What do you do if you’re faced with increasing labor costs and a shortage of workers? If you’re one Chinese province, you invest in workers that never demand raises and are willing to work around the clock.
Over the next five years, authorities in the eastern province of Zhejiang, a manufacturing hub, will invest some 500 billion yuan ($82 billion) to help 5,000 companies per year swap humans for machines, China Daily reports. Labor costs have been rising almost 16% annually in the province, and switching over to machines could trim the need for 700,000 jobs, according to the Zhejiang Economic and Information Commission. Of course, robot producers are quick to point out that using their products doesn’t necessarily mean job cuts. “Replacing workers with robots in dangerous and unhealthy working environments and using them for more creative jobs will be an inevitable choice for China’s manufacturing sector,” said Li Gang, China robotics head at the Zurich-based industrial robot producer ABB.
As standards of living rise and its working-age population shrinks, China has been steadily losing its labor cost advantage to less developed countries like Bangladesh and Cambodia. As Quartz has reported, China has said it wants to become a world leader in robotics, with companies now focusing on both service and industrial robots. Foreign manufacturers like iPhone manufacturer Foxconn, which has been plagued by a series of labor scandals, has announced plans to add more than one million robots to its workforce. It still has a long way to go, though, as only about 20,000 are currently in use.
Zhejiang’s progress in its attempts to switch from people to machines may serve as a bellwether for nationwide efforts.While the financial pledge seems robust, automating workforces isn’t easy: it will take many years and huge financial outlays for China to catch up with advanced robot technology from the likes of Japan, and the machines carry their own downside. “If your orders decrease, you can lay off workers,” Tim Li, of Taiwanese PC maker Quanta Computer, told the Wall Street Journal last month. “You can’t lay off robots.”