Think tank observation: miniaturization, intelligence, specialization into new features of production

Yu Bin, the Minister of Macroeconomic Research at the Development Research Center of the State Council, recently released the "China Economic Outlook." While many macroeconomic issues are beyond our control, several of his key points—particularly the fourth, fifth, and sixth—have direct implications for corporate management and operations.

Especially the fourth point:

"Production capacity and industrial organization: enterprise mergers and acquisitions, relatively concentrated production, and miniaturization, intelligence, and specialization have become new features."

This concept aligns closely with recent trends in Japanese industry. In recent years, Japan has been promoting the idea of "production miniaturization," a strategy that may seem counterintuitive to some in China, where leaders and experts often advocate for larger, more powerful enterprises.

So why is Japan pushing for smaller-scale production? The key conditions for this approach include reducing the size of the workshop without compromising output. The benefits of such a model are significant:

- Lower rent and fixed asset costs;

- Reduced electricity and energy expenses;

- Shorter logistics distances within the factory;

- Fewer workers needed, and less reliance on skilled labor.

How is this possible? It’s largely due to the increasing use of numerical control (CNC) equipment, which brings intelligence to the production process. Unlike traditional automation, which requires frequent adjustments and is better suited for mass production, CNC machines can handle small-batch, customized production with minimal setup.

In the past, automation focused on minimizing manual handling and completing processes in one go. Today, with CNC technology, a single machine can perform multiple tasks like drilling, milling, and cutting—all in one place, without the need to move the workpiece around.

Therefore, miniaturized production relies heavily on intelligent, numerically controlled equipment. Let's look at an example:

- A single CNC machining center can replace four manual vertical lathes and two manual drills.

- This setup covers about 22–25 square meters, plus storage, totaling roughly 40 square meters.

- In contrast, the traditional setup would take up about 60 square meters, plus storage, totaling around 100 square meters.

This means a CNC system can save over half the space compared to conventional manual equipment.

Moreover, CNC production ensures higher quality and consistency. Parts made on manual machines are often not interchangeable, while CNC-produced components are standardized, making assembly and packaging much easier. Even after sale, parts can be shared across different models or products.

The same logic applies to painting processes. Automated rolling, infrared drying, and robotic spraying all help reduce space and improve efficiency.

With smart equipment, you don’t need highly skilled workers—just general laborers. This reduces staffing needs significantly. For instance:

- One CNC machine can be operated by a single worker (or even two machines managed by one person).

- Traditional setups with four lathes and two drills require at least six to eight workers.

This leads to a dramatic increase in productivity per worker.

Miniaturization, combined with intelligent equipment, is the core of this new production model. Specialization is another key element—where factories focus on producing a single product or component, maximizing efficiency.

For example, in Malaysia’s Muar industrial cluster, specialized factories produce just one item, such as dining chairs. They use simple equipment and non-technical workers, yet achieve high per capita output. If they redesign their products and use better materials, they could double their value per unit.

Japan follows a similar model. Their furniture industry focuses on a limited number of styles—bedroom sets, living room sets, and drawers in just a few sizes. This allows for specialized production and centralized supply chains, leading to high productivity and efficiency.

Japanese furniture factories have per capita outputs of over 1 million RMB per year, which is 4–5 times higher than what we see in China today.

Ultimately, the State Council’s push for miniaturization, intelligentization, and specialization aims to shift away from outdated, large-scale, and inefficient production methods toward modern, efficient, collaborative, and specialized systems.

This transformation is essential for the future of the furniture industry—and indeed, for the broader manufacturing sector as well.