Will China lose its status as the “world’s factory” in 2022?
Chinese young people’s enthusiasm for manufacturing is declining.
Dong Sheng is the boss of Guangzhou Renyi Labor Dispatch Co., Ltd. In 2006, he just entered the labor agency industry. At that time, companies came to select workers, “as many as they want.” But starting from the year before last, recruiting workers has become more difficult every year. Last year, we could recruit more than 200 people a day. At the end of April this year, this number dropped to about 70 people.
“2020 Migrant Workers Monitoring Survey Report”, according to this report, the number of migrant workers in China in 2020 was 285.6 million, a decrease of 5.17 million compared with 2019, accounting for 27.3% in the manufacturing sector . In response to this report from the Bureau of Statistics, economic expert Ma Xinyuan said: “Young people are very clear-headed. They like freedom and do not like the working atmosphere in factories. This situation is not optimistic. By 2022, our status as the world’s factory may not be guaranteed.”
Young people advocate freedom more, pay more attention to personal life experience, and care more about the quality of life. Compared with the boring, repetitive and simple manual labor in manufacturing factories, Young people prefer free emerging careers such as food delivery, express delivery, live broadcasting, and self-media. The factory owner said: “We no longer recruit young people. Even if we do, they will leave after less than a month. When young people come, they will look around and look around. Among the 20 people who are willing to stay and work in the end, Not one.”
Japan’s Daiwa Securities even predicted that China will lose its status as the “world’s factory” by 2022 at the latest.
From 2008 to 2018, the average annual growth rate of the number of migrant workers in China’s manufacturing industry was -2.84%, with more young people turning to emerging service industries such as takeout, taxi-hailing, express delivery, and live broadcasting. Chen Chun (pseudonym), a native of Liaoning, is in his early 20s and just came to Shenzhen to become an express driver. In his opinion, the work of driving is free, flexible and much easier than working as an apprentice in a factory.
Made in China has reached a critical point of change, and the history of having a large amount of cheap labor has been turned over. On April 28, the British “Financial Times” reported that China’s seventh national census may result in a total population of less than 1.4 billion. At present, the deep aging population is approaching, the demographic dividend window is closed, and the costs of land, raw materials, shipping logistics, etc. are all rising, which is pushing Chinese manufacturing companies into a new situation.
The international environment is also quite complex. The anti-globalization trend and the COVID-19 epidemic have prompted developed countries such as Europe, the United States, and Japan to re-examine the global layout of industrial chains, and have introduced subsidy policies to encourage companies to relocate manufacturing industries. China’s status as the “world’s factory” is increasingly challenged by Southeast Asian countries such as Thailand, the Philippines, Vietnam, Indonesia, Laos, Cambodia and Myanmar, and even South American countries led by Mexico.
At the end of March, data from the Ministry of Industry and Information Technology showed that the proportion of China’s manufacturing industry in GDP has dropped from 32.5% in 2006 to about 27% in 2019. The severe situation requires attention. Many experts said that the decline in the proportion of manufacturing will not only drag down the current economic growth and affect urban employment, but will also bring industrial safety risks and weaken China’s economic ability to resist risks and international competition. force.
Why can’t China keep these labor-intensive factories?
The core factor is the rise in labor costs! Data released by the National Bureau of Statistics on April 30 show that in 2020, the average monthly income of migrant workers engaged in manufacturing was 4,096 yuan, an increase of 138 yuan or 3.5% over the previous year, making it the fastest-growing industry. Compared with 2006, the average monthly income of migrant workers who came to cities for work and business was only 966 yuan.
After the Spring Festival this year, a subsidiary of a Zhejiang Electric Co., Ltd. did not recruit any general workers.
In order to catch up with the goods, administrative staff had to go to the workshop to work overtime. In March alone, they worked 29 overtime days. Chairman Li Zhixiong lamented: “Many provinces that used to export large populations are now unable to export. Now the proportion of non-locals in Wenzhou is getting smaller and smaller. People have been working for ten or twenty years, and when their children start high school or college, they No more coming out.”
Many times, employers are not willing to raise wages to recruit employees. In Qidong, Jiangsu, Zhao Xiao’s (pseudonym) father runs a small-scale marble processing factory. Zhao Xiao posted a job recruitment post online, setting the target age between 30 and 50 years old, and offered a monthly salary of 7,500 yuan. With experience, the salary can be increased. But after recruiting for more than half a year, there were only a few suitable candidates.
