China steps towards intelligent manufacturing

China is committing itself to automation. If all goes as per plan, soon robots and automation will be the norm in Chinese factories

Neelima Mahajan

[Photograph by Steve Jurvetson under Creative Commons]

There was a small restaurant in my neighbourhood. It shut down about two months ago. I didn’t give it much thought because frequent renovation or change in ownership is common for restaurants in my neighbourhood. It reopened recently with a new name and completely redone interiors. As I walked past it a few days ago, I couldn’t believe what I had just seen. Inside were two robot waiters holding trays—a far cry from the conveyor belt sushi restaurants that are common in this part of the world.

The robots might very well be just a gimmick to pull in crowds or a genuine attempt to reduce staff costs. My neighbourhood restaurant is actually a late mover in the trend of automation in the hospitality industry. In Shenzhen a space-themed hotel that opened in 2013 has a staff of almost entirely robots—from the bot manning the concierge desk to the one waiting on customers in the coffee shop and many more across the hotel. Restaurants across China have deployed robot waiters and chefs who have mastered cooking everything from dumplings to noodles. Some have even learnt the fine art of slicing noodles.

Even as robot waiters and chefs take over human jobs in some restaurants across China, their bot brethren are taking the manufacturing sector by storm. In 2011 Foxconn, the world’s largest contract manufacturer, announced its intention to deploy one million robots in its factories (and eliminate one million jobs). The first batch of Foxbots, as they have come to be known, was deployed in 2012—rumours are that the next iPhone might be assembled by an army of bots.

Using robots makes perfect sense for Foxconn. Labour costs are rising in China, pushing up the cost of manufacturing (we have seen a manifestation of this in Foxconn’s recent announcement to open 12 manufacturing plants in India where labour costs are considerably lower). And the kind of work done in Foxconn’s factories is hard, precise, repetitive and requires concentration for long hours—best suited for a robot. (On the somewhat ironic though positive side, robots won’t get depressed and commit suicide, something that’s so common in Foxconn’s factories that it has fixed ‘suicide nets’ to prevent people from jumping to death).

The Chinese government is intent on automation too. Earlier this year it announced the grand ‘Made in China 2025’ plan that aims to move the country’s manufacturing sector up the value chain. If all goes as per plan, soon robots and automation will be the norm in Chinese factories. The Chinese government’s plan takes inspiration from Germany’s Industrie 4.0 plan which emphasizes “smart factories [that] use information and communications technologies to digitize their processes and reap huge benefits in the form of improved quality, lower costs, and increased efficiency”.

The focus of the Made in China 2025 plan, as the government says, will be on 10 key high-tech sectors such as high-end robotics, advanced IT, new materials, new energy vehicles, biopharma, aerospace and aviation equipment, etc. It will heavily leverage technologies like cloud computing, the Internet of Things and big data. It aims to create ultimately 40 innovation centres across the country by 2025. Billions of renminbi will be poured into this plan. Clearly the sweatshops of Shenzhen that churned out cheap electronics, clothes, shoes, etc., don’t have a role in the new scheme of things.

A lot still depends on the actual implementation. Opinions are divided on whether China’s industry can take the great leap forward smoothly as planned, or whether it will hurtle towards the final goal. There are several challenges. For instance, many argue that China’s industry is still transitioning from traditional assembly line manufacturing to one that makes more use of technology and automation. But the level of automation required in the Made in China 2025 plan is several steps ahead of the stage it is currently at. There are also issues of different stages of development in different sectors of the industry. And there are challenges related to progress on intellectual property issues and also having the right kind of high-skilled workforce that will be required (not everything can be done by bots after all).

But if all goes as per plan, we’ll soon see a very different face of Chinese manufacturing. Gone will be the days when Made in China was synonymous with cheap and low quality. Gone will be the sweatshops. Gone will be the copycats. Hopefully then, like Germany, China will command respect for high-end manufacturing, technology and innovation.

As China plans to take its manufacturing game several notches higher, the question is: who will take its place as the factory of the world. Is India listening? 

About the author

Neelima Mahajan
Neelima Mahajan

Senior Journalist

Beijing

When I landed in Beijing in 2012, I gave myself six months to either survive China or let it overwhelm me. I hadn’t been here before, yet I jumped at the opportunity to head the management publication of a leading Chinese business school with decidedly global ambitions. I was, after all, intrigued by the question: "What makes Chinese companies tick?"

Settling in wasn't easy with challenges ranging from language and food to biting cold winters and Beijing's infamous smog.

Before I knew it, the six months had become three years. While my decade-long experience in India, with publications like Businessworld, The Times of India and Forbes India, familiarized me with how Indian companies behave and view opportunity, my China stint gave me a completely different worldview. If anything, these three years here have challenged my preconceived notions about the Middle Kingdom.

For instance, the popular perception outside of China is that the state is dominant in the business sector here. I found, much to my surprise, that it is not true. If anything, China’s growth miracle owes its success to private enterprises. And Chinese entrepreneurs go through the same trials and travails as their counterparts elsewhere. So what makes them so successful? How is it that Alibaba’s Jack Ma has built a $251 billion enterprise in just 15 years? How did Pony Ma at Tencent lead his company to such a mammoth scale? I can’t say with certainty that I have fully cracked that question yet, but in my observations so far, a couple of things stand out: thinking big, relentless drive, tenacity , a difference in the way they view and crack opportunities, and loads and loads of spunk.

The other popular notion about China is that Chinese companies are simply clones of their Western counterparts. Once again, it is not entirely true. I have visited both the Google headquarters in Silicon Valley and Baidu’s headquarters in Beijing, and I can say with certainty that Baidu is not a copy of Google.

A third notion that I have seen crumble before my eyes is that China is all about cheap, low-quality products. While I don’t deny that there are cheap, fake products proliferating the market, I would urge you to look at the other side: Chinese companies that are leading the game in innovation. Walk into the innovation center of a Lenovo or a Haier, and you’ll know what I am talking about.

I have an avid interest in multinational company strategy as well as the so-called 'emerging giants'. It is fascinating to see how MNCs are navigating their way around this hard-to-ignore country and also how homegrown giants like Lenovo, Huawei, Alibaba, Baidu and Haier are approaching global markets.

I also have a keen interest in management thought. I have interviewed thought leaders like C.K. Prahalad, Michael Porter, Philip Kotler, Clayton Christensen, Henry Mintzberg, Henry Chesbrough, Marshall Goldsmith and Gary Hamel, and Nobel Prize winners John Nash and Amartya Sen.

Before coming to China, I was an International Visiting Scholar at the University of California Berkeley. There, I explored how publications need to evolve with changes in technology and reader habits, and business journalism in Silicon Valley. I was awarded a Bill and Melinda Gates Foundation fellowship as part of the Africa Reporting Project to write about coffee and climate change in Uganda, Africa.

In 2010, I received the Polestar Award for Excellence in IT and Business Journalism. I have researched and edited two books: Leading with Conviction (Jossey-Bass) by Shalom Saada Saar and Michael Hargrove, and Culture of the Sepulchre (Penguin India) by Madanjeet Singh. The second book is closely linked to my family’s personal history in East Africa.