Chinese factories accelerate push for robotics as workforce shrinks

Chinese factories accelerate push for robotics as workforce shrinks

China installed nearly as many robots in its factories last year as the rest of the world, accelerating the automation and consolidation of its manufacturing dominance even as its working-age population shrinks.

Shipments of industrial robots to China in 2021 rose 45% compared to the previous year to more than 243,000, according to new data seen by The Wall Street Journal from the International Federation of Robotics, a robotics industry trade group .

China accounted for just under half of all installations of heavy-duty industrial robots last year, cementing the nation’s status as the No. 1 market. 1 for robot manufacturers worldwide. IFR data shows that China installed almost twice as many new robots as factories across America and Europe.

Part of the explanation for China’s rapid automation is that it is only catching up with wealthier peers. It is the second largest economy in the world behind the United States and manufacturing powerhouses such as Japan, Germany and South Korea in the prevalence of robots on production lines.

The rapid automation also reflects a growing recognition in China that its factories must adapt as the country’s supply of cheap labor shrinks and wages rise.

The United Nations expects India to overtake China as the world’s most populous country as early as next year. China’s population of people between the ages of 20 and 64—the bulk of the workforce—may already have peaked, United Nations projections show, and is expected to fall sharply after 2030. as China’s population ages and birth rates remain low.

By adopting more robots, Chinese factories can fill a widening gap in the labor market and keep costs down, making it less advantageous for Western companies to shift production to other emerging markets or their own home countries.

Since China can no longer rely on a growing workforce to drive economic growth, automation is the best way, according to many economists, to improve the productivity of its workers , which is essential if China is to escape the middle ranks. -income countries.

Data from the Conference Board shows that output per hour worked in China in 2021 will be a quarter of the average of the Group of Seven advanced economies and a fifth of the level in the US Moreover, China’s productivity growth having slowed down in recent years. After rising at an average annual rate of 9% between 2000 and 2010, output per hour worked in China grew by 7.4% per year in the following decade.

“You can’t wait until you run out of people to start dealing with it,” said Andrew Harris, deputy chief economist at Fathom Consulting in London.

Despite trade tensions with the United States and growing Western concerns about perceived overdependence on Chinese manufactured goods, China remains the world’s factory floor, accounting for 29% of global manufacturing, according to UN data.

Automation can help Chinese factories focus more on high-end manufacturing tasks that require precision.


Photo:

Qilai Shen/Bloomberg News

Many younger workers are eschewing factory work for more flexible jobs in China’s expanding services sector, and the country’s long boom in internal migration is ending. About 147 million people were employed in China’s manufacturing sector in 2021, according to International Labor Organization estimates, down from a 2012 peak of 169 million. Over the same period, employment in the services sector rose 32% to an estimated 365 million, according to the ILO.

In addition to helping to ease the pressure of those transitions, automation can help Chinese factories focus more on high-end manufacturing tasks that require more precision than most people can manage, and the robots themselves are becoming cheaper and more adaptable.

Dobot, a China Shenzhen-based maker of small robot arms used in industry and education, has developed a robotic system for a customer in China that manufactures wireless headphones for Apple Inc.

The system uses robotic arms to install magnets in the earphone case, a process that involved four people. The human team could complete about 650 cases in an hour; the robot arms can manage 800, said Xie Junjie, product director at Dobot.

“Automation is an inevitable trend,” he said.

IFR data shows that industrial-robot installations worldwide rose 27% in 2021 from 2020, to 486,800. Growth in shipments in 2020 was little changed compared to the previous year, as the pandemic hampered investment.

Yaskawa’s robotic arm on a production line at a toothbrush factory in China examines the output as an employee.


Photo:

Qilai Shen/Bloomberg News

The US and other parts of the Americas added 49,400 robots in 2021, up 27% for the year, while installations in Europe fell 15% to 78,000.

Although the term “industrial robot” encompasses a range of products, the machines must be programmable, multi-purpose devices used in automated industrial applications to be included in the IFR statistics.

Preliminary data from China shows installations by electronics manufacturers to rise 30% in 2021 as exporters try to keep up with booming Western demand for consumer goods. Other sectors that are significant investors in robotics include car makers and manufacturers of plastics, rubber, metals and machinery. Robot installations in China’s automotive sector were up nearly 90% last year, IFR data shows

Although China’s domestic robotics sector is expanding, most of the industrial robots installed in China last year were made overseas, mainly in Japan.

Manabu Okahisa, who runs the China unit of the Japanese robot maker Yaskawa Electric Corp.

said the speed of China’s robot adoption reflects companies’ willingness to experiment with new technology.

“It’s a manufacturing powerhouse,” he said. “When something new comes along, they quickly try it.”

Xuzhou Construction Machinery Group Co., a state-owned maker of heavy construction machinery such as loaders, concrete mixers and excavators, began testing large-scale automation as early as 2012, said Liu Hui, intelligent manufacturing manager at the company’s bronze machinery. . business.

A major reason for the company’s automation drive is the growing difficulty in attracting workers, said Zou Yajun, the unit’s manufacturing director.

Making a loader before automation required teams of 11 people working two 10-hour shifts to sort around 10,000 components. Now, two workers supervising a robot can do the same job in one shift, Mr. Liu said.

The number of workers on the production line is down 56% from before automation, and the total daily production capacity is 50% higher.

The remaining workers are better paid because they are more skilled, Mr. Liu said. In the past, a welder only needed to know how to weld.

“Now, they need to know the automation technology and how to operate the smart equipment as well as the welding technology,” he said.

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Jay Huang, director of Greater China research at Bernstein, said the economics of China’s shifting labor market and improving robot technology mean China is entering a robot adoption boom. He predicts that China will have between 3.2 million and 4.2 million industrial robots working on production lines by 2030, up from about one million currently.

China’s pandemic experience has highlighted the benefits of automation, he said, as widespread lockdowns have prompted staff shortages that have severely affected factory output.

“The manufacturers have experienced firsthand that if you don’t automate, you can’t produce,” said Mr. Huang.

Just as the United States and other Western countries have begun to question their perceived overdependence on China for manufactured goods, Beijing under Xi Jinping has proposed to reduce China’s dependence on overseas markets. and expanding the share of domestic companies in global supply chains.

Susanne Bieller, secretary general of the IFR, said pressure on the labor market means that robots will be key to achieving that goal as well.

“China can’t do that without automation,” she said.

Many economists consider automation the best way for China to improve the productivity of its workers.


Photo:

Qilai Shen/Bloomberg News

Write to Jason Douglas at jason.douglas@wsj.com

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