China prepares for a manufacturing future beyond cheap labour

The traditional canals of Suzhou are a world away from the city's high-tech industrial park that is setting the stage for a manufacturing future beyond cheap labour.

Manufacturers in China are combining labour-cost advantages with expertise in automation, design, and manufacturing to build a new generation of high-tech facilities that will benefit the country for decades ahead, even as its living standards – and wages – rise.

In an insightful feature in MIT Technology Review, Christina Larsen takes a closer look at the Suzhou Industrial Park near Shanghai – the product of joint investment by Singapore and China in the 1990s and the specific case of Singapore-based supply chain solutions firm Flextronics.

The company refocused its two Suzhou factories on more complex manufacturing, aiming to make higher-priced machines for the aerospace, robotics, automotive, and medical industries. To do so, Flextronics has invested in automation, increasingly precise manufacturing, and improved worker training, all while learning to manage a complicated component supply chain.

And that decision should concern western companies that comfort themselves with the notion that China remains simply a low-cost mass production economy. Nothing, at least in Suzhou, could be further from the truth.

Rather Flextronics is reaping the benefits from both advanced high-tech automation AND lower costs.

Flextronics has pursued automation wherever it has the potential to reduce labor costs and errors. For example, automated optical testing equipment, which checks that the circuitry on printed circuit boards is correct before they are installed in other machines, has cut the number of workers on the inspection line from six to two.

But as product cycles speed up, it doesn’t always make sense to make large investments in robots. Humans are still more flexible. “The time you have to spend changing the machine means it’s not always worthwhile to automate,” says Es Khor, an engineering director at the factory. “When we look for where to automate, we also look for process-specific, rather than just product-specific, tasks.

And all this in combination with partnerships in the West, such as one with a French robotics firm working in the medical field.

So while the French robot line may be creating the health-care assistants of the future, at the moment the robots are being assembled by 28 workers wearing navy blue uniform smocks, mostly young men from rural China.

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