Abstract:
Mariangela Pira, an expert at the Italian Institute of International Politics（ISPI）, said in the article The Chinese Race to Artificial Intelligence that in 2016, Beijing launched 87,000 industrial robots, only after Europe and the United States. The robot revolution initiated by Chinese leaders has had a direct impact on the balance sheets of Chinese companies, including two aspects: the improvement of labor quality and the rise of labor costs. As a result, many Chinese companies are considering moving to Southeast Asia where labor costs are still low. In any case, efficiency, quality, risk reduction, and labor replacement are factors that Beijing is concerned about. China is no longer just a manufacturing power, but a technologically advanced country that focuses on innovative solutions that can replace competitors and is working to develop artificial intelligence.
The full text of the article is as follows:
In China, it is very likely that an army of robots will soon replace the terracotta one. After all, President Xi Jinping himself called it in 2014: "the robot revolution".
The statistics of the International Federation of Robotics report an important trend. Beijing introduced 87,000 industrial robots in 2016, standing just behind Europe and the United States. This type of production is expected to further grow at a sustained rate (about 20%) until 2020. Foxconn, the company that produces iPhones in the Chinese Silicon Valley, located in the south of China, slightly increased its turnover between 2012 and 2016, while its workforce decreased by about one third: 400,000 jobs replaced by tens of thousands of industrial robots, the so-called 'Foxbots’. After all, the “tin drums” work 24 hours a day, depending on how they are programmed, and do not need holidays. No wonder Foxconn recently announced they want to increase the number of robots up to 30% of the labour force.
What struck me the most, and this is what I reported on SkyTg24, is that according to a survey conducted by the company Dentsu Aegis Network, the Chinese are the most optimistic in the world when asked about the impact of Artificial Intelligence (AI) on their lives and their work. Two-thirds of respondents believe that AI will create new jobs. However, for the World Bank, robotics will eliminate 77% of jobs in China, even if it must not be forgotten that the Middle Kingdom is facing a demographic problem. In short, automation in China is needed also in relation to its demographic issue. The working population in the country (people aged 15-64 years old) is about 998 million: this figure, which has been decreasing since 2014, is going to shrink further to 800 million by 2050.
Certainly, the revolution launched by Xi had a direct effect on the balance sheets of Chinese companies. On average, the profit per worker - thanks to high robotic density - has reached USD 48.000, a level never witnessed before (CNBC.com). This had a direct impact on two aspects: on the quality of labour, which is increasing, and on the cost of labour, which is rising. In Shanghai, the average monthly salary (the highest in China) is equal to RMB 2.420, or USD 366.62, more than twice that of ten years ago. As a consequence, many Chinese companies are now considering moving their production and offices in Southeast Asia where labour cost is still low.
In any case, efficiency, quality, risk reduction, workforce replacement are the factors that Beijing is looking at. Geekplus, a Chinese company, has now affirmed the use of robots, equipped with QR code, capable of reducing human presence from 50 to 80%. And what about Huawei? Visiting its headquarters in Shenzhen is like being on the set of Gattaca. The impression is to touch the future with your own hands. This demonstrates that China is no longer what we used to know – merely a big manufacturing country – but a technologically advanced country that focuses on innovative solutions capable of displacing rivals. China is working hard on artificial intelligence to the extent that it has already managed to install it on smartphones, mobile phones, everyday devices we cannot separate from.
The chips of normal phones are composed of the CPU (Central Processing Unit), necessary for the numerical calculation, and the GPU (Graphics Processing Unit), which deals with the graphics. The new mobile phones, instead, are in the real sense of the term more intelligent. In new phones, along with the CPU and the GPU there will also be the NPU (Neural Computing Unit) or artificial intelligence. Do I have to leave earlier and have to book a flight? Thanks to the artificial intelligence chip located inside the phone, the device will do it for me. The new chip records my taste and preferences in terms of flight schedules and airlines, managing to select the best options.
The secret to achieving this is to invest, invest and keep on investing. Still focusing on Huawei, the telephone group employs 45,000 people and about eight thousand engineers: 45% of Huawei's workforce is employed in Research & Development, a sector in which the group has invested about 40 billion dollars in the last ten years, about 10% of its turnover. An exception is 2016, a year in which Huawei invested about 15% of its sales in innovation. In the meantime, the company is growing. In 2018 the total turnover could reach 88 billion dollars, while in 2019 it could exceed 100 billion. Should that be the case, Huawei would be the first Chinese company - private and unlisted - to hit this important goal.
China is also a very far-sighted country. Part of the automated machines that are used are those of Kuka, the precious asset of German robotics sold to Midea, the Chinese group of household appliances. This demonstrates how China is slowly gaining - through direct acquisition or sometimes illegal technological transfer - European industrial strategic assets for its own development. This direct challenge should encourage Europe to strengthen its political entity, making it a coherent united body able to develop a strategy to keep as close as possible its precious know-how.
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