A glimpse into China's new solution to industrial chain disruption

China is piloting an industrial chain chief system to smoothen and strengthen industrial operation.

Inspired by success in improving water resources management and water pollution control through the river and lake chief system, China is piloting a new type of chief in various regions to smoothen and strengthen industrial operation: the industrial chain chiefs.

Who are the industrial chain chiefs? And what exactly do they do? In a time when COVID-19 is still disrupting the global industrial and supply chains and putting a damper on the economy, these new positions are quite an eye-catcher.

Here follows some background of China's industrial chiefs, particularly on how they have contributed to stabilizing and improving industrial chains at the regional level, and how this mechanism would facilitate China's industrial modernization and high-quality development, a top priority for the country in the next five years and beyond.

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WHO ARE THEY？WHAT'S THEIR JOB?

Changsha, the capital of Hunan Province, was the first to appoint industrial chain chiefs.

In 2017, local authorities of Changsha established 22 offices in provincial-level industrial parks to enhance industrial chains, which are headed by municipal leaders, to improve the quality of industrial chains.

Two years later, Zhejiang Province, the economic powerhouse in east China, introduced the industrial chain chief system to the provincial level. The province asked all its economic development zones to pick a distinctive and internationally competitive industrial chain as a pilot, and local principal officials would be chiefs of these chains.

Industrial chain chiefs in Zhejiang are responsible for a number of tasks, including formulating a development plan and a supporting policy package for the industrial chain, as well as nurturing several leading industrial firms.

An executive with Chinese automaker Geely's production base in Changxing, Zhejiang, recalled that the chain chief in Changxing once chaired 26 project-promoting events and solved more than 150 problems for the company.

"This has played a decisive role in our several projects," the executive told Outlook Weekly.

Other regions quickly followed. Since 2020, governments of provinces such as Jiangxi, Hebei, Henan and Shandong, as well as cities like Shenzhen, Ningbo and Hefei have all established the "industrial chain chief" system to support manufacturing and ease the impact of the virus.

For instance, in Jiangxi, the 11 provincial leaders are responsible for 14 industrial chains in the region to tailor specific solutions for problems encountered by enterprises and the industrial chains.

Industrial chain chiefs are not necessarily individuals. In Hubei, for instance, provincial-level financial institutions took up the role of industrial chain chiefs to enhance financial services for key industrial chains.

In Shandong, while local government heads serve as industrial chain chiefs, large enterprises are selected as the "hosts" of the industrial chains to collaborate with the chiefs and coordinate upstream and downstream cooperation.

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HOW DO THEY PERFORM THEIR ROLES?

The most common role of local industrial chain chiefs is troubleshooting, as they have helped enterprises solve their pressing needs in time to ensure that the industrial chain runs smoothly.

Earlier this year, the resurgence of COVID-19 disrupted the supply of production materials for several electronic technology companies in Jiangxi.

Faced with the emergency, relevant local industrial chain chief immediately coordinated with authorities in transport, industrial production and disease control and came up with a contactless closed-loop solution to remove the logistic choke-points.

The quick response has saved these enterprises from the virus' impact, some of which even recorded a huge year-on-year rise in output, according to Outlook Weekly.

In Jiangxi alone, local industrial chain chiefs have located some 817 specific problems hampering industrial chain development in 2021, of which 784 of them have been solved by the year-end.

But what industrial chain chiefs can do is far more than this. Besides helping individual enterprises, many local industrial chain chiefs have targeted overall industrial development that benefits all enterprises along the industrial chains.

In Wuyi County of Zhejiang Province, local electric tool producers once relied heavily on suppliers from outside the province for lithium battery modules, and therefore their production and profitability were restricted to some extent.

To reinforce the weak link, local authorities made precise efforts to attract new investment. In 2019, a new energy technology firm was brought in to provide technical solutions on lithium batteries for local electric toolmakers.

As a result, in 2020, the total output of the electric toolmaking industry in Wuyi expanded 11.3 percent from a year ago, according to Science and Technology Daily.

Huang Xuegong, the chief engineer with the industry and information technology department of Hunan Province, said while local resources are limited, the industrial chain chief system, among others, has made policy support more targeted and sustained, thus facilitating the growth and efficiency of enterprises.

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ECOSYSTEM BUILDING

Industrial chiefs are also working to strengthen local innovation capabilities so that the industrial chain they are in charge of can climb up the value ladder.

Xu Nanji, the municipal party secretary of Yingtan, a copper-rich city in Jiangxi Province, said through the efforts of local industrial chiefs, the city has become home to dozens of innovation bases for the Internet-of-Things.

A general manager of a local power inverter company told Outlook Weekly that the local research centers could save the company more than three months in product testing, significantly prompting the R&D progress, 

"Bringing testing and reviewing platforms close to the enterprises contributes more to the business environment than simple tax and fee benefits," the magazine quoted Chen Changhe, head of the China Academy of Information and Communications Technology's research institute in Jiangxi.

Driven by the industrial chain chief system, all participants of industrial production, including the government, colleges, enterprises and industrial associations, have obtained a "growing sense of industrial chain."

Zhu Lijin, an official with Changsha's industry and information technology bureau, said those working under the industrial chain chief mechanism would have a stronger awareness of industrial-chain needs, which would be conducive to optimizing the business environment.

After years of experiment, an ecosystem for innovation and entrepreneurship, like a tropical forest, is taking shape, as industry insiders noted.

Meanwhile, participants in industrial production maintain that the market should always play the leading role, while the government should avoid overstepping its bounds or failing to play its due role so that industrial chains can survive and thrive, according to Outlook Weekly.

Industrial chains do not belong to one region only. Observers have called for local governments to have the national and global industrial landscape in mind while enhancing their regions' own comparative advantages.

With China building a unified market nationwide, localities need to be open to regional competition as well as cooperation, they said.