Rising Wages Drive China to Become Top Robotics Market

The speed at which wages are rising in China is spurring companies to invest in automating manufacturing with robots, putting the nation on track to become the world’s top robotics market by 2014.

There’s plenty of room for growth. Japan’s highly automated manufacturing sector uses 306 robots per 10,000 population while China has just 15, according to CNN.

The incentive to pump tens of billions into robots over the next few years comes from a 21.9% jump in wages last year for rural workers, the sector from which most manufacturers draw their labor forces. In the cities the wage growth was 12.4%.

For world-class manufacturers in China the incentive is more than saving labor costs — it’s also about image and quality and reliability as they battle over the world’s biggest market for everything from cars to luxury goods.

One example is Volkswagen, China’s leading foreign auto brand. It plans to double its capacity to 4 million cars by 2018 when China’s auto market is expected to reach 40 million a year. Only by using more robots can the company expect to expand that much production capacity without suffering quality issues or setting itself up for disruptions caused by an increasingly assertive labor force.

Competition is heating up as every major automaker rushes to claim its share of what by then will be a market three times the size of the US. Add to that the rapid influx of Japanese carmakers abandoning Japan and its high yen-based costs, and you have the makings of a huge shortage of experienced manufacturing workers. In turn that will translate to continued double-digit rise in labor costs. Robotics is the only way to address that scenario for the long term.