Size and scale don't really matter anymore when it comes to next-generation manufacturing with highly automated and roboticized production lines. Or so claims one expert who dismissively writes China off as doomed to be an also-ran to a resurgent US manufacturing sector in the coming decades.
It's true that a shrinking, more expensive workforce has eroded China's longstanding labor cost advantage in low-to-medium end manufacturing which has propelled it to economic superpowerdom in 30 years, even as a shortage of high-skilled technical talent and managerial expertise calls to question its ability to broadly and comprehensively climb the value chain. To contemptuously brand Beijing's "Made in China 2025" initiative as little more than a communist Potemkin village, however - as if the US can simply count on its vaunted "free market", without highly deliberate and targeted government support, to keep or regain its productive edge in the 21st-century global economy - reeks of the very kind of elitist arrogance and ignorance that has millions of middle and working-class Americans up in arms this election year.
With the right policies, openness to global investment and competition, and willingness to learn from mistakes, China could well end up dominating next-generation manufacturing, too.
Size and scale will always matter in manufacturing, whatever the degree of automation or use of robotics. And China has every intention and ability to retain its advantages in this regard.
Its market, for one, is simply unrivaled: it already consumes around a quarter of the world's industrial robots, and yet its robot density is an order of magnitude below that of Japan or South Korea. This gap will close as thousands upon thousands of Chinese factories replace human workers with robots in the coming decade to trim labor expenditure; one can foresee one-third or even up to a full half of robots worldwide being consumed in China by the mid-2020s, and an increasing proportion of these will roll off local robot-making assembly lines, even if they're owned and operated by foreign companies.
The resultant economy of scale - especially if supported by longstanding government initiatives like land grants and other subsidies - will be tough for any competitor nation, including the US, to match. That's doubly so because industrial materials sourcing across the entire periodic table of the elements is utterly dominated by China, which thereby effectively sets global prices for inputs into anything and everything that's assembled or fabricated. That's not even taking into account that factories themselves have to be built, supplied, and maintained: unbeatable Chinese prices for steel, cement, copper, and the like guarantee that both the plants and their supporting transport and power infrastructure will continue to enjoy immensely superior turnover cycles over alternative production locales, nullifying the premium from export shipping over much of their lifespan.
And it sure won't help America's cause that confiscatory tax rates and a crushing regulatory burden by an entire host of federal and state agencies are likely to be complemented in coming years by import tariffs borne of a neo-protectionism that both political parties are finding necessary to appease. If Washington prioritizes its steel industry's preservation of local market share in the face of cutthroat Chinese competition, to take just one example, that absolutely doesn't serve the US auto industry's efforts to keep local car production costs down.
The present Chinese manufacturing crisis is already largely being misinterpreted. It's already removing with little mercy the inefficiency and waste in lower-end, more labor-intensive industrial and manufacturing sectors, even as it's compelled the most competitive state and privately owned firms alike to streamline or upgrade their operations, consolidating or expanding market share while also investing more effectively in productivity-enhancing modernizing equipment and processes. A select minority of firms are already foraying into higher-end, higher value-added manufacturing, including of components which have traditionally been imported for final assembly in China.
That's not to say "Made in China 2025" or more generally the country's whole transition up the production chain are sure bets - they most definitely are not. But to write off the potential of the monumental shift plainly out of hand - as if present problems and deficiencies are static in their permanence - is just downright silly.
Already, Chinese appliance giant Midea's high-profile bid to acquire German industrial robot maker Kuka is just one of a host of upgrades by mainland firms via partnership with rich-world innovation leaders. This of course will trigger accusations that China simply can't innovate on its own, but that's missing the point.
China's dominance in next-generation manufacturing will be in essence the same as its dominance in traditional manufacturing: its unique ability and capacity to create massive economies of scale and thereby crash prices worldwide. Just as the iPhone wasn't invented in China but only became a global consumer commodity through vast Chinese assembly lines and hordes of cheap Chinese labor, so tomorrow's disruptive products up and down the global economy will likely become commodities available to the general population through a vast array of automated, smart, and connected Chinese factories and supply-chain networks.
Size and scale not only still matter - they arguably will matter more than ever in the industry, manufacturing, and construction of the future. Beijing seems to envision the sheer magnitude of what it's eventually shooting for. Someday, entire cities will be 3D printed just like 3D printing of earthquake-proof mansions is being pioneered in China today. This isn't a country content to be an also-ran, but rather one that knows full well the untold billions or even trillions that must be invested to establish a 21st-century industrial base and economic infrastructure. One might even wonder these days whether the same can be said of a politically dysfunctional US.
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