Age of the robots

Led by China, a new industrial reality is taking place as more manufacturers turn to automation

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May 8-14, 2017
in Sydney

They are called ‘dark factories’ — buildings where vast armies of robots do the work once done by humans.

In the sprawling manufacturing regions of China, such as Guangdong in the south, dark factories are fast taking over the industrial and manufacturing landscape.

This is the new industrial reality now taking hold as workers are replaced by machines. The rapid rise of industrial robots on assembly lines in China is already having an impact as more and more companies automate.

Analysts at global investment manager Bernstein recently noted that manufacturing jobs are disappearing globally. These jobs are being replaced by robots and China is leading the way.

“China’s manufacturing sector is undergoing significant change,” said Xi Ning, chair professor of robotics and automation at the University of Hong Kong.  “High labor costs have made manufacturing uncompetitive. Many factories are now moving offshore or becoming automated to reduce costs,” he told China Daily Asia Weekly.

“The point is, China does not want to stay a low-cost manufacturing center. It is moving up the ladder to value-added, high-end manufacturing.”

Xi said the impact on labor in China will not be as severe as many people expect, as the workforce is becoming older. “What we have seen in recent decades is automation taking over what are commonly referred to as ‘3D’ jobs — dirty, dull and dangerous.

“What we are seeing today is automation moving into new areas … working with people.”

With a focus on education and high-tech, innovation, and research and development, China is well placed to make the transition, Xi added.

Low-cost manufacturing has moved around Asia for decades to take advantage of its deep pool of low-cost labor, said analysts at Bernstein. This helps drive economic growth in many emerging economies in the region.

However, China is taking a different approach when it comes to dealing with the “mismatch between high-cost employees and low-cost manufacturing”, according to Bernstein.

“It’s simply replacing them (workers) with machines.”

Robot arms weld auto parts in Qingdao, East China’s Shandong province. Credit: Liang Xiaopeng / ImagineChina

Changying Precision Technology Company in Dongguan, Guangdong province, is seen by many analysts as the model for the future of China manufacturing.

One of China’s first unmanned factories, the cell-phone maker has replaced 600 workers with robots. Just 60 people remain in the vast complex to oversee its smooth running and even that number may be reduced further.

With production lines now running around the clock, seven days a week, productivity has increased by 250 percent while product defects have been reduced by 80 percent, the company said.

China is the world’s biggest market for industrial robots, importing 26 percent of the global supply in 2015, according to the International Federation of Robotics (IFR), a Germany-based global industry group.

It aims to become one of the world’s most intensively automated nations by 2020.

This was the challenge set by Wang Ruixiang, president of the China Machinery Industry Federation, at the China International Summit of Robot Industry in Shanghai last year. The Chinese market for industrial robots continues to be strongly influenced by imports.

Domestic competitors are currently increasing their market share significantly, according to the IFR. Within two years, the sales volume posted by Chinese manufacturers has risen from 25 percent in 2013 to the most recent figure of 31 percent.

The government is promoting the rapid expansion of automation, through its Made in China 2025 reform agenda — a national plan to transform China into a world manufacturing powerhouse.

“By the end of 2020, I reckon that the share of the domestic market enjoyed by Chinese robotic manufacturers could well increase to 50 percent,” Qu Daokui, CEO of Siasun Robot and Automation, recently told an IFR CEO Round Table in Munich, Germany.

Already China is acquiring some of the world’s leaders in robot technology.

In two major acquisitions last year, electrical appliance giant Midea paid $5 billion for Germany-based Kuka, one of the world’s top suppliers of robotics. And Zhejiang Wanfeng Technology Development bought the United States-based Paslin, an assembly line robotics manufacturer, for an undisclosed sum.

Lee Boon Keng, associate professor of banking and finance at the Nanyang Business School in Singapore, said China faces growing demographic pressures, as the country’s working age population continues to decline.

“These challenges mean China needs to rapidly increase labor productivity in order to continue its economic development. Greater investment in education is part of the solution. However, firms are also increasing automation — a growing global trend.”

Lee said that while the short-term adjustment may be somewhat trying, the long-term effect of automation is positive for the economy. “The only way an economy can increase its potential output is to increase productivity, and automation in manufacturing is a necessary step.

“More importantly, the technological spillover from automation is wide ranging, especially in the areas of innovation.”

The challenge for China is not the displaced workers due to automation, he said, but how to raise its human capital in a dynamic and competitive global landscape to “create value”.

Despite the challenges, countless manufacturers in China plan to transform their production processes using robotics and automation on an unprecedented scale.

Analysts say in many ways they do not really have a choice.

