Robot revolution sweeps through China’s factories

Monday, Sep 28, 2015

In China’s factories, the robots are rising.

For decades, manufacturers employed waves of young migrant workers from China’s countryside to work at countless factories in coastal provinces, churning out cheap toys, clothing and electronics that helped power the country’s economic ascent.

Now, factories are rapidly replacing those workers with automation, a pivot that is encouraged by rising wages and new official directives aimed at helping the country move away from low-cost manufacturing as the supply of young, pliant workers shrinks.

With costs rising and profits shrinking, Chinese manufacturers “will all need to face the fact that only by successfully transitioning from the current labor-oriented mode to more automated manufacturing will they be able to survive in the next few years,” said Jan Zhang, an automation expert at IHS Technology in Shanghai.

Shenzhen Rapoo Technology Co is among the companies at ground zero of this transformation. At its factory, orange robot arms work alongside human operators assembling computer mice and keyboards.

“What we are doing here is a revolution” in Chinese manufacturing, said Pboll Deng, Rapoo’s deputy general manager.

The company began its push into automation five years ago. Rapoo installed 80 robots made by Sweden’s ABB Ltd to assemble mice, keyboards and their sub-components. The robots allowed the company to save US$1.6 million each year and trim its workforce to less than 1,000 from a peak of more than 3,000 in 2010.

Such upgrading underscores the grand plans China’s leaders have for industrial robotics. Chinese President Xi Jinping called in a speech last year for a “robot revolution” in a nod to automation’s vital role in raising productivity.

Authorities have announced measures such as subsidies and tax incentives over the past three years to encourage industrial automation as well as development of a homegrown robotics industry.

Some provinces have set up their own “Man for Machine” programs aimed at replacing workers with robots.

Guangdong Province said in March it would invest 943 billion yuan (US$148 billion) to encourage nearly 2,000 large manufacturers to buy robots, the official Xinhua news agency reported. Guangzhou, the provincial capital, aims to have 80 percent of manufacturing automated by 2020.

A relentless surge in wages is adding impetus to the automation revolution. Deng said Rapoo’s wage bill rising 15 to 20 percent a year was one big factor driving its use of robots.

“Frontline workers, their turnover rate is really high. More and more people are unwilling to do repetitive jobs. So these two issues put the manufacturing industry in China under huge pressure,” he said.

China’s auto industry was the trailblazer for automation, but other industries are rapidly adopting the technology as robots become smaller, cheaper and easier to use. It now only takes on average 1.3 years for an industrial robot in China to pay back its investment, down from 11.8 years in 2008, according to Goldman Sachs.

Companies such as electronics maker TCL Corp are using robots to produce higher-value goods. At one factory in Shenzhen, TCL uses 978 machines to produce flat-screen TV panels. At another TCL plant in Hefei, near Shanghai, steel refrigerator frames are bent into shape before being plucked by a blue Yasakawa robot arm that stacks them in neat rows for further assembly.

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