Dongguan upgrades to smart factory

By Chen Qingqing Source:Global Times Published: 2018/2/26 22:03:39

Manufacturing prowess still increasing

In the past two years, I've traveled to Dongguan in South China's Guangdong Province three times. Each time, I was assigned to cover a different topic ranging from the replacement of workers with robots to the slowdown in local GDP due to crackdowns in various areas such as the way in which original equipment manufacturers (OEMs) operate.

No matter who I talked to, it always seemed that this manufacturing hub has been growing from a world factory into a smart factory that will reshape industries and supply chains in  the Pearl River Delta region.

Western journalists care more about how many jobs have been replaced by robots  and how many foreign-funded factories in Dongguan have been shut down because of the alleged deteriorating business environment in the Chinese mainland. It seems that they have ignored some basic factors involved in the industrial restructuring process.

When China began its economic reform and opening-up in 1978, foreign companies came to invest in China as a way of helping local industries. Some companies, which considered themselves contributors to China's economic growth, enjoyed a slew of favorable policies such as low tax rates and land use fees. In the ensuing years, thousands of factories were set up in the Pearl River Delta region, attracting migrant workers from all over China. Many were from rural regions, born and raised by poor families. And they wanted to change their destiny by working hard in those factories.

Some Chinese businesspeople, whom I interviewed during my days in Dongguan, shared the same path of becoming successful after spending years working in the region. Although some of them worked on simple tasks or assembled the same component day by day, they accumulated experience in doing repetitive work and left with the ambition to create their own business.

Some worked on really niche areas. They have been focusing on those areas for years and have become experts on the technologies involved. For example, some make strong magnets with alloys using rare-earth elements. The product may be unremarkable, but can be used in many everyday areas including consumer electronic products such as smartphones and selfie-sticks.

It is not a secret in Dongguan that some foreign-owned factories and enterprises have felt lost in recent years. As Chinese enterprises - boosted by technologies and skills learned from their foreign rivals - rushed into the global supply chain, foreign firms have been losing their edge and becoming less and less competitive. 

Some foreign business representatives have complained that the commercial environment in China has become more difficult, with tightened rules and regulations on issues such as labor and environmental protection. Others have pointed fingers at the so-called unfair business environment, as their Chinese counterparts are believed to have easier access to funding needed to expand their production scale. Foreign firms in Dongguan have felt less welcome because of the smaller privileges they enjoy today. Some have even fled to Southeast Asia seeking lower labor costs and better policies.

But the region is moving forward. Factories in Dongguan are not willing to work just as OEMs, as the business model has low added value. Many of them are now building their own brands instead.



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