Many factories in China are turning to robotics to counter rising salaries in the workplace. And small and medium-sized enterprises are being priced out of the market, unable to cope with the initial expense. But there's a big drive in southern China's Guangdong province to get them up and running.
One in every eight smartphones across the world is manufactured here in Dongguan -- a manufacturing base of apparels and technology. But the region has been losing its competitive edge over wage demands. The solution for many entrepreneurs is to introduce robots to the factory floor.
Yin Shuping is running a factory which produces lights and lamps, but whilst he has some robots, he is hesitant to utilise any more.
"It puts us under a lot of pressure if we use robotic arms in some production processes. It’ll take us 5 to 8 years to recoup the cost," Yin said.
Though robots can greatly reduce the costs of labor, small and medium sized enterprises are often price sensitive and reluctant to spend big money on these automated systems.
Wu Fengli is the founder of Topstar Technology, a local robot company which provides total solutions. He said financial leasing might be a way to help these smaller enterprises.
"Through financial leasing, a factory can rent robots from us and pay their bill monthly instead of paying up front. In this way, the fixed cost can be allocated into each month, which greatly reduces the burden on small companies," Wu said.
And the local government is tapping into this idea, by helping small factory owners get bank loans to rent robots.
"Now we’ve established a special pool of 200 million RMB to support the small- and medium-sized companies in leasing machines and robots, to provide interest subsidies and risk compensation," Zhang Yuqing, chief economist of Dongguan Municipal Admin. of Economy & Information, said.
According to Wu, the CEO of Topstar, there is a severe lack of experience and skilled workers in the market, so these SMEs need total automation solutions in manufacturing, training and logistics.
Making a robot is like producing a car. But apart from selling the car to your customers, you have to build a racing track and even train the drivers for them," Wu said.
Founded in 2007, Wu’s robotic company has annual sales worth more than 300 million yuan, or 44 million dollars, with an annual growth rate of more than 45%. Wu said most of his customers are big companies, and the robotic industry will only reach its potential once the small factories can afford to utilise them.
