Advancing IT-OT Integration to Drive Deep Synergy Between Shanghai's Manufacturing and Service Industries

Editor's note:

The International Business Leaders' Advisory Council for the Mayor (IBLAC) brings together top executives from leading multinationals to exchange insights on Shanghai's development strategy. Each company brings forward a paper that draws from their global practices and local insights. Shanghai Daily has selected and summarized some of the astute suggestions to this city.

Shanghai's services account for nearly 80 percent of its GDP and contribute approximately 85 percent of its economic growth. That is the city's greatest strength. Yet the concern is equally clear: Where services grow rapidly, manufacturing's share tends to keep falling, raising the risk of "industrial hollowing-out," as high-value-added core functions – R&D, design, and supply chain management – follow manufacturing activities abroad, weakening overall command of the value chain.

At OMRON, our view is straightforward: Manufacturing and services are not locked in a zero-sum competition in which one must decline for the other to rise. They are interdependent and mutually reinforcing. Advancing the servitization of manufacturing and the industrialization of services – "the two transformations" – is the key to resolving this structural challenge.

We note that Shanghai's 15th Five-Year Plan (2026-2030) has set the goal of "maintaining a reasonable share of manufacturing," targeting an industrial value-added share of GDP of no less than 20 percent by 2030. It takes "service-manufacturing integration" as the overarching theme, empowering producer services through "AI+" and driving the strategic upgrade from a "manufacturing base" to an "intelligent manufacturing enablement center." We strongly endorse this reorientation and stand ready to support it through our own practice.

Where is the lever? Our answer is IT-OT integration. The core bottleneck is the long-standing IT/OT divide: IT professionals lack understanding of production lines, while OT resources remain largely undigitized, leaving process parameters and quality judgment standards stranded on the shop floor as tacit manufacturing know-how – never systematically recorded, analyzed, or reused.

Our answer is to restructure OT resources using IT logic and convert tacit manufacturing know-how into digital assets. The technologies required must possess four characteristics – visualization, efficiency, lightweight deployability, and universality – forming a consistent closed loop of "identifying problems → analyzing problems → solving problems."

The IT/OT divide is therefore not a technical detail that can be bypassed. It is the fundamental divide that determines whether an enterprise can shift from the industrial-era logic of "cost and scale" to the digital-era logic of "data and services." Bridging it requires coordinated progress at the infrastructure, platform, and application levels: fully automated end-to-end processes and a comprehensive data collection network; an integrated industrial internet architecture spanning IaaS, PaaS, and SaaS; and integrated scenarios covering execution, management, operations, and decision-making. In OMRON's practice, a one-stop IT-OT data platform illustrates how this capability can be systematized and platformized, moving IT-OT integration from project-level custom delivery toward enterprise-level standardized service.

At OMRON's Shanghai operations, our one-stop IT-OT data platform organized around four management modules – production, quality, equipment, and energy – has supported a shift from "reactive handling" to "proactive intervention": predictive maintenance accuracy of 96.3 percent, zero missed critical-defect detections, yield rates exceeding 98.5 percent, production-efficiency improvements of approximately 15 percent, and capacity increases of approximately 5 percent.

On that basis, our recommendations to the Shanghai government are fourfold: establish "Manufacturing as a Service" (MaaS) shared enablement pilot zones that open verified IT-OT capabilities to SMEs as standardized services; promote the adoption and implementation of intelligent manufacturing standards through incentives and subsidies; accelerate the opening of production scenarios from large enterprises to SMEs, fostering a collaborative innovation ecosystem in which "large enterprises pose the challenges, SMEs provide the solutions;" and establish a mutually beneficial mechanism for Chinese and foreign enterprises, encouraging joint-delivery partnerships and supporting a "Shanghai services + China manufacturing" brand.

The two transformations will ultimately be realized not through strategy alone, but by bridging the IT/OT divide in practice – and that is what will secure Shanghai's position in the global industrial division of labor.