion of ten types of digital technologies by companies and their use in different
stages of the industrial chain. Seventy-three percent of those claim to use at least
one digital technology at the process stage. Another 47% use in the development
stage of the productive chain and only 33% in new products and new businesses.
It is therefore necessary to identify the national industrial applications which could
benefit from this technological advance and which strategic indicators must be put
in practice. Increased use of technology systems means that the qualitative chang-
es brought by I.4.0 are likely to be positive for the labor market. The number of
physically demanding or routine jobs will decline, while the number of jobs re-
quiring flexible responses, problem solving, and customization will increase. And
for I. 4.0 to work effectively, workers will need a variety of skills. They will have
to combine the know-how related to a specific work or process, such as techniques
to work with robots or change the tools, in the machines, together with knowledge
in the areas of Technology Information (TI) ranging from interfaces of use of
basic plots to advanced programming and analytical skills. The need for multiple
skills and the unprecedented reach of factory floor changes mean that soft-skills
will become more important than ever. Employees should be even more open to
change, have more flexibility to adapt to new roles and work environments and
become accustomed to continuous interdisciplinary learning (Gerlitz 2016).
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3 Comparative Analysis

Synthetically, the maturity level related to industry 4.0 is in descending order:

Germany, USA, China and Brazil, the first not only as a pioneer of the subject, but
with a large part of the industry already with operational projects. Although the
investments are larger in the eastern country, North America comes after Germa-
ny, because it is in the forefront of four synergistic technological revolutions: in-
novation in energy production; advanced and digital manufacturing; biological
sciences and information technology (industrial internet) (Schwab 2016). Manu-
facturers also note that regulatory uncertainty impacts their ability to both adopt
new manufacturing technology innovations and to continue U.S.-based operations.
Second, AMP2.0 encourages the further development of tax policies which are de-
signed to encourage long-term establishment of capital-intensive and space-
intensive manufacturing operations.
Per Staufen AG (2015), Chinese companies were near in the same position in
2015 as German companies were in 2014 compared to I. 4.0. Based on other data
from the consulting, 58% of Chinese companies are already focusing on smart fac-
tories and one in ten companies is already having individual operational projects
in progress.
The consulting also interviewed German and Chinese entrepreneurs in order to
relate them to their knowledge by questioning them: where is your company head-
ed for smart factories? Is your company well prepared to become a smart factory?
The data are shown in figure 4.

Fig. 3 – China x Germany Industry 4.0 maturity. Source: Staufen AG (2015).

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Despite a higher level of maturity in I.4.0 approach of Germany compared to

China, there is still great progress in China in recent years due continuously
entering segments with higher aggregate values in global production and
employing their important economies of scale to better compete in the world
(Schwab 2016).

In Brazil, most of the efforts made by industry are at the stage of industrial
processes, opening a huge disadvantage related to other countries. Also, having
the high cost of implementation as the main internal barrier to the adoption of
digital technologies, the National Confederation of Industry in Brazil conducted a
survey of industrial companies and found that in order to accelerate the adoption
of digital technologies in the country, it is fundamental to develop digital
infrastructure (broadband, sensors, etc.), followed by new models of education and
training programs and, finally, to establish specific financing lines (CNI 2016).

4. Relevance

This paper presents different strategies adopted by each selected country in this
study (Germany, EUA, China and Brazil), based on I.4.0 approach. Therefore,
those countries which can establish the best international norms for the future re-
lated to the main categories and fields of the new digital economy (Internet of
Things, Advanced Manufacturing, Digital Health, Communications 5g, among
others) will have great economic and financial benefits. By contrast, countries that
only promote their own rules to offer advantages to domestic producers, to prevent
the entry of foreign competitors, and to reduce the royalties paid by domestic
firms to foreign technologies will be in risk to be cut off from international stand-
ards and become the retards of the new digital economy (Schwab 2016). Finally,
public policy choices will decide whether a given country will be able to capitalize
on all the opportunities offered by the technological revolution.
Based on the I.4.0 approach, the general data of this research indicate that
Germany has leadership in projects, China investment leadership and US interme-
diate stage between the two previous countries. The three countries mentioned
present long-term strategies with establishments of predetermined goals and sec-
tors, for a well-defined trajectory establishment. Unlike Brazil, which is still in a
stage focused on industrial processes, requiring several investments and an indus-
trial policy focused on the most competitive sectors related to Brazilian character-
istics, as the same time to develop an appropriated infrastructure for this new sce-
nario.

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