Is China's Robot Revolution Good or Bad?

Aug 09, 2016

China is making sure that it maintains the title of being the world's biggest manufacturer of automation as the country's robot revolution brings both positive and negative effects to the economy.

On Wednesday, the Wall Street Journal took notice of the growing strength of Chinese manufacturers thanks to automated machines we now know as 'robots.'

While the progress seems to be good for companies like Foxconn as well as robot manufacturers who saw an increase in sales, some media outlets like Reuters believe that this robot revolution would also fuel the country's growing debt crisis.

Benefits
In this modern day of technological advances, artificial intelligence (AI) can be quite a sight especially for companies who wish to increase their sales and productivity.

Because of this, China sees some of the most obvious benefits of automation in the manufacturing industry which includes the efficiency in the production process and the minimized cost of manpower.

Since robots work faster and more efficiently, there is a very small margin of error especially for manufacturers like Foxconn which has been considered as the bellwether of the industry.

In fact, the company that largely assembles Apple's iPhones decided to purchase industrial robots and make use of them in production at its biggest plant in the province of Kunshan near Shanghai.

As expected, many companies followed suit and added to the already high number of robot-powered manufacturers in China which the International Federation of Robotics pegged to comprise 25 percent of the world's industrial robots.

Disadvantages
But with great advancement comes certain sacrifices particularly for human resources and the country's economy.

Foxconn is also the best example of this after it decided to let go of 60,000 out of its 110,000 employees working in Kunshan, the news unveiled just a couple of years after Foxconn increased its employees' salaries by 25 percent in 2012.

Aside from that, some restaurants in China including one that was featured by the WSJ in July has also replaced human waiters with automated machines because apparently, that is what's trendy.

"Young people like to pursue what's new, and robots are a fashionable, modern style of service," explained Wang Peixin, the owner of the Together Restaurant located in central Beijing.

Of course, there is the issue of debts.

According to a Reuters report, China's robotics rush can result in a worse debt scenario especially for small to medium enterprises (SME).

"Hero," the Wuhu Hands On Café's automated waiter, for example, cost Wuhu a staggering 2.2 billion yuan which amounts to about $332 million.

Spending amount could have been worth it if Hero is bringing in lots of customers but that is far from the real situation in the medium-sized Chinese city.

"Loads of infrastructure-investing companies are exhausting every means they can get to get money," Bohai Trust's Li Yujian explained, highlighting the country's growing problem in debt.

Source: YIBADA English