Rising use of industrial robots in China will revolutionize global production chain

By Wang Jiamei Source:Global Times Published: 2017/8/27 20:03:39

It was supposed to be Southeast Asia and Africa that would replace China as low-end manufacturers in the global value chain, yet the rise of robots in China's factories raises doubts that this will actually happen.

Manufacturers have reportedly been moving fast to replace humans with robots along China's southern coastline, driven by the country's rising labor costs and declining demographic dividend. From 2013-15, China was the largest market for industrial robots each year, according to a report from the Financial Times in June 2016.

Moreover, a report from IDC Manufacturing Insights showed in October 2016 that robotic applications are expected to accelerate over the next two years, with the adoption rate of robotics in China's manufacturing sector jumping 150 percent by 2018.

The automation trend is so robust in China that some worry it may threaten factories in Southeast Asia and Africa where low-end Chinese producers like shoemakers have been moving in recent years.

But the far-reaching technological upgrading that is required for universal application of robots in China's manufacturing sector won't happen in the short term. It's not enough to just buy robots: Chinese manufacturers also need economic incentives and technological development to use them effectively in place of humans.

The Financial Times report also noted that China has 36 robots for every 10,000 manufacturing workers, much lower than 292 in Germany, 314 in Japan and 478 in South Korea.

In this sense, China's robotic revolution is unlikely to affect the shift of low-end manufacturing to emerging markets in the short term.

Yet, in the long run, mass adoption of industrial robots in China will surely have an impact on the global value chain, revolutionizing labor-intensive sectors in particular. Southeast Asia and Africa, which have so far received most of the low-end manufacturing activity that is moving out of China, may bear the brunt of the trend.

Chinese companies that mainly focus on the domestic market may reshore jobs to China. But the impact on emerging markets could be limited if most Chinese manufacturers are highly globalized by that point. In the era of automated manufacturing, highly globalized companies may set up factories wherever their markets are. The local policy environment, the potential of nearby markets and raw material supplies will be more decisive than labor costs.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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