Factories that raise wages excessively will face an unprofitable dilemma. At the same time, young people’s concepts of career selection are also changing. In recent years, the growing environment of China’s new generation of young people has been greatly improved. Rural children no longer want to be engaged in high-intensity overtime work, low welfare guarantees, simple working environments, and ordinary manufacturing jobs with assembly lines and screws like their parents did. Manufacturing is becoming less attractive to young people.
In this case, the advantage of economically underdeveloped countries in undertaking the transfer of China’s manufacturing industry has become prominent.
The year before last, some insiders inspected Uzbekistan’s manufacturing investment environment: A Chinese company��Investment in the local area enjoys preferential policies in terms of land, factory buildings, taxation, etc., more than 20 engineers are stationed, and a large number of local employees are hired. Each person’s monthly salary is around 1,000 yuan, and the net profit for a year can reach 200 to 300 million yuan.
“They are very capable and work overtime every day, no problem.” Nowadays, the salary of ordinary workers in Wenzhou does not reach 6,000 yuan, and it is already difficult to recruit people who are willing to work. In India, the monthly salary per person is only 600-800 yuan. China can no longer compete with Vietnam, India and other countries for the “demographic dividend”.
It is worth noting that manufacturing has always been the foundation of China’s real economy. The country’s 3.27 million manufacturing companies employ 105 million people, accounting for 27.3% of total employment, ranking first among all industries. China’s most competitive industry is manufacturing. The decline in the proportion of manufacturing will definitely have a great impact on the competitiveness of the entire country. Referring to international experience, even in the United States, if the proportion of manufacturing is too low, it will indeed create a series of risks.
Digital transformation, leanness, and fewer people are the way out for the manufacturing industry?
Experts in the industry believe that in order to achieve manufacturing labor productivity reaching about two-thirds of the level of developed countries, we cannot count on population growth and can only rely on intelligent manufacturing.
Building unmanned factories and realizing industrial automation are the core to solving labor problems, reducing industrial production costs, and improving competitiveness with other developing countries; improving quality control capabilities and product quality through intelligent manufacturing can also promote product quality improvement , in line with European and American countries.
On April 14, the Ministry of Industry and Information Technology released the “14th Five-Year Plan for Intelligent Manufacturing Development (Draft for Comments)”, proposing that by 2025, more than 2,000 new technology application intelligent scenarios, more than 1,000 intelligent workshops, and 100 More than one benchmark smart factory will lead the development of the industry, and key enterprises in key industries will initially realize intelligent transformation; by 2035, manufacturing enterprises above designated size will fully implement digitalization.
Since 2015, China has successively selected more than 200 smart manufacturing pilot demonstration projects in nearly 100 industries, and the exploration has achieved initial results. Changhong Intelligent Manufacturing Industrial Park is one of them. This industrial park, which was built with an investment of approximately 5.5 billion yuan, covers smart display terminals, smart energy and related supporting industries, and has introduced technologies such as industrial robots, machine vision, and edge computing into the production process. Currently, Changhong’s intelligent production line can reduce manpower by 70%, increase output efficiency per person by 65%, and achieve a logistics automation rate of 95%.
Less people is a development direction of intelligent manufacturing, but less people does not mean unmanned. The ultimate problem that Changhong wants to solve when exploring smart manufacturing is to meet individualized consumer demands through industrialized means, to undertake fragmented orders with flexible production in the era of the Internet of Things, and to achieve large-scale personal customized production. The prospects are promising, but for small and medium-sized enterprises such as China’s garment industry, there is a longer way to go to realize intelligent manufacturing.
“Automation should be promoted in a cyclical and gradual manner, and we should not pursue complete high-end automation in a short period of time.” Experts suggest that enterprises should carry out digital workshop transformation according to local conditions, with less investment in the first year to allow employees and management teams to adapt first, and from the annual increase in workshop The labor demand starts to solve the staff gap demand. After the benefits are seen in the second year, the decision will be made as appropriate to maintain stable production demand and integrate man-machine to ensure a good advancement of corporate capital investment and automation equipment application.
Intelligent manufacturing in the apparel industry should not set unified standards for measurement. Enterprises should achieve the best balance at this stage based on their own industry characteristics, business development methods, supply chains, personnel flows, etc., and then continue to improve informatization and Data utilization level.
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