The hidden standards battle: inside China’s push to rewire global manufacturing
News Summary
China is quietly vying to influence the bodies that set global manufacturing standards, an arena long dominated by Europe and the US. This 'hidden battle' is crucial because whoever owns the standards essentially writes the rules for a global industry, forcing competitors to adapt to specifications developed to suit the winners’ own products. For decades, the United States and Germany have dominated this process, giving companies like Intel and Siemens significant advantages. However, this is now changing. China is rapidly emerging as a technological leader across various industries, transitioning from a low-end factory hub to a rule-maker, embracing the mantra that 'top-tier companies set standards.' The stakes are enormous, impacting emerging sectors from electric cars to robotics.
Background
Global manufacturing standard-setting bodies have long been a domain of European and American influence, granting significant competitive advantages to Western companies like Intel and Siemens. The 19th-century German industrialist Werner von Siemens famously stated that 'he who owns the standards, owns the market,' a maxim that remains central to global competition today. This year marks the 50th anniversary of formal diplomatic relations between China and the European Union, as well as the 25th anniversary of the European Union Chamber of Commerce in China, underscoring the importance of their economic and technological ties. Over several decades, China has evolved from a 'world's factory' role to a technologically advanced nation with global competitiveness in various high-tech sectors, making its pursuit of global rule-making power a natural extension of its industrial upgrading strategy.
In-Depth AI Insights
What are the deeper geostrategic intentions behind China's push for global standard-setting beyond immediate market control? - On the surface, it's about economic gain and market share. However, the deeper objective is to enhance China's voice in global tech governance, thereby ensuring the security and autonomy of its own technological supply chains. By dominating standards, China can reduce its reliance on Western technology and gain a more advantageous position in international trade and investment. - This also serves as a strategic response to the current Trump administration's 'America First' policies. By establishing alternative global norms in technology standards, China can offer alternatives to non-Western nations, potentially diminishing US leadership in technology and providing external support for its own 'dual circulation' development strategy in critical technological sectors. How should investors assess the escalating competitive risks for Western companies and the potential opportunities for Chinese domestic champions? - Western companies that dominate existing standards, particularly in sectors like semiconductors, industrial automation, and new energy vehicles, face long-term risks of market share erosion and increased costs to adapt their technologies. They may be forced to modify products to comply with new standards or lose competitiveness in certain markets. Investors should monitor these companies' engagement in standard-setting bodies and their strategies for adapting to China-led standards. - Chinese domestic champions, especially those with technological advantages in advanced manufacturing, AI, and digital infrastructure, will gain significant first-mover advantages. Their pivotal role in shaping standards will create vast global markets for their own products and technologies. Investors should look for Chinese enterprises actively participating in international standard organizations and holding core technology patents. How will this battle for standards impact global supply chain resilience and the potential fragmentation of future technology ecosystems? - Fragmentation of standards could lead to increased complexity in global supply chains, as companies may need to produce products compliant with different standards for various regional markets. This would raise R&D, production, and compliance costs, potentially encouraging more regionalized supply chains to mitigate cross-standard compatibility challenges. - In the long run, if two major standard-setting blocs (one China-led, one Western-led) emerge, the global technological ecosystem faces deep fragmentation. This would not only affect interoperability but could also escalate technological barriers and trade friction, ultimately leading to two relatively independent tech spheres. Investors need to be wary of market access risks and the potential impact of technological decoupling driven by this fragmentation.