Ex­perts say that the au­toma­tion rev­o­lu­tion is in­evitable and com­pa­nies need to start in­tro­duc­ing robots to their man­u­fac­tur­ing pro­cesses and start think­ing long-term if they are to re­main com­pet­i­tive

China Daily (Canada) - - SHANGHAI - By ZHU LIXIN in He­fei and WANG YING in Shang­hai

Ris­ing la­bor costs as well as a rapidly ag­ing pop­u­la­tion in ma­jor ci­ties like Shang­hai have in­her­ently ac­cel­er­ated the re­place­ment of hu­man work­ers with in­dus­trial robots.

Ac­cord­ing to a re­port jointly re­leased by Deloitte and Chi­naInfo100, a non-gov­ern­men­tal or­ga­ni­za­tion started by Chi­nese schol­ars, China’s la­bor costs have soared five times in the past decade, driv­ing some multi­na­tional cor­po­ra­tions to re­lo­cate their plants to lower cost re­gions or back to their home mar­kets.

In the mean­time, China’s work­ing pop­u­la­tion, de­fined by those aged be­tween 15 and 64, has en­coun­tered neg­a­tive growth for the first time in the past two decades. The re­port pro­jected that the coun­try’s young pop­u­la­tion, or peo­ple aged be­tween 15 and 39, will de­crease from 38 per­cent of the pop­u­la­tion in 2013 to 28 per­cent by 2030.

The prob­lems caused by an ag­ing pop­u­la­tion looks to be even more se­vere in Shang­hai — a blue pa­per pub­lished by the Shang­hai Academy of So­cial Sciences last month said the city’s de­mo­graphic div­i­dend, which is the eco­nomic growth po­ten­tial re­sult­ing from a work­ing-age pop­u­la­tion sur­plus, will dis­ap­pear come 2020.

As such, Shang­hai will face a se­ries of chal­lenges posed by an ag­ing pop­u­la­tion dur­ing the 13th Five Year Plan pe­riod (2016-2020).

More than 6.4 mil­lion peo­ple in Shang­hai, or 45 per­cent of the to­tal per­ma­nent res­i­dents in the city, are ex­pected to be aged 60 and above by 2045.

Man­u­fac­tur­ers have said that the re­place­ment of hu­mans with ro­bot­ics is bound to hap­pen, though the present eco­nomic slow­down has made some of them think twice be­fore do­ing so.

He­fei Meil­ing Group, a ma­jor home ap­pli­ances man­u­fac­turer based in He­fei city, capital of East China’s An­hui prov­ince, has since years ago been plan­ning to in­stall more in­dus­trial robots in its re­frig­er­a­tor plants lo­cated in the He­fei Eco­nomic & Tech­no­log­i­cal De­vel­op­ment Area (HETDA).

“Though we be­lieve the re­place­ment of hu­man work­ers will be in­evitable in the man­u­fac­tur­ing sec­tor, we are con­tem­plat­ing if we should do it now when growth of the home ap­pli­ances sec­tor has been slow­ing down in re­cent years,” said Huang Da­nian, as­sis­tant gen­eral man­ager of Meil­ing.

“We worry that the in­vest­ment re­cov­ery pe­riod might be too long,” said Huang.

In con­trast, Giti Tire (An­hui) Co Ltd has al­ready been ben­e­fit­ing from au­toma­tion. Yu Neng­gao, as­sis­tant gen­eral man­ager of the com­pany, said that Giti Tire has even been in­creas­ing its in­vest­ments in robots since a year ago.

The com­pany is ex­pected to in­vest more than 100 mil­lion yuan ($14.98 mil­lion) this year into fur­ther au­toma­tion up­grades.

He added that the robots have also made it more ef­fi­cient and safe when trans­port­ing the big and heavy tire which has wit­nessed over­ca­pac­ity prob­lems in re­cent years,” said Yu.

