The hottest robot industry strategy in China

2022-09-23
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China's robot industry strategy at the end of March this year, apple, the world's largest market capitalization, signed an agreement with Foxconn, the world's largest contract manufacturer, agreeing to improve working hours, raise wages, increase union representatives, and improve health and safety conditions for 1.2 million workers in Chinese assembly plants that produce iPhones, iPads, and other products

many observers are gratified that Chinese manufacturers have to shorten working hours per week and improve working conditions, and are happy to see workers' wages rise. Others regard this major concession made by large multinational companies to workers as a good story. However, critics believe that the agreement is just a face saving measure for enterprises to undertake social responsibilities

all these views fail to understand the broader importance of this agreement. We are witnessing a major shift in China's industrial strategy. To understand the reason, it is necessary to recall Foxconn's statement in August last year that the significance of deploying 1million industrial robots in assembly plants in the next three years is more important through the use of composite materials and dispensing design (according to the data of the International Federation of robotics, the total number of industrial robots used worldwide is close to 1.1 million)

Foxconn has every reason to implement the robot strategy. Replacing labor with capital can solve one of the biggest problems of the company. Workers are engaged in boring and repetitive work with high intensity

but given that these robots will replace ordinary Chinese workers, why does the Chinese government agree to this strategy? Some people may think that the Chinese government will participate in the conception of any such industrial strategy, especially Foxconn, which is a Taiwan funded enterprise

the answer lies in China's population development path, which has brought huge and unrecognized challenges to western society

Chinese economic planners understand that the number of people entering the labor market each year will soon peak. Due to China's long-standing cultural tradition of favoring boys over girls (which is exacerbated by China's family planning policy), the peak employment period of young women has ended. So far, they have been the main force of assembly line operations in China's coastal provinces

but

both the Chinese leadership and the people are keenly aware that China's population may grow old before it gets rich. But the law of population can hardly be changed. However, what can be changed is the income level created by an economy and its overall growth path

the Chinese government is betting on this. It hopes to see wage growth, not only to promote domestic consumption, but also because it will mean that Chinese enterprises will produce more advanced products for the global market. In the final price of iPhone or iPad, the labor cost in China is estimated to account for only 1% - 3%. A substantial increase in this extremely low proportion is China's goal and the core of the strategic aspirations of all its industrial sectors. Operating large-scale assembly plants is no longer seen as a viable way to ensure the future of China's economy. To achieve this goal, China needs well-trained, well paid and motivated workers. Using robots to do heavy and low-level work is in line with this strategy

it is worth noting that few people in the western world understand this lofty ambition of China. While we are uneasy about China's low salary level, the real challenge lies entirely elsewhere. China is determined to raise wages by raising the level of education and relying more on capital intensive production. The West has not yet begun to recognize the impact of China's rapid implementation of automation

when emerging market economies begin to produce more and more advanced products, there was a debate in academia nearly a decade ago about the impact on developed countries, including economists such as Nobel laureate Paul Samuelson. But they did not expect this to happen for decades

the West must end 1. The complacency of the universal experimental machine about its ability to create human capital. The West urgently needs measures to attract talents, strengthen primary and secondary school and university education, and enterprise vocational training. For Europe, this requires new policies to attract skilled immigrants and revitalize university education. Every time we add a robot to Foxconn's assembly line, we need to respond more urgently

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