Human labor in China is no longer as cheap as it once was, especially compared to rival manufacturing hubs such as Vietnam, Thailand and Indonesia. In these countries, factory wages are less than a third of what they are in the manufacturing centers along China’s east coast.

Foxconn, the world’s biggest manufacturer of Apple’s iPhones, has a three-phase plan in place to fully automate its factories using software and in-house robotics units, known as Foxbots.

The Taiwan-based company employs more than 1.5 million people around the world — 1 million of them in the Chinese mainland, where it aims to have 30 percent of its factories fully automated by 2020.

Foxconn told China Daily Asia Weekly it is committed to driving the “advancement of the industry” and contributing to the Made in China 2025 strategy.

It said automation technology and robotic engineering will play an important part in “realizing that strategy”.

“As a technology company that continues to manufacture, rather than just operating as a manufacturing company, Foxconn has been investing in the automation of many of the manufacturing tasks associated with our operations throughout our facilities in China for many years,” the company said.

“Our robotics and automation efforts are driven by the needs of each manufacturing process and our goal of continuously enhancing the quality of our products.”

Foxconn said that automation and other innovative technologies are being applied in all of its facilities to maximize efficiency and to carry out repetitive tasks.

And through training, the company said, employees can focus on higher value-added elements in the manufacturing process, such as research and development, and quality control.

Foxconn said the value of automation is far more than cost savings and it is “not possible to quantify the benefits in cost savings only, especially in the initial phases of implementation”.

“For instance, automation also supports our goal of continuously enhancing the quality of our products while also maximizing efficiency and it enhances our ability to adopt lean manufacturing and production, which improves our overall waste and gas emissions capacity.”

Foxconn said it takes a “long-term view” toward the research and development and application of automation and robotic engineering in the manufacturing process.

“As our manufacturing processes and products become more technologically advanced, automation is playing an increasingly important role in our operations.

“As part of our long-term growth strategy, we will continue to use both manpower and automation in our manufacturing operations, and we expect to continue to maintain significant employee levels in China and throughout our global operations,” Foxconn said.

Southeast Asia braces for change Fresh approach required from policymakers to seize opportunities as automation set to transform the garment and footwear industries

May 8-14, 2017
in Sydney

Some 9 million people, mostly young women, employed in the textile, garment and footwear industries in Southeast Asia are facing an uncertain future from the advance of robot technology.

They work in poorly lit factories on long assembly lines where the work is dirty, boring and repetitive.

Badly paid, overworked and susceptible to injuries ranging from lung ailments to lost fingers, they produce garments and footwear for some of the biggest brand names in the world.

As automation takes over more and more jobs in all sectors of the global economy, these workers face the prospect of being replaced by automated assembly lines or ‘sewbots’.

Even if automation in garment and shoe factories does not happen immediately, it is on the horizon, and Southeast Asia should be prepared.

The International Labour Organization (ILO) is urging the 10-member Association of Southeast Asian Nations (ASEAN) to start planning now to diversify to “avoid considerable setbacks in development”.

In a report earlier this year, the ILO said companies are attracted to automated technology because of “competitive pricing and quality, and by the mitigation of reputational risk”.

Gary Rynhart, a senior specialist on employers’ activities in Southeast Asia and the Pacific for the ILO, said “technology will get rid of a lot of dirty and dangerous jobs … so that is a plus.

“But it will require a fresh approach by countries in the region to seize new opportunities,” he told China Daily Asia Weekly.

“The worry is we don’t see a lot of that urgency from policymakers in the ASEAN region. The exception, however, is Singapore.”

Automation has become a major contributor to Singapore’s economic growth, said Walter Theseira, a senior lecturer of economics at the Singapore University of Social Sciences.

For more than two decades, the city-state’s economic expansion was driven primarily by immigration, particularly of medium and lower skilled workers, he said. But as the technology revolution began to spread around the world, Singapore realized it needed to move into areas of industry that required a highly skilled workforce.

According to Theseira, two factors are driving automation in Singapore.

“Growth driven by lower-skilled immigration has been linked to low productivity and is unsustainable because of the strain on infrastructure and integration with the resident population. Automation is seen as a solution to this problem.

“The export-oriented sectors in Singapore, such as electronics, biomedical and petrochemical manufacturing, are highly productive and use the latest technology,” he said.

Meanwhile, there is the “more important problem” concerning sectors which are less productive yet resistant to change. These are the industries that cater more to Singapore’s domestic market, including construction, consumer services and the food and beverage sector.

“These sectors are dominated by small and medium enterprises, do not use significant amounts of technology, and are used to relying on lower cost, low- and medium-skilled foreign workers,” Theseira said.

“There is potential demand there, but there needs to be some policy coordination to convince these sectors to adapt and change.”