China has since 2013 been the world’s largest in­dus­trial ro­bot mar­ket. In 2015, sales of robots in China reached 68,459 units, up 18 per­cent year-on-year, said Song Xiao­gang, ex­ec­u­tive pres­i­dent and gen­eral sec­re­tary of China Ro­bot In­dus­try Al­liance (CRIA).

Lat­est data from the In­ter­na­tional Fed­er­a­tion of Ro­bot­ics (IFR) in­di­cated that China’s ro­bot den­sity has also in­creased from 11 to 36 in the past five years. Ro­bot den­sity refers to the num­ber of mul­ti­pur­pose in­dus­trial robots per 10,000 per­sons em­ployed in the man­u­fac­tur­ing, au­to­mo­tive or gen­eral in­dus­tries, ac­cord­ing to IFR.

An­dreas Bauer, chair­man of the ro­bot sup­pli­ers group of IFR, be­lieves that there is great po­ten­tial for fu­ture growth in the in­dus­try as China’s ro­bot den­sity is cur­rently about half of the global av­er­age.

How­ever, the com­pany with the world’s lead­ing ro­bot den­sity of 569 is ac­tu­ally Shang­hai Highly (Group) Co Ltd, a com­pany that man­u­fac­tures air con­di­tion­ing com­pres­sors.

Over the past nine years, the com­pany has re­placed nearly 1,000 work­ers with 480 robots.

“We dis­cov­ered that an av­er­age of 33 per­cent of our work­ers quit dur­ing the months of Fe­bru­ary and March, dur­ing our peak pro­duc­tion pe­ri­ods, and this has greatly af­fected our prod­uct qual­ity and man­u­fac­tur­ing safety,” Zheng Min, deputy gen­eral man­ager of Highly, was quoted as say­ing by ThePaper, a Shang­hai me­dia out­let.

In 2007, Highly in­tro­duced their first ro­bot at an an­nual cost of 73,000 yuan — al­most dou­ble that of a hu­man worker (37,000 yuan) — at that time.

How­ever, la­bor costs have been in­creas­ing at an an­nual rate of 10 per­cent while the costs of robots are drop­ping 5 per­cent year-onyear, re­sult­ing in the lat­ter be­com­ing cheaper than the former by 2011.

By 2014, the an­nual cost of a ro­bot was just 56,000 yuan, in con­trast to 92,000 yuan for a hu­man worker.

The cen­tral gov­ern­ment in April un­veiled a de­vel­op­ment plan for the ro­bot­ics in­dus­try, de­tail­ing ob­jec­tives that need to be achieved

Christo­pher A Pis­sarides, the 2010 No­bel Prize win­ner in eco­nomics, has warned that pop­u­lar­iza­tion of ro­bot­ics will re­sult in nu­mer­ous mid-level work­ers, es­pe­cially those from the man­u­fac­tur­ing sec­tors, los­ing their jobs and China has to be pre­pared for it.

He added that post-2025 China, which will be home to a small but dy­namic man­u­fac­tur­ing sec­tor that will drive pro­duc­tiv­ity growth and ex­ports, will need to re­spond to this prob­lem by hav­ing a much larger ser­vice sec­tor that can pro­vide jobs.

Au­thor­i­ties have al­ready vowed to pro­mote ser­vice-ori­ented man­u­fac­tur­ing and man­u­fac­tur­ing-re­lated ser­vice in­dus­tries.

“The strat­egy needs to be ac­com­pa­nied by other sup­port­ing poli­cies that will gen­er­ate em­ploy­ment. About 90 per­cent of the coun­try’s em­ploy­ment will have to be in ser­vice sec­tors which can­not be au­to­mated,” said Pis­sarides, who be­lieves that the ser­vice sec­tors will have to take on broader scopes.

He sug­gested that China will also need to re­form its econ­omy in or­der to en­cour­age more pri­vate sec­tor de­vel­op­ment, es­pe­cially in the ser­vices in­dus­try.

