Robots replace China´s workers - Shaun Rein

Shaun Rein

For long China was the world´s working place with thousands of workers toiling away in dirty workshops. But China´s youngsters do not want to work in factories anymore, says business analyst Shaun Rein, author of The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia, to MIT Technology Review. In stead, robots take over.

Shaun Rein:

In the 1990s, service accounted for 50 percent of China’s economy. It now accounts for 68 percent. Chinese workers are now a third as productive as their counterparts in America or Germany. My firm, the China Market Research Group, estimates that it’s now only about 20 percent cheaper to manufacture in China than in the U.S. Some Chinese companies, like the construction manufacturer SANY, are even setting up manufacturing operations in the United States. 

This is why manufacturers have turned their focus to automation (see “The People’s Robots,” page 44), which is one of the fastest-growing sectors in the country, with a growth rate of 59 percent last year. China is now the world’s largest user of industrial robots. 

Foxconn, the maker of iPhones and other gadgets, operates factory-cities that employ upward of 350,000 people, but it is replacing people with robots because it can no longer find the workers it needs. It’s now easier and cheaper for Foxconn to automate than it is to train workers. After 2010, when 14 Foxconn workers committed suicide, the company started an initiative to use robots in its factories’ “3D” positions—dirty, dangerous, and dull. It hopes to reach 30 percent automation by 2020 by installing more than a million robots on its production lines. 

Chinese real estate developer Vanke has invested $20 million to establish a robotics R&D center to reduce its reliance on human labor. Hyundai and its partner Beijing Motors recently completed a factory that will produce over a million cars a year, mostly using robotic assembly. Even restaurants in Shanghai are using robots to make udon noodles because they can’t find enough cooks. 

China won’t lose its manufacturing dominance anytime soon. It has advantages in scale and logistical capabilities. But it will become the leading hub for innovation in manufacturing by adopting and creating robotics faster than any other nation.

More in MIT Technology Review.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Robots are bad news for low-income jobs - Sara Hsu

Sara Hsu

China and especially Foxconn has been taking the lead in replacing labor by robots in manufacturing. Especially for the low-income jobs that might be bad news, says financial analyst Sara Hsu in the Diplomat. Job creating in the right sector is not going fast enough.

Sara Hsu:

The government is attempting to increase the number of robots per 10,000 people from about 36 toward developed-country levels, at about 164 robots per 10,000 people in the U.S., and higher in the case of Germany or Japan. The goal is to expand the use and creation of innovation to become a high-tech hub by 2049. 

This does not have pleasant implications for China’s labor market. The government has stressed that increasing consumption is an important component of the new economy, but without jobs many lower-income individuals well be unable to purchase retail products. 

Furthermore, as the leadership has stressed that China is moving up its value chain, as it sheds low-skilled jobs, inevitably a large body of the workforce will find themselves left out of the economic growth story. This does not make sense for an economy whose comparative advantage is in labor-intensive production. 

Already, China has a problem employing many of its college graduates. There is insufficient job creation in high-skilled manufacturing and the service sector The unemployment rate is even higher for college graduates, who are supposedly high-skilled, than for high school graduates. Those who have a college degree find themselves ill-suited for the labor market, with specializations that do not match most job descriptions. 

An increasing number of companies are planning to move to automated production processes. The switch to robotic labor in manufacturing will only serve to increase unemployment in an economy that is moving out of low-skilled manufacturing and into limbo. Opening up the services sectors such as health and education could be promising, but this is happening at a glacial pace as China’s leadership strives to combat a massive economic slowdown and mounting debt. Until then, workers will continue to feel the pinch as their livelihoods are encroached upon at both ends.

More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more financial analysts at the China Speakers Bureau? Do check out this list.  

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The mental health of migrant workers - Zhang Lijia

+Lijia Zhang 

Migrant workers suffer from a wide range of mental disorders, caused by their working situation, tells author Zhang Lijia at the CNN-website. Her findings are based on recent research by Yu Cheng,Sun Yat-sen University, Guangzhou. More action on the workplace is needed.

Zhang Lijia:

Cheng said he first noticed this issue five years ago when he conducted research on the mental health of sex workers in the region, most of whom worked at factories before turning to prostitution. 

In 2010, the issue made international headlines after a spate of worker suicides at Foxconn, a large electronic manufacturer that assembles many Apple products, making the professor determined to find out the root causes of the workers' mental health problems. 

Loneliness and a sense of isolation were reported to be among the reasons that drove the workers to jump off factory and dormitory roofs. 

Though the focus of Cheng's research was in the southern province of Guangdong, the mental health of migrants is likely to be similar elsewhere in the country. 

Some 260 million Chinese farmers have left their villages and to work in cities, according to the China Labour Bulletin. 

Despite their contribution to China's economic miracle, the social status of these migrant workers remains low... 

The government recently announced plans to relax the control over hukou system in a bid to narrow the gap between rural and urban areas and to help migrants assimilate better into the city life. But the process will be a long and slow one. 

"We just have to pay more attention to mental diseases as they can lead to suicide," said Cheng. 

He recommends compulsory mental health testing in the workplace and a practice he calls "positive psychological intervention" -- setting up hotlines and counseling services and providing workers with more opportunities to socialize.

More at the CNN website.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Guanxi dies or gets into prison; the Fredy Bush case - Wei Gu

Guanxi used to be a key word when foreigners came to China to do business, including business women Fredy Bush, the founder of Nasdaq-listed Xinhua Finance, a successful deal in the tough media industry. Wealth editor Wei Gu explains for the WSJ why the now-jailed tycoon could not survive now times have changed.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

+China Weekly Hangout 

Foreign firms have a hard time in adjusting to the fast changing times in China, where consumers and government rules become more important than guanxi, the connections with the powerful. In the China Weekly Hangout on January 30, 2013, panelist +Richard Brubaker of Collective Responsibility and +Andrew Hupert, expert on conflict management in China, discussed the changing playing field for foreign companies. Moderation: +Fons Tuinstra of the +China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.

