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A clothing technology company in Georgia, the United States is going to launch the“robotic tailor”.
This technological innovation in the post-financial-crisis period is said to be able to change the fate of American manufacturing as its cost is lower. Thus the “made in America” could defeat the “made in China” and the United States can erase the 100-billion-USD deficit of the clothing trade with China and Vietnam.
This automatic sewing machine controlled by computers can replace the manpower and finish designed clothes needle by needle. No human beings will be seen in the production line. This represents the main direction of the “re-industrialization”in the United States after the financial crisis. People call it the“revolution of automation” or the “revolution of robot”.
Steve Dickson, founder of this clothing company, said that the “automatic robots can bring the manufacturing of mobile phones, computers and TVs back to the United States”.
Columnists for the Washington Post commented that the robotic technology has been put into several fields, including medical skills and manufacturing. “Robots do not sleep or take holidays. They cannot be distracted or ask for increasing salaries. Therefore it is cheaper to use robots than to us human beings.”
They further forecasted that the new industrial reform caused by artificial intelligence, robots and digitalization allowed American companies to set up plants in where they are and create various kinds of products. “The American robots can directly compete with Chinese laborers in the coming future.”
This is definitely bad news for Chinese enterprises which have been trapped in the “low-income trap” featured with increasing salary, improving raw material price and shrinking exports orders. A man could win the competition with another man with diligence, hard work and minimum requirements of salaries. But these advantages cannot be maintained when the competitor becomes the cold and heartless robots?
Then the question came out: can the Chinese manufacturing be killed by robots?
Blocking up the “Made in China”
Defeat human with robots. It is one of the strategies of American “re-industrialization”.
When the international financial crisis broke out, the U.S. president Obama and many American enterprises began to call for the “return of manufacturing”. They announced the plan of reconstructing the global competitive situation of manufacturing in the next 20 years through the development of highend manufacturing. From “de-industrialization” to “re-industrialization”, what the United States is going through is not limited to the return of manufacturing. The main goal is to take the dominant place in the new round of technological innovation and industrial competition.
After the reflection over the financial crisis, Americans have already realized that the long-term “outsourcing” policy could lead to the hollowing of its domestic industry and several social defects. Yang Jianwen, fellow of the Shanghai Academy of Social Sciences, said that developed countries finally got to understand that high-end technologies and finance are very lucrative but they could provide a limited number of working opportunities. In addition, the high requirements for these positions make it hard for ordinary people to benefit from economic development driven by them. The income gap is getting broader and the unemployment rate is increasing, causing furious social contradictions and unrest.
For developing countries, the global division of production tasks in “outsourcing” is also defective, which now gradually becomes visible. The long-term use of cheap labor force led to the generation of “World Plant” but is no longer sustainable as the income gap is increasing as well.
The “outsourcing” simultaneously intensified the internal contradictions in developed and developing countries. Salary increase became the common appeal of people in different countries. However, the limitation in human resource stops developed countries from taking back the “manufacturing with low profits” and they must continue to progress to the high end and take back the long-lost traditional manufacturing through subversive technological innovation.
Yang Jianwen said that the “re-industrialization” of developed countries is to be realized by taking international market. A combo of attacks with the integrated use of politics, econo- my, diplomacy, military and trade are taken to boost the market share to drive domestic enterprises’ reproduction and expansion of reproduction for reducing the unemployment rate and social contradictions.
Influenced by the European debt crisis, the EU members are also close to consensus about “re-industrialization” in emergent situations.
Antonio Tajani, vice chairman of the European Commission, recently said that Europe now was facing serious financial crisis. To turn this crisis into an opportunity, the industry in Europe needs to be boosted because industry is the main contributor to the entity economy. The European Commission thus put forward the idea of“new industrialization”, focusing on technological innovation and structural renovation. It aims to change the energy structure oriented by hydrocarbons for the efficient and sustainable utilization of resources. Meanwhile the new production method should be greatly promoted, including robots, digital technologies, advanced materials and recyclable energy.
