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How to survive the manufacturing sector shift in China?

· Factories,China,Automation
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Over the last 10 years China has been struggling with two opposite forces, producing always cheaper to fight the decrease of western purchasing power, while dealing with 190% increase on workers’ wages (average min. salary in 2018: 356 USD / month)

On the top of that the manufacturing sector is not as attractive anymore to young Chinese, leading to a shrinking of the labor force. In that context foreign clients and even Chinese factories themselves started to delocalize elsewhere in Asia, looking for cheaper production means.

So, are we experiencing the end of China manufacturing era? Maybe not …

Many factories are now turning to automation to counter manpower issues. For proof the automation assets have more than doubled between 2015 and now. Once reserved to big factories, automation is now democratizing as the equipment’s price drop. Even medium to small factories with a few dozen workers start to invest.

If for some of them it is just a matter of face to own machine and they encounter obstacles with workers qualification, for others it translates in substantial gains.

“Before the all process took several hours to make a box, now with the folding machine it only takes few minutes” owner of a 16-workers decorated cardboard factory, Shantou, Guangdong

Automation not only increases productivity by shortening the lead-time but also results in less quality defects and more standardized finish products.

But more automation also means less customization

And it has been for a long time one of the talents of Chinese factories: being able to produce complex, taylor-made products in a relatively standard manner and big quantities. They can perform quick switch in products according to the demand and the season. Yet they are little by little losing that precious know-how with the departure of their aging workforce.

“Our boss decided not to employ workers over 60 years-old anymore. I don’t know if he realizes that only we have the experience and can teach to younger workers” a 56 years-old worker in a metal crafting factory, MinHou, Fujian

What is the future of small and medium size factories relied on a smart mix of automation and crafting?

Many repetitive and hard tasks are not attractive anymore to young workers who are looking to acquire skills and to develop a career.

As we can now automatize most of the non-qualified tasks why training workers on more specialized and crafting tasks? In that context the system of Master and Apprentice could be revalorized and bring new career perspective to young workers.

Young workers to force new standards

The young generation is not only careful about the job but also the work environment in term of health and safety, ergonomics. So as a domino effect, the new qualified workers could also bring more standardization and professionalization among the factories.

This is a win-win situation as the factories will be able to produce higher added-value goods, while providing more meaningful jobs to workers. As their workforce become more engaged and the production standards rise this will bring more opportunities for innovation.

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