China has gone all in, embracing robot technology in place of human workers. Never mind the initial investment, businessmen here are looking at the long term benefits: higher productivity, output, and of course, profit.
In the last two decades, the manufacturing sector in the US was able to produce more valuable products and higher production outputs. Thanks to automation…
Bloomberg recently reported on China’s expanding robotics revolution. Robots which replace factory workers cost a hefty 40,000 yuan ($5,850) each, but factory owners are more than willing to invest in machines which can do the work of dozens of workers and allow them to move to manufacturing other products.
Labor costs have surged in China in recent years. Monthly wages for a factory worker already topped 4,126 yuan ($606) which is higher than worker wages in Mexico, India, Vietnam, Thailand and Malaysia. Wages are increasing by around 12 to 15% each year.
At the same time, workers are leaving factory sites for greener pastures. The turnover rate for employees in Guangdong, where China’s largest factories can be found, is as high as 37% for workers under the age of 28.
While no one can blame employees for wanting higher wages and better working conditions, the dilemma is pushing business owners and factory owners to choose robots in place of human workers.
The Cheaper Alternative
Multinational companies have set up factories in Asia because of lower labor and manufacturing costs. However, like most firms in China, they are now looking at acquiring more robots and automating their operations rather than hopping from one country to another.
In Guangdong, 8% of factories already have robots and roughly 40% are already automated. It also helps that the government offers business owners subsidies for every robot purchase. This is on top of the tax exemptions, refunds, and special favors they receive for furthering industrial upgrades.
State-owned companies receive an 83% subsidy, while private companies get about 50% for robot purchases.
Rising labor costs have led to different problems in China, and the fastest and most logical solution they can find is to automate their way out of the problem. This scenario isn’t just happening in China, it is being echoed across the world.
In the US, for example, 85% of jobs lost in 2016 didn’t go to offshore companies or outsourced services, they were lost to robots, said Tech Crunch. The number was attributed to “productivity growth” which basically meant that robots were put in place to do a job previously handled by a human worker.
Robots are Not Stealing Our Jobs
While there’s no denying that the Fourth Industrial Revolution has arrived, it doesn’t mean that machines will be taking over and edging out humans.
In the last two decades, the manufacturing sector in the US was able to produce more valuable products and higher production outputs. Thanks to automation, more work was in fact being done than ever, even as there were countless jobs left vacant by an aging population.
Additionally, more jobs are being brought back to the US because of China’s high labor costs. Reshoring Initiatives, a company that works to bring back jobs to America, reported that 60% of reshored jobs from the year 2010 to 2016 came from China.
If this trend continues, factories will continue to invest in automation and include more robots in their assembly line to meet production demands and schedules.