“This will cause damages to the upgrade and transformation of China’s manufacturing industry,” said Chi Fulin, executive director of the China (Hainan) Reform & Development Institute. Europe and America are building new trade barriers with “re-industrialization” and are trying to take back the dominance in the international industrial competition via carbon tax, laborer standard and social responsibility.
In his opinion, China is now in a predicament in which developed countries take the high-end manufacturing while the low-end manufacturing is moving to emerging countries. The advantages of Chinese manufacturing from the low cost are gradually impaired but its new competitive advantages have not been formed yet.
According to the statistical data, the monthly salary for ordinary workers in manufacturing is 1000 yuan in Vietnam and 600 yuan in India. In comparison, the salary for workers in the eastern coastal areas of China is 2500-3000 yuan. One typical example is Nike. China was once the biggest manufacturing base for this American sportswear brand and 40% of its shoes were made there. But now Vietnam has replaced China as Nike’s largest manufacturing base in the world.
Arm China’s Manufacturing with “Robots”
Foxconn, the largest outsourcing company in Taiwan, has already announced the plan of using 1 million industrial robots in three years to control the cost. The company even invested to build an industrial park of robots in Jincheng, Shanxi to produce industrial robots by themselves.
Since the serial suicide cases of its employees in 2010, Foxconn has already increased the salary of its workers for several times and established plants in inland provinces of China. Foxconn now employs over 1 million workers in mainland China. And if the plan of using robots is successfully implemented, the number of robotic workers is not smaller than the workers of blood and flesh.
According to the analysis, Foxconn is now using “low-end robots” – the robotic arm. Each of these devices cost over 100 thousand yuan. This robotic arm could work for 24 hours a day, three times of an ordinary worker, whose yearly salary is around 30-40 thousand yuan. Therefore, the cost of using a robotic arm for a year is equal to employing three employees for one year. The cost can be taken back within one year and profits would come in the following year. The increasing labor cost in China pushed up the cost of“made in China”. If the “plan of robots” is successful, it could help Foxconn break the “ceiling of need for labor force” and carry out the “strategy of globalization”. Foxconn has definitely planned to invest 12 billion U.S. dollars in Brazil and its arms have been extended to Vietnam and India.
Terry Guo, who is widely blamed for the over-strict management, wants to use “robots” to completely change the profile of Foxconn. “We do not want human beings to be controlled by machines; instead, we should control them and give the boring and repeated workload to them so that our employees are able to do more things.”
Indeed, intelligent robots can do better than men in the links of polishing, burnishing, laser-branding, jointing and coating during the process of assembling and processing iPad and iPhone. They are also more suitable in working in flammable and explosive environment.
This is the general trend of industrial upgrade. “China wants to be the kingdom of manufacturing, for which the most important factor is to turn demographic dividends to wisdom dividends,” Terry Guo said. With the utilization of robots, manpower is moved to the part with higher added value. Those young workers who are tired of boring work can learn how to control, maintain and repair robots as engineers of applications and software of robots.
It seems that China is slower than developed countries in arming its manufacturing industry with robots. The trend began to emerge in 2008 when the labor cost had an obvious increase. Industrial robots were seen in the manufacturing. In 2008, 7,500 robots were sold, taking one third of the total amount sold in the 24 years before.
After that, the use of robots was greatly spread. According to the statistical data, China imported 23.4 thousand robots in 2010, up 130% year on year. In 2011, the number of imported robots increased by 62% to 38 thousand units.
According to Xie Baihui, president of the International Association of Mold, Hardware and Plastic Suppliers, the robot industry in China will meet an important turning point in the“12th Five-Year Plan” (2011-2015) as the market demand will drastically develop at a 15%-20% pace year on year.
Presently, robots are mainly used in the manufacturing of autos. In the future, they will be widely used in the mold crafting, mechanic processing, jointing, heat processing, surface coating, assembly, examination and stowing as a standard device. They will play an active role in the automation of China’s industry. Many international robot makers, like Kuka, ABB, Fanuc and so on, now consider China as a market “that must be taken”.
