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G to C and then M

July 3, 2023

About three years ago, I first heard about the concept of GAIA-X (G-X), which originated in Germany. It is a mechanism for autonomous, decentralized and secure data exchange and collaboration between companies without the need for external platforms. At that time, the giant U.S. platforms known as GAFAM were enjoying their springtime glory with their enormous power, and the G-X concept was described by some experts as “a big challenge to GAFAM”. 

Based on this concept, the “Catena-X (C-X)” data sharing infrastructure project for the automotive industry has been then launched in Germany. Currently, about 100 companies, mainly German automakers and parts manufacturers, are participating in the initiative, which is expected to reach 1,000 companies by the end of this year. The number of automotive parts is said to be as many as 20,000. What would happen if all suppliers, including material suppliers, participated in this initiative, sharing data on the CO₂ emitted during the production, assembly and transportation of materials and parts, and ensuring traceability during manufacturing? The total amount of CO₂ emitted during the production of a single car would be known at a glance. If we could also track how the car was used and then disposed of, we would know the amount of CO₂ emitted by the car over its entire lifetime. Undoubtedly, this is a groundbreaking concept. 

The biggest hurdle for companies if trying to become truly carbon neutral is “Scope 3”. This will be difficult to achieve unless all the companies involved work together, as is the case with C-X. Or, create a strong legal regulation like the border carbon tax currently being considered in Europe. Hmm… something like the big picture is starting to emerge… 

Now, the “Manufacturing-X (M-X)” concept has been in the works since late last year, when the feasibility of C-X began to surface, with the goal of applying the C-X mechanism to the entire manufacturing industry. In addition to the C-X concept of environmental measures that span the supply chain, M-X aims to establish data linkage for emergency and disaster preparedness, to streamline mass customization, and for product development and design involving the entire supply chain. The German government is also keen to support SMEs with the updated “vertical alliances” concept. 

However, behind the convenience and innovative concepts, there are always dangers. While a robust security system is a prerequisite for data exchange, each company must be able to make a profound judgment, such as “Is this data really okay to share?” Artificial intelligence (AI) may inductively suggest a company’s guarded know-how through a large amount of casually shared data. While customer companies and suppliers are allies in the pursuit of profit, they can also become potential adversaries competing for their hard-earned gains. It is a bit like the story of the pirates who band together to get treasure, but end up fighting over its division (perhaps a slightly rude analogy). 

Nevertheless, I am always impressed by the fact that there are so many great strategists in Germany. The question now is whether they can transform their grandiose plans into reality, and I can’t help but feel a bit uneasy about their timidity or fragility, which I find very germane-like and hard to hate.

Shu Yasumi, Editor-in-Chief


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