Half-finished mask machines in KYD's factory in Dongguan Photos: Wang Bozun/ GT

More than two decades ago, relatively low labor cost helped China to quickly attract a lot of foreign companies with advanced technologies in many fields to set up factories in the country, which boosted the nation's manufacturing sector and helped talent development. 

Now China has no doubt become the world's "supper factory" with its integrated industrial chains, skillful industrial workers and strong production capacity. However, as the labor cost has been gradually increasing in recent years and other countries with lower labor cost such as Vietnam are stepping in the manufacturing sector, that advantage is gradually fading.

In a recent trip to Dongguan, South China's Guangdong Province, the Global Times found that the increasing labor cost is indeed a concern for local businesspersons as they have already felt the impact, even if it is not strong. 

Embracing innovation

 But with the advantage of the integrated industrial chains in Dongguan, known as the world's factory, they have apparently found their own ways to solve the problem - to embrace new technologies and upgrade production lines.

In Kinyet Metal Products, a Taiwan stamping parts supplier in Dongguan's Chashan town where many electronic products assemblers are located, not too many workers could be seen in the workshop, instead, several industrial robots were busy on the production lines.

"We have started to upgrade production lines by setting up industrial arms [robots] or redesign the machines to make them more automatic to increase the efficiency to balance the cost starting a few years ago," Zhan Binghuang, a manager of the workshop told the Global Times.

In addition to upgrading the production lines, introduction of new technologies is a unique weapon for Zeng Junfu, general manager of KYD, a Dongguan-based mask machine developer and producer.

 After entering KYD's factory in Dongguan, the first facility that one sees is a research and development (R&D) center - a hint of  how important innovation is to the factory.

Zeng told the Global Times that he attaches great importance to the company's R&D center to innovate or upgrade machines to help not only his company but also his clients to reduce labor costs.

Zeng, who was a machine engineer before funding KYD, said that the company almost always invests 5 percent of the annual revenue in R&D, which is higher than the average in this industry. 

Zeng is not the only one. Arun, a consumer electronic product manufacturer in Dongguan whose product line spans from power banks to earphones, also pays higher attention to R&D.

"We invest about 5 to 6 percent of our annual revenue in R&D to not only maintain our leading position, but also to improve the efficiency to balance the increased labor costs," Sun Defeng, deputy general manager of Arun, told the Global Times, adding that Arun also allocates a huge amount of budget to equipment upgrading including industrial robots.

Aside from measures taken by these companies, Dongguan's integrated industrial chain that ensures access to adequate supplies is also an advantage for local factories to increase efficiency.

Sun said that her company is equipped with industrial robots which were purchased from a local industrial robot developer that is within one-hour driving, to increase the efficiency.

"With the integrated industrial chain, I can almost get everything my factory needs in Dongguan," Sun said.

Government efforts

 It's not just the entrepreneurs who are paying attention to industrial upgrading. The Government of Dongguan has also put efforts into facilitating local businesses by launching a campaign to transition from "Made in Dongguan" to "Innovated in Dongguan."

To turn Dongguan into an advanced manufacturing center in the Greater Bay Area, the local government has released measures including creating smart industrial alliance, and promoting industrial robot developers, an official from Dongguan's Industry and Information Technology Bureau told the Global Times.

According to Dongguan's Industry and Information Technology Bureau and the Science and Technology Bureau, the Dongguan government is also enhancing local companies' ability of innovation by accurately helping enterprises from different industries to develop their own advantages.

"Dongguan has so far attracted 91 R&D teams nationwide to the city, which has provided strong support for industrial upgrading and high-quality development," officials from these bureaus told the Global Times.

Beside these measures, Dongguan's government also coordinated the cooperation between the capital market and local enterprises to help leading companies get listed on the capital market for a better development, according to the officials.

Partly as a result of the local government's efforts, Dongguan now has 6,217 high-tech enterprises - the most in Guangdong's prefecture-level cities, and the government is now trying to build a matrix with these tech companies to facilitate the city's goal of building an advanced manufacturing center.

Zeng of KYD, who barely had interactions with local government before this year's COVID-19 pandemic, said that after the pandemic, he really felt the strong support from the government.

"I can feel that their [government officials'] goal is really to make enterprises like us better, and they are really programmatic in their approach to work. And after the pandemic, I am more determined to keep my factory here," Zeng said.