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Doubling Apple stores is just not enough - Shaun Rein

Shaun Rein

Battling a slowdown in Apple's China sales by doubling the number of outlets might just not be enough, tells retail analyst Shaun Rein in Bloomberg. Apple is facing “serious political headwinds”.

Bloomberg:

Concerns that Apple’s growth is slowing globally were reinforced by a forecast for sales this quarter that may miss analysts’ predictions by as much as $4.9 billion. In China, where Apple has 11 outlets, the company has been criticized in state-run media over the quality of its after-sales service compared to that provided in the U.S. 

“Doubling stores over two years is simply not enough,” said Shaun Rein, managing director of China Market Research Group in Shanghai. “Their sales growth is really collapsing.” 

Apple is facing “serious political headwinds” that may make it more difficult to get permits to open new stores, Rein said. Cook’s plan is well off the pace set by former head of retail operations Ron Johnson, who set a target of 25 stores by February 2012. 

Apple opened its first Chinese store in Beijing’s Sanlitun district in 2008. Johnson left Apple in 2011 to becomeJ.C. Penney Co. (JCP)’s CEO, a role he was ousted from this month.

More in Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.


+China Weekly Hangout
Many foreign firms fail in China. The China Weekly Hangout discussed in January 30, 2013 a range of failures  with panelist +Richard Brubaker of Collective Responsibility and +Andrew Hupert, expert on conflict management in China. Moderation: +Fons Tuinstra of the +China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.

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Will free unions work at Foxconn? - Zhang Lijia

Zhang Lijia

The Taiwan electronics producer Foxconn has, under pressure from one of its main customers Apple, has allowed its Chinese workers to elect their own unions. But will that work in a country where the government opposes independent organizations, wonders author Zhang Lijia in the BBC.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers request form.

Doing a Foxconn - Bill Dodson

Bill Dodson

Suicide in China has now been linked to the poor working condition at Apple supplier Foxconn. But, as China veteran Bill Dodson discovers at a plant a Suzhou, love might destroy also the lives of workers. From his weblog:

Bill Dodson:

The attempted suicide in his factory comes on the heels of two suicides just a couple weeks before at a factory in Dongguan, Guangdong province. 

“Boy trouble?” I asked. My friend nodded in agreement. “I think so. These young people just can’t cope with disappointment,” he observed. “Now we’re probably going to have to put up nets around the building and bar the windows, just like Foxconn,” he said despairingly.

I know the manager had prided himself on creating a working environment in whcih people for the most part enjoyed coming to work. Changes to prevent suicides would only create a prison-like atmosphere, of course. Still, managing suicides as commentary on the conditions of worker environments or their love lives seems a permanent fixture of doing business in China.

More at Bill Dodson's weblog.

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Are China's authorities starting to listen to revolting workers? - Zhang Lijia

Zhang Lijia

Apple, and its supplier Foxconn, are in the middle of revolts by workers in Beijing, Shenzhen, Wuhan and Wukan, who are standing up for their rights. Former factory worker Zhang Lijia supports their actions, and hope China's government will continue to support those workers, she writes in The Guardian.

Zhang Lijia

I  felt the pain of my fellow workers because I, too, slaved for 10 years at a factory and endured its strict rules. The restrictions at my state-owned factory, however, paled in comparison to those of cold-hearted capitalism. There is labour law that forbids a 16-hour working day, among other malpractices, but it is not forcefully implemented by the local authority. After all, the private or foreign-invested enterprises bring revenues. 

I was very pleased to see the migrant workers beginning to resist. Shortly after Foxconn's suicides, workers from several Japanese-owned Honda factories revolted. They went on strike until their demands for better pay and working conditions were met. In chatrooms on the internet, several Honda workers argued that it would be better to put up a fight than to take one's life. Compared with their fathers, the young workers are savvy about the internet, better educated, more worldly and far more aware of the law and their rights... 

I was relieved and delighted by the approach the authorities have taken in both the Wukan and Wuhan cases: they have clearly recognisednongmin's rising demands for rights and equality. But a soft approach alone isn't enough. I hope China's leaders will really listen to the farmers, opening up more channels for them to express their grievances, and allowing some kind of independent labour union or at least a collective bargaining mechanism to ease the conflicts. And ultimately, they'll have to grant the same rights to those who make gadgets such as the Xbox and iPhone as those who use them.

More in The Guardian.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

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What about your contingency plan? - Bill Dodson

Bill Dodson       

Is your company ready when China explodes, falls into piece, or does both, Bill Dodson wonders on his weblog. What happens in your company when the natives get restless?

Interestingly, most of the rejection has been of Asian companies; expressly, Taiwanese (Foxconn) and Japanese (most recently the car plants in the south whose workers went on strike while Foxconn staff was suicidal; and the rampant protests in Chinese cities against the Japanese in 2005). Mostly, Western companies, which in general tend to pay their workers more than their Asian FDI counterparts and – again, generally – tend to treat their staff with a bit more respect than Asian investors – have gotten off with little more than job-hopping youngsters who will quit and join another company for a 50 RMB raise in salary.
Still, that’s not to say that Western companies should be complacent about social upheaval in China that could affect their operations. Recall the boycotts of French brands and retailers in 2008, when the French government made gestures that drew the ire of Chinese hardliners: Carrefour and Auchan had a tough time of it while thousands of Chinese protesters all but ransacked the hypermarkets. American businesses must remember the ritual stoning of the American embassy in 1999 (oops, we bombed which embassy?) and then again in 2001 (spy planes like us).

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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