“The main sec­tors that will ben­e­fit are health­care, ed­u­ca­tion, per­sonal ser­vices, house­hold ser­vices, real es­tate man­age­ment and the hos­pi­tal­ity in­dus­try,” said Pis­sarides, adding that these par­tic­u­lar sec­tors in China are not do­ing very well.

Xin Changx­ing, vice min­is­ter of hu­man re­sources and so­cial se­cu­rity, said at a State Council brief­ing that al­though the num­ber of em­ployed peo­ple will grad­u­ally de­crease in man­u­fac­tur­ing in­dus­tries, this tech­no­log­i­cal rev­o­lu­tion will ac­tu­ally cre­ate more job va­can­cies for work­ers in the long run.

Pis­sarides be­lieves that em­brac­ing ro­bot­ics does not nec­es­sar­ily mean there will be prob­lems with over­ca­pac­ity.

“Though it is grow­ing, China’s in­dus­trial pro­duc­tiv­ity is still very low. The ‘Made in China 2025’ strat­egy, which em­pha­sizes on au­toma­tion, will help to in­crease the pro­duc­tiv­ity sub­stan­tially,” said Pis­sarides dur­ing a speech in the He­fei-based Univer­sity of Sci­ence and Tech­nol­ogy of China in April.

The “Made in China 2025” strat­egy, which is fo­cused on the man­u­fac­tur­ing sec­tor, was un­veiled by the State Council in May 2015 and it is the first 10-year ac­tion plan de­signed to up­grade China’s ca­pa­bil­i­ties so that it can be­come a world man­u­fac­tur­ing power by 2025.

Fu Haibin, an of­fi­cial tasked with at­tract­ing in­vest­ments for HETDA, said many of the new man­u­fac­tur­ers in the zone al­ready use robots for some of their pro­cesses, while the older com­pa­nies in HETDA are be­gin­ning to ac­knowl­edge the need for such tech­nol­ogy.

“There is no bet­ter time to em­brace ro­bot­ics than the present, since the process is in­evitable. The ear­lier they start the cam­paign, the bet­ter de­vel­op­ment chances they will have in the fu­ture,” said Pis­sarides dur­ing the speech in April.

The Harbin In­sti­tute of Tech­nol­ogy Robots Group (HRG), a lead­ing ro­bot­ics de­vel­oper in China, agrees with Pis­sarides’ sen­ti­ment.

The in­sti­tute an­nounced ear­lier this month that it will build a large ro­bot­ics hub in the zone, with to­tal in­vest­ments in the project pos­si­bly amount­ing to more than 2 bil­lion yuan in five years.

Yang Wei, head of HETDA, es­ti­mated that this project would add 10 bil­lion yuan a year to the value of pro­duc­tion by He­fei’s man­u­fac­tur­ing sec­tor.

The project will in­clude HRG’s eastern China head­quar­ters, a ro­bot man­u­fac­tur­ing plant and a re­search and de­vel­op­ment cen­ter for ro­botic tech­nolo­gies, said Han Jiecai, vice-pres­i­dent of the in­sti­tute.

“The in­dus­trial ro­bot­ics busi­ness will ac­count for one-third of our He­fei project. We be­lieve that the eco­nomic slow­down will ac­tu­ally be an op­por­tu­nity for HRG, as the coun­try is now seek­ing new growth driv­ers,” said Han.

Con­tact the writ­ers at zhulixin@ chi­nadaily.com.cn and wang_ ying@chi­nadaily.com.cn


Com­pa­nies have of­ten turned to robots to per­form tasks in en­vi­ron­ments which are too un­com­fort­able for hu­mans to work in.


Com­pa­nies that have used robots say they help boost prod­uct qual­ity, which in turn helps the or­ga­ni­za­tion be­come more com­pet­i­tive.


He­fei Meil­ing Group, a ma­jor home ap­pli­ances man­u­fac­turer based in He­fei, An­hui prov­ince, has been plan­ning to in­stall more in­dus­trial robots in its re­frig­er­a­tor plants but wor­ries the in­vest­ment re­cov­ery pe­riod might be too long.

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