Few would dispute that automation brings increased efficiency and productivity. A recent ILO study said that over half of all jobs in five Southeast Asian countries — Thailand, the Philippines, Vietnam, Indonesia and Cambodia — could be automated in the next decade or two.

Women working at a garment workshop on the outskirts of Hanoi. Over half of all jobs in five Southeast Asian countries, including Vietnam, could be automated in the next decade or two. Credit: AFP

While that may sound alarming, Rynhart of the ILO made the point that technology is “always replacing jobs, changing them, making them better or creating entirely new jobs”.

“If you currently work in mobile phone technology, social media or a related sector, then your job didn’t exist 10 or at most 15 years ago,” he said.

“There always has been the threat of technological upheaval in the workplace along with the naysayers and Luddites that went with it — from the industrial revolution to the move from horse to automobile.”

Rynhart cited the telephone, commercial airplanes, even modern kitchens, saying they all came along in a transformative way, yet the “sun still came up in the morning”.

“Societies progressed. And job quality improved as technology replaced the jobs we didn’t want to do or need to do,” he said. “So it’s hardly surprising when some people shrug their shoulders and say: Why the fuss now?”

But he went on to explain that the difference today is threefold.

“First, speed. The lag between the inventive and innovation processes and commercialization (from patent to operation) has narrowed considerably,” he said.

“Technologies are diffusing much faster now than they have in the past. It took the telephone 75 years to reach 50 million users. Angry Birds took 35 days to reach that number,” he said, referring to the popular mobile game franchise.

“Or think of Uber (established 2009) or Airbnb (established 2008) as two new major disruptive forces of very established sectors — transport and hospitality.”

Second is the pervasive and transformative nature of new technologies.

“Technologies such as 3D printing can be deployed everywhere from high-tech industries such as aerospace to build jet engines, to back garden sheds to produce gardening equipment.”

He said this technology has now evolved to the extent that it can produce almost any component using metal, plastic, mixed material and even human tissue.

The third difference now, Rynhart said, is the potential impact on developing countries.

“In the manufacturing sector, many enterprises were reluctant to use industrial robots because they were seen as expensive, lacking reusability (as they were custom made) and having a short product life cycle. Critically, it was still possible to find labor with wages low enough to do an equivalent robotic job,” he said. “All of those factors have now changed.”

Recent advances in technology have cut the costs of robots considerably and increased their capabilities, as a new generation of reprogrammable, multipurpose machines comes into service. By some estimates, an investment in industrial robots can be repaid in less than two years.

This technological transformation will have an impact on developing countries in Southeast Asia, especially in those low-end, labor-intensive sectors such as footware, clothing and textiles, according to the ILO.

It said technology will be adopted “increasingly” as the cost declines and innovations become accessible to even small enterprises.

“During previous incarnations of technological change — from the industrial revolution through to more recent iterations — new manufacturing technologies mainly benefited low- and medium-skilled workers by simplifying the tasks workers had to perform,” said Rynhart.

“Technological progress did not induce a long-term rise in unemployment as production increased drastically, allowing prices to fall and consumers to buy more goods and thus creating job growth in many sectors of the economy.

“That mass employment manufacturing model enabled hundreds of millions of workers in postwar Japan, Korea and more recently and most spectacularly in China to move first from farm to factory, and then from factory into higher value services jobs.”

This model has been copied by other economies as the development route out of poverty, Rynhart said. But it seems it is no longer the template it once was, which means countries that compete on low-wage labor need to reposition themselves.

“Price advantage is no longer enough,” he said. “Policymakers need to create a more conducive environment that leads to greater human capital investment, research and development, and high-value production. No easy thing.”

Hawking highlights huge AI risks The eminent scientist believes the rise of super-intelligence poses an existential threat to humans

May 8-14, 2017

Imagine a space journey where you travel with the artificial intelligence (AI) robot Hal, which is known to be foolproof and incapable of error. Putting Hal in charge of the flight, you are able to literally be asleep at the wheel.

Suddenly the robot reports that an antenna control device has malfunctioned, but you find nothing wrong and a comprehensive check indicates that Hal has made an error. Hal, however, insists that the problem exists and believes it is due to human error.

A conflict between man and an AI robot ensues.

You decide to disconnect him in case of any emergency. Hal, however, is determined to make a preemptive strike.

This is the scenario of the legendary science fiction film, 2001: A Space Odyssey.

But with the swift development of technology, an AI robot like Hal that can rival or even outcompete human beings is maybe closer to reality than you think, and it is something that Stephen Hawking is worried about.

The renowned scientist reiterated his warning about the risks posed by AI at a technology conference in Beijing on April 27. And his views were echoed by other participants.

