Guangdong to spend Rmb1tr on factory automation by 2018

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GUANGDONG, CHINA'S MOST populous province, plans to spend close to Rmb1 trillion (Rmb943bn) between 2015 and 2018 to automate factories. And the provincial capital, Guangzhou, has a goal of automating more than 80% of the city’s manufacturing production by 2020. Between September 2014 and May 2015, Rmb4.2bn has been invested by 505 factories in Dongguan, with plans to replace the equivalent of 30,000 workers with robots.

These ambitious goals are being supported by municipal subsidies of between Rmb200m and Rmb500m each for robot makers, and for factory owners who install them on their production lines. Such incentives will boost factory automation on production lines.

So why are Guangdong factories in such a rush to replace people with robots? Apart from the subsidies on offer, another reason is that the supply of rural migrant labour that these factory owners have depended on for so long is declining.

Guangdong, home to 106 million people, comprises a significant part of China’s manufacturing base. Like most other Chinese manufacturing hubs, labour used for factories in the province has largely come from rural areas outside the main cities, and often from outside the province. Now that the surplus rural labour appears to be declining, the labour supply for factories is struggling to meet demand.

In terms of the share of population, the Chinese city with the most people working outside the city is Guang’an in Sichuan, the birthplace of Deng Xiaoping, where one third of the 4.7m registered population no longer live.

In order to fill the gap left by the declining number of migrant workers, there has been an apparent increase in the number of factories that are opting to automate. One such example is a factory run by Shenzen Evenwin Precision Technology Co, which has started construction on a fully automated factory. The new factory will use 1,000 robots, and the company plans to reduce its current workforce by 90% from 1,800 to 200 people.

One by-product of such reliance upon rural migration in previous years has been the impact upon the villages, towns and cities where workers are from. Some recent media articles have covered the issue of loneliness experienced by the people left behind, particularly in rural villages. It is not clear whether the move towards automation will help to alleviate this situation. What is clear, however, is the changing face of Chinese factories, and the role of automation.

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