Chain of Thought
China Gives Workers a Piece of Its Mind

China Gives Workers a Piece of Its Mind

Democracy is like potato chips. Once consumption starts, it’s hard to stop. We’ve seen that play out around the world, wherever oppressed people have gotten their hands on devices linking them to the web and showing them what freedom tastes like. It’s happening in Hong Kong as I write this. Protesters are demonstrating what they think of Beijing’s attempts to limit their say in who leads them. The news media are speculating on how Chinese president Xi Jinping will react to this and other protests that sprout up because of this one. These new ones could even involve labor. How would that affect supply chains around the world that thrive on the sweat of low-paid Chinese workers? More importantly, how would that affect their state-controlled bosses?

Industry reports have been providing some clues to that answer in recent days with the release of some interesting market statistics. For example:

  • A report from PwC US, in conjunction with The Manufacturing Institute, notes that robots could relieve pressure on companies contending with rising wages and currency fluctuations, as well as volatile transportation, logistics and trade-related costs. It notes that China ordered more robots in 2013 than any other country (37,000), and is ramping up automation in response to higher labor costs, availability of skilled labor and higher expectations and demand for higher-quality products.
  • The Freedonia Group, a Cleveland-based market research firm, just released “World Material Handling Products,” a study that states automated storage and retrieval systems and automated guided vehicles will register the strongest sales growth of any products, and that India and China will see the strongest gains through 2018. Growth in those nations’ automotive sector is one of the biggest factors thanks to rising labor costs.
  • Lux Research just released a report titled “China’s Growing 3D Printing Ecosystem,” stating that China is rapidly embracing 3D printing and that printer sales there will grow four-fold to 37,800 in 2018.  Richard Jun Li, Lux Research Director and the lead author on this report said “While 3D printing has been touted as a way for Western economies to compete with China’s manufacturing advantages, the Asian giant is also taking rapid strides to parlay its traditional strengths into 3D printing as well.”

I asked him if he felt this could cut into China’s massive labor force.

“Both 3-D printing and robotics technologies are regarded by the Chinese government as emerging technologies to upgrade its manufacturing industry,” he told me. “Robotics technology will certainly help to reduce manpower required and increase the efficiency,” he added, however, “the value proposition of 3-D printing technology is very different; it is only suitable to produce small batch products due to the limitation of the printing speed. Besides, the costs of 3D printing materials are high at present. So while both technologies gained government support due to their economic values, I don’t think they are related to either “democracy” or “worker’s rights.”

Maybe not. But according to the South China Morning Post, China has earmarked robots as one of the industries of the future, and is throwing a lot of money in that direction. For example, the city of Guangzhou offers subsidies of up to 500,000 yuan (HK$628,000) for firms that install automated manufacturing equipment. I think 3-D manufacturing matches that description.

For some visuals on how China is automating various aspects of its industries, tour our gallery of video and photographic examples.

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