China’s next chapter: Tech, manufacturing, and innovation

McKinsey partners explore China’s coming technology transformation, the challenges facing manufacturers, and an exciting new wave of innovative enterprise sparked by high mobile penetration and social media.

Digital innovation looks set to drive China’s future productivity growth as companies there absorb the lessons of successful enterprise IT programs elsewhere in the world, capture opportunities to exploit “big data,” and reinvent operating processes to increase efficiency. The relative scarcity of big legacy IT systems, the high penetration of mobile devices, and the wide popularity and use of social media are all advantages on which the country can build. Manufacturers in particular must rapidly adapt to rising labor costs, growing volatility, more complex value chains, and increasingly sophisticated consumers.

The good news, as McKinsey partners Karel Eloot, Chris Ip, Gordon Orr, and Michael Wang point out in this video, is that skill levels are rising; obsolete technology is being replaced; investment in new infrastructure is attracting scientists to centers of excellence in biotech, electronics, and pharma; and businesses are developing new approaches to organizing R&D.