Robots will Help China Lead as World’s Factory

Published Date : Jul 27, 2015

In the last three decades, China has successfully transformed itself from a poor economy depending on agriculture as their major source of income to a manufacturing powerhouse. The country has emerged in the global landscape as the largest manufacturer of everything ranging from steel to zippers. According to the Global Manufacturing Competitiveness Index, China is the most competitive manufacturer in the world. 

Deloitte is the firm who compiles the index. It believes that China is poised to dominate the global manufacturing scenario for at least the next five years. However, over the time the Chinese manufacturing sector will lose its position in the market as an increasing number of people are becoming increasingly skeptical about how long China can sustain its position as a competitive manufacturer. 

A major reason discouraging China’s competitiveness is the cost incurred on labor. Between 2000 and 2013, the average real wage in China rose at a rate of 11.4%. In terms of consumption, the wages of Chinese workers in 2000 accounted for only one-third of their contemporaries in Mexico, but by 2013, the average wage Chinese workers became 50.3% higher than their counterparts in Mexico, the observation was released in the U.S. Congressional Research Services. 

We can take the example of Nike shoes to illustrate how China is rapidly losing its footing as the leading low cost manufacturing industry. In 2000, China accounted for 40% of Nike shoes produced globally, while Vietnam held only 13% of the market. More than a decade later, the market share of China has decreased to 30%, while Vietnam’s has increased to 42%. 

Industry veterans believe this could well be the beginning of China’s predominance in the global manufacturing industry. However, it is wrong to write-off China so soon. Country has already started embracing robust technological advances. Robots have entered its manufacturing scenario in a big way, and such developments are expected to boost manufacturing in China significantly.