In 2014 Chinese President Xi Jinping called for a "robot revolution" in manufacturing. It's now under way and boosting productivity, but there are adverse consequences.
After decades of growth, rising wages are consuming profits and pushing manufacturing to Southeast Asia. Shanghai's minimum monthly wage, for example, the highest in China, is 2,420 yuan (US$366.62), two and a half times what it was a decade ago.
"They realize you cannot just compete with cheap labor. You have to elevate the manufacturing capabilities as a whole," said Jing Bing Zhang, research director of market intelligence and consulting firm IDC.
An aging demographic also necessitates automation. China's working-age population, people age 15 to 64, is 998 million. It started declining in 2014 and could drop to 800 million by 2050.
According to the International Federation of Robotics, China added 87,000 industrial robots in 2016, slightly below Europe and the United States combined. Chinese growth is forecast to exceed 20 percent annually through 2020.
One example is massive iPhone producer Foxconn, officially known as Hon Hai Precision Industry. Between 2012 and 2016, Foxconn's operating revenues increased slightly, but its headcount declined by almost one-third. More than 400,000 jobs were eliminated as tens of thousands of "Foxbots," factory robots, were deployed. Foxconn is targeting 30 percent automation by 2020.
Droids spray, press, assemble, disassemble, weld, package and track goods. They work 24-7, don't require holidays and do as programmed. They increase efficiency, improve quality and reduce risk.
Chinese companies not only adopt robots, they also manufacture them. A national campaign, Made in China 2025, encourages automated processes and intelligent manufacturing. Last summer Premier Li Keqiang called on domestic companies to make more robots. With local and national government funding and policy support, approximately 3,000 robot makers or solutions providers launched between 2014 and 2016.
"The focus now is to encourage innovation, encourage development of automation and robotics technologies. And also encourage manufacturing companies to adopt robotics in the production line," Zhang said.
Beijing-based Geekplus Robotics develops logistics and warehousing applications, which e-commerce sites, manufacturers, express deliverers, supermarkets, retailers and pharmaceutical companies use to sort, pick and move inventory.