月份：2020年1月

Another new article authored by Gao Feng Advisory’s CEO Dr. Edward Tse was published, where he discussed china’s shift into industrial automation. Dr. Tse said robots will become a strategically important constituent in China’s labor force going forward.

China’s labor market is evolving from a mass of unskilled labor into one featuring an increasingly sophisticated labor force. Now, it is transforming as automation and the use of robotics in manufacturing or logistics sectors are rising fast.

Cheap labor has long been considered as one of the main factors propelling the country to the status of the word’s factory, which shifts global supply chains and attracts thousands of companies in other countries moving their plants to China. However, economic growth during the past 20 years has led to a rapid increase in wages. China’s average wage increased by 8.2 percent annually in the decade, much higher than the global growth rate, according to the International Labor Organization report. In the report, it also mentioned the average real wages of China has almost doubled between 2008 and 2017. That’s the result of an economy that’s been growing by high single digits to double digits annually for two decades.

In 2008, Beijing updated its Labor Contract Law to improve the labor contract system by defining labor right, reducing working hours and improving the welfare benefits and working environment. Labor conditions have largely been improved since that time. At the same time, there are an oversupply of educated workers and a shrinking low-cost labor force as more high school graduates go on to obtain university degrees. With increased labor union activities, better wages and higher levels of education improving the plight of workers, manufacturing becomes less profitable before the country can shift to less labor-intensive and more value-added industries.

“Made in China 2025”, a strategic plan of the People’s Republic of China issued by Premier Li Keqiang and his cabinet in May 2015, aims at rapidly moving from being a low-end manufacturer to becoming a high-end and high-tech producer of goods. Under the plan, the number of industrial robotics operating in China is targeted to expand tenfold to 1.8 million units by 2025. As part of its effort to upgrade its manufacturing sector, the Chinese government started a campaign in 2014 with the overall aim to gradually replace manual labor with robots, with the heavily industrialized provinces of Jiangsu, Zhejiang, and Guangdong among those introducing the new technology on a massive scale.

According to the World Robotics 2019 report released by International Federation of Robotics (IFR), China has been the world’s largest industrial robot market since 2013. The city government of Dongguan, in the heart of the Guangdong province that is known as China’s industrial and export hub, has allocated 385 million yuan (US$56.8 million) to boost automation in factories last year alone. Foxconn, the Taiwanese electronics giant which makes half of the world’s iPhones, plans to fully automate 30 per cent of its production by 2020. In the logistics sector, robotics is also changing the whole industry. Cainiao, one of China’s leading logistics players (~63% owned by Alibaba), has opened China’s largest and most efficient robot-operated warehouse in 2018, with the application of nearly 700 robots, including robotic arms and unmanned drones.

China began its economic ascent as the “world’s factory” over the past several decades by taking advantage of cheap labor. Now, a robot revolution is under way and robots will become a strategically important constituent in China’s labor force going forward.

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This is a new article authored by Gao Feng Advisory’s CEO Dr. Edward Tse, in which he discusses the culture of “working hard” —”996″ schedule of the Chinese businesses.

After decades of tremendous growth, China is now an upper-middle-income nation, according to the World Bank. Its reputation as an innovative economy is increasing. Along with its economic growth, China’s productivity too has been growing well.

The growth of China’s productivity during the last few decades is mainly due to the opening-up and reform policy implemented from 1978 onwards, its labor intensive exports driven manufacturing and investment-led growth model underpinned this extraordinary progress. Yet some strains associated with that approach have become evident in the last one decade or so as these economic drivers seem to be running out of steam.

China stepped into the innovation wave after the wireless internet (together with smart phones) became prevalent. Chinese entrepreneurs have leveraged this technology to create a range of new business models and products that cater to the evolving consumer and business needs. In the race against time and in the midst of hyper-intensive competition, Chinese entrepreneurs have to be fast, agile and adaptive in order to remain ahead of others. They often don’t mind using the market as a test bed for experimentation as they fine-tune their business models along the way. Quick experimentation often becomes the core part of the very culture of Chinese companies. Speed, rhythm, intensity and multi-tasking have become parts of the DNA of many Chinese companies. On top of this, evolving government policies and regulations are often a source of uncertainty and they keep Chinese entrepreneurs persistently and highly alert and vigilant.

As a result, many Chinese businesses have formed a culture of “working hard.” This is the now widely known as “996” schedule – which means working from 9am to 9pm, six days a week. This has become common place among Chinese entrepreneurs, particularly among large internet-based businesses. The 996 schedule was initially applied in order to improve overall productivity of companies by increasing working hours.

Source: Baidu

However, the notion of “996” has become somewhat controversial. Alibaba’s founder Jack Ma is a vocal supporter of the gruelling working hours commonplace in China’s tech and internet industry. He once said at an internal meeting that this is, “a huge blessing that many companies and employees do not have the opportunity to have,” according to a transcript published on Alibaba’s official WeChat account. Richard Liu, CEO of JD.com, a leading e-commerce company, responded to the recent layoffs saying that JD.com would never force employees to work in a 995 or 996 schedule, but every staff of JD.com must “have a competitive spirit!”

Besides the 996 schedule, many Chinese companies, including both state-owned enterprises (SOEs) and privately-owned enterprises (POEs), are actively seeking multiple ways of improving productivity. More and more companies, especially SOEs and some internet companies, are beginning to provide free meals to their employees in order to reduce the amount of time spent on purchasing and eating meals. Moreover, employees’ dormitories and free buses are also being offered as perks to simplify the lives of employees and make sure they can get to work on time. In some companies, a military-style management has also been deployed to improve the efficiency and productivity of their staff’s work.

The “working hard” culture of the Chinese businesses probably won’t go away any time soon.