China is advancing rapidly in next-generation manufacturing, while parts of Europe are struggling to keep pace due to legacy systems and structural challenges, according to the Industry 4.0 Barometer 2026, a study on industrial digitalization conducted by Germany-based management and IT consultancy MHP.
In a Wednesday release, MHP said it surveyed more than 1,200 industrial companies across major global markets. The findings highlight growing disparities in the adoption of digital technologies such as artificial intelligence, digital twins, and software-defined manufacturing.
Global digitalization rises, but gaps widen
The report shows that industrial digitalization has increased globally, with overall adoption rising from 48 percent in 2022 to 66 percent in 2026. China leads with 72 percent, followed by the United States at 69 percent. India and Mexico also report relatively high levels at 68 percent and 67 percent, respectively.
In contrast, the DACH region—Germany, Austria, and Switzerland—remains at 57 percent, while the United Kingdom has declined slightly to 62 percent.
Legacy systems slow European progress
The study identifies technical barriers as a key reason for slower transformation in some regions. Fragmented data systems, limited interoperability, and reliance on legacy IT infrastructure continue to hinder the adoption of newer technologies across industries worldwide. While such challenges are common globally, the pace at which companies overcome them varies significantly, particularly in areas like artificial intelligence (AI) and digital twin technology.
Rapid growth in digital twin adoption
Among the technologies analyzed, digital twins are seeing the fastest growth. Adoption in factories and machines rose to 62 percent, while use in logistics reached 67 percent.
China leads in this area, particularly in logistics, where 84 percent of companies report at least partial use of digital twin technology. Other countries trail behind, such as Mexico at 74 percent, the United States at 61 percent, the United Kingdom at 54 percent, and the DACH region falling behind at 42 percent.
AI use expands, but integration differs
AI is increasingly used in manufacturing environments, with China again reporting the highest level of adoption at 71 percent. India and the United States follow with 61 percent and 57 percent, respectively; while the DACH region show a lower usage rate at 37 percent. The report also pointed out that in the Europe, AI is often limited to pilot projects rather than fully embedded in production processes.
Software-defined manufacturing still emerging
The concept of software-defined manufacturing (SDM), which separates production control from hardware through centralized software systems, shows a great propensity to invest at 13.8 percent. However, awareness is significantly higher in China and India, where 30 percent of respondents report strong familiarity with the concept. By comparison, familiarity is much lower in the DACH region and the United Kingdom.
Overall, the report concludes that countries in Asia—particularly China—along with the United States, are adopting digital manufacturing technologies more quickly and comprehensively than European counterparts.