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Part 1 of a two-part series. Here's Part 2.
Gerry Wong graduated from MIT with his bachelor's degree, his master's degree and his Ph.D, but in 2000 he left the United States and went home to China start a telecom equipment company.
Labor was readily available and relatively cheap.
But he says the environment has changed. These days wages are rising quickly. He currently pays his factory workers about a $1,000 USD a month.
"It’s getting difficult competing with lower-cost factories in like Southeast Asia," Wong said, referring to countries like Vietnam. "This is a big pressure on all the factories in Shanghai ... they're going to have to automate."
And so Wong is on a mission to automate his own factory. He sees it as his only choice for survival.
Surrounded by more than a dozen screens with bar graphs and flow charts detailing the productivity of each assembly line on his factory floor, Wong sits in his office in Shanghai explaining that he's already cut his workforce in half.
In the United States, automation may be a politically dirty word. But in China, it's a buzzword for politicians and CEOs.
Last year, China was by far the largest market for robots, with sales nearly equal to all of Europe and the United States combined, according to an annual report from the International Federation of Robotics.
Chinese companies bought 87,000 robots in 2016.
That number alone might not mean much, but it's about a third of all the robots sold around the globe.
In fact, there is essentially a government mandate to automate factories.
China President Xi Jinping has laid out an ambitious plan called MadeInChina2025 encouraging automation to ensure companies keep advanced manufacturing in the country.
"In the United States right now, there’s a lot of concern over unemployment through automation of jobs. That is just not as much of a concern in China."Gregory Allen, Center for a New American Security
Most industrial robots are made in Germany or Japan. But in the last few years, China has been pouring money into creating a domestic robotics sector -- and in some cases that means copying foreign companies, and in other cases it means buying up a foreign company in its entirety.
Either way, the main goal is to automate as much of the manufacturing process as possible to drive down costs.
"The Chinese approach is less hamstrung by some of the political debates that we face in the United States," said Gregory Allen, a fellow at the Center for a New American Security who previously worked with the White House Office of Science and Technology Policy and advised a number of robotic startups around Boston. "So, for instance, in the United States right now, there’s a lot of concern over unemployment through automation of jobs. That is just not as much of a concern in China."
Plus, Allen says, the Chinese government is accustomed to shifting the labor pool. A few decades ago, he explained, the country was largely an agrarian society and the government successfully moved many people into manufacturing jobs. And now presumably the government thinks it can move people from manufacturing into tech or service jobs.
"Right now, their primary problem [in China] is a labor shortage, not an unemployment crisis," Allen said.
"China is facing a lot of pressures — labor costs, energy costs. And that’s why we’re putting the emphasis on automation, rather than pure rely on low-cost labors," said Wong.
He wants portions of his facility to become a so-called “dark” factory — one where the only humans are the technicians.
"For R&D people, we told them, from now on, if your product is not designed for automation, it will not get manufactured," Wong explained.
And so he has taken some of the leaders from his R&D team and given them a new directive: Figure out how to automate the factory lines.
Part of the widespread corporate automation appetite is directly tied to the government’s agenda.
The country offers financial incentives to companies. Wong says government subsidies will cover about 20 percent of his automation costs.
But more than the money, it’s the political encouragement.
"Our company, in Shanghai, it’s not a big company. But surprisingly, we got a big support," Wong said. "The deputy mayor visit[ed] here. And [he] gave a really strong encouragement for using more automation technologies."
He then directs us to the factory floor. A couple of his employees, with slippers, lab coats and hairnets lead the way through a decontamination door before entering the clean room factory.
Qinghua Cao was employee No. 7 when Cambridge Industries Group was created, and now he's the company's chief automation officer.
He points to a series of automated machines on the factory floor that act as “inspectors."
And as a beeping warehouse robot rolls by to deliver supplies, Cao's colleague, Rose Hu, says when the company first started making routers and telecom equipment, everything was done by hand.
"We used to have two rows of people sitting in this factory," Hu said, pointing to a line of automated machines. "Last year, we started to do this automating."
She said the process used to require over 60 workers, now it only takes about a dozen.
And Cambridge Industries Group is not that unique. All around China, you'll hear similar stories — companies craving automation, and a government hungry to help.
A Private And Public Effort To Automate
For the past few years, Beijing has hosted a massive annual robot conference that attracts everyone from curious kids to academic experts. And this year, the most popular booth was a coordinated dancing robot troop — comprised of little white humanoid robots with blue eyes. The dance team swiveled their arms and bent their knees to Maroon 5's "Moves Like Jagger" as kids intently watched.
The robots were made by UBTech, a company based in Shenzhen, a Chinese coastal city near Hong Kong that essentially serves as the hardware backyard for the world.
The company paints itself as a Silicon Valley-esque startup, but there's one key difference: It has an unusual stakeholder.
"It’s not just private investors, the government also invested [in us,]" said Jeff Li, UBTech's general manager. Li wouldn’t disclose the exact amount but said the company was receiving “big money” from the city of Shenzhen.
And a government grant is also helping the company build a new factory in Yunnan, near the Myanmar border, according to Qianqian Guo, an HR representative for the company.
"The land, the factory and even the office furniture are all offered by the government for free," she said.
Off a dusty alley in Shenzhen, up a couple of flights of stairs, in a manufacturing facility controlled by fingerprints, dozens of young workers in pale yellow polo shirts are assembling UBTech's dancing robots by hand, as machines work next to them.
"We have two automation facilities here, one for assembly, one for testing," explained Ye Junwei, the production manager for the robot's joints (think elbows and knees).
The goal, he says with pride, is to have robots making robots. He says human labor is expensive and not always reliable.
"If it's human work, the quality will not be consistent," Junwei said. "But, with [a] machine, it will."
UBTech's co-founder Goti Deng is blunt when he explains why the company is in such a rush to automate. "Because we try to have a better performance on revenue and profit margins," he explained.
"We had 400 some workers, eight to nine months ago, and ... we reduced the number of labor workers to 167," Deng said in August when we last spoke. Yes, he admits, he knows the exact number.
Government Funding For Robots
Allen, with the Center for a New American Security, says there's an obvious difference between robotic investment by the Chinese government and the American government -- both culturally and financially.
Allen says funding under the Obama administration was always a challenge, but it's gotten worse.
"While China is throwing tens of billions of new dollars in funding and support for this type of technology and researching this technology, in the United States, it’s being cut," said Allen, who was a member of President Obama's National Robotics Initiative, which no longer exists as a standalone group.
According to the Trump administration, the robotics initiative was incorporated under a different umbrella, and funding levels for FY '16-'18 were reported around $200 million a year.
But for Allen and other American roboticists, the bigger question is the overall attitude toward science.
The Office of Science and Technology Policy had 135 people on staff at its peak in December 2016, according to the former director. Now it's down to about 45 people.
This story was made possible by the Bringing Home the World International Reporting Fellowship Program for Minority Journalists at the International Center for Journalists (ICFJ).
Lusha Chen contributed to the reporting of this story.
This segment aired on November 20, 2017.
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