“The development of full AI could spell the end of the human race,” said Hawking, who is credited with pushing the boundaries of technology and science in pioneering ways.

“AI would take off on its own, and redesign itself at an ever-increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded,” he said in a rare video speech to a Chinese audience.

According to Hawking, there is no real difference between what can be achieved by a biological brain, and what can be achieved by a computer. As a result, the real question is how to strike a balance between reaping AI’s benefits while avoiding its pitfalls.

Kai-Fu Lee, CEO of the venture capital firm and technology incubator Sinovation Ventures, also expressed concern that clever machines can undertake work currently done by humans, and destroy millions of jobs.

“More people will move toward the service industry where love and hospitality are needed to perform good jobs, such as teachers and caregivers. AI-enabled robots cannot deliver such subtle feelings,” the former Google China chief said.

“Machines also can’t replace the most talented people in a profession, and those in the art industry,” he added.

Still, more efforts are called for to adapt ourselves to a rapidly changing era when useful knowledge can be irrelevant in seconds, Lee said.

Zhang Yaqin, president of search engine Baidu, warned a group of college students that “the machine is learning and you must learn faster”.

Undoubtedly, AI is empowering new innovations such as autonomous vehicles, from drones to self-driving cars. But it also makes it possible to create lethal intelligent autonomous weapons.

Also, more research is needed to decide how a self-driving car may, in an emergency, have to decide between the minor risk of a major accident, and the major probability of a minor accident, experts said.

Privacy concern also abounds given that cutting-edge AI is becoming increasingly capable of interpreting large surveillance datasets.

Lee said tech heavyweights boast endless data, which enables them to swap user privacy for profits. It is quite hard for them to resist such attempts. Once big tech companies cannot restrain themselves, it will also stifle innovation from startups.

Hawking said that although the companies are currently using the data only for statistical purposes, the use of any personal information should be banned.

“It would help protect privacy, if all material on the Internet were encrypted by quantum cryptography with a code that the Internet companies could not break in a reasonable time. But the security services would object to this,” he said.

In the long term, the ultimate concern is the potential loss of control of AI systems. That is, the rise of super-intelligences that do not act in accordance with human wishes, Hawking added.

“Success in creating AI could be the biggest event in the history of civilization. But it could also be the last, unless we learn how to avoid the risks,” the scientist said.

Robot vendors track down customers Internet connectivity helps retailers target consumers and manufacturers to upgrade production methods

May 8-14, 2017
in Guangzhou

Robot hawkers and smart automated vendors, anyone?

They can approach passers-by, scan them for potential buyers and then make a customized sales pitch.

Such scenes may no longer belong to the realm of fantasy but become a reality sooner than later, according to experts driving innovative Internet-based technologies in China.

Unlike traditional vending machines found in public areas, an intelligent vending robot can interact with consumers and understand what each of them really needs.

“The vending robot can help companies better adjust their product mix and build a more market-oriented business by mining data on consumer habits,” said Dai Jiabao, founder and CEO of Guangdong Magic Wand Technology Co.

Magic Wand has developed an intelligent vending machine that will be tested at major public areas in Guangzhou, capital of the southern Guangdong province, according to Dai.

“Traditional retail companies need to introduce more Internet-based technologies to upgrade their businesses. As a company engaged in research and development of intelligent facilities, we are willing to use the booming Internet-based technologies to help traditional manufacturers to boost their sales.”

A smart Magic Wand vendor in the southern city of Guangzhou. Credit: Zhu Yuanbin / For China Daily

According to Dai, Magic Wand will provide customized services for retailers, aiming to expand the use of smart robots in major industrial areas.

The company has already signed purchasing agreements with a number of domestic companies in the fast-moving consumer goods, or FMCG, industry, according to Dai.

“Internet-based technologies, which are used by intelligent vending machines, will help revitalize the manufacturing and retail sectors,” said Dai.

A growing number of traditional manufacturing businesses in the Pearl River Delta have already harnessed Internet-based technologies to upgrade themselves, especially their sales operations.

Stephen Tai, founder and chairman of Four Seas Group, a Hong Kong-based food company, said Internet-based technologies have opened up new opportunities for the traditional manufacturing sector, driving the industry from low-end processing to advanced and intelligent manufacturing.

“We opened online trading services last year, which were well combined with our traditional business,” said Tai.

Four Seas has 20 production plants in Hong Kong and the Chinese mainland, which distribute over 5,000 food products sourced from over 30 countries and regions.

In Guangzhou alone, Four Seas has opened 10 food-processing plants, including a subsidiary dedicated to international trade and e-commerce.

“The booming Internet-based technologies have helped expand our sales and product varieties. As a traditional food company, we are bracing for new challenges and opportunities in the Internet era,” said Tai.

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