“Presently there are only tens of thousands of industrial robots in the manufacturing industry of China, much fewer than Europe, America and Japan. But the potential in China is too huge,” said Dr. Gu Chunyuan, director of ABB’s robot business in China. “China will have the largest number of robots equipped in the next few years. We all know that point.”
Local companies do not want the market of their home to be taken by foreigners. The research and development of robots in Shenyang and Xi’an are developing very quickly and more and more robots are used in the Pearl River Delta.
According to the statistical data, the Shenzen Association of Robots has recruited 64 members, which could contribute the yield of 16 billion yuan in 2011. These enterprises are growing at a 50%-60% rate per year. Local governments took the flexible “employment” measure to solve the problem of too much investment in using robots. Local companies are allowed to “use these robots before payment” and they can “fire” ro- bots with bad performance.
This April, 36 enterprises, universities, institutes, and investment institutions in Shenzhen founded the “Alliance of Production, Study, Research and Investment for Robots”. Bi Yalei, secretary-general of the Shenzhen Association of Robots, said that a time that “robots can be seen in every family and every enterprise” will come soon. Presently there are only a few established robot enterprises in China and this situation is expected to be changed in the future.
“High-end Manufacturing” Needs to Be Supported by Local Market
If men are replaced by robots, where should men work? In truth, the “re-industrialization” strategy in the United States did not have great improvement to the employment situation. In the past two years, the manufacturing enterprises in the United States had seen recovering profits. But the unemployment rate was maintained at 9%, only 1% lower than the worst time in 2009.
American scholars said in a report named “Myth and Truth: Global Manufacturing Returns Home” that the fast progress of the “re-industrialization” in the United States might deprive China of its advantages in labor cost, but it cannot bring more jobs to Americans because the positions taken back from China can be filled by robots.
Economist Li Caiyuan thought that the utilization of a variety of new technologies and techniques after the financial crisis will eliminate some old jobs but will bring about new ones. “The multiplication effect of the industrial chain tells us that a position in high-end manufacturing can bring about three or over low- and middle-end positions. For example, the production of robots can be followed by the working opportunities in training, talent cultivation, system management and production service,” he said. For the long term, the formation of emerging industrial chain cannot reduce the job opportunities for human beings.
For example, before the rising of Internet and ecommerce, it was hard to image that people can sell and buy things online. This generated the new position of online sellers. In addition, it also boosted the fast expansion of express.
Thus it is clear that the industrialization is a process where“robots take the place of men”. When robots are able to finish a lot of low-end, boring, tough and dangerous duties for men, people can spare more time and energy in the study, innovation, research, communication and artistic creation.
In Li Caiyuan’s opinion, mankind evolved from the “age of manpower” to the “age of object power”. Now they are marching towards the “age of intelligence power”. This is irreversible.
The current concerns should be that what China should do to catch up with developed countries in this new round of evolution when the United States and other developed economies are boosting technologies and emerging industries.
The “re-industrialization” and use of intelligent robots signal that the advent of a new round of technological revolution.
Prof. Jia Genliang from the People’s University of China thought that the most apparent changes brought this new technological revolution was that no men could be seen in the frontline manufacturing field since the digital automated production is used. The labor-intensive industry based on processing and manufacturing might be the history in the future.
In the time of great turning, China, which is considered the “World Plant”, might suffer a slowed economic growth if it cannot catch up with this trend. The “high-wage countries”taking the high technologies and high-end manufacturing” can defeat “low-wage countries” with behindhand technologies, just like how Great Britain defeated China and India after its industrialization.
Historically, countries relying on exporting resources and cheap labor force cannot have real development. In Jia Genliang’s opinion, China must make up its mind to independently develop self-owned core technologies without the hope of relying on others. The massive Chinese market should be fully used as the soil for fostering the self-owned technologies and indus- tries of China. “Why the Great Britain was surpassed by the United States at the end of the 19th century? The answer is not with traditional industries or the foreign market; instead, it is related with the current emerging technologies and the rigorous protection of domestic market.”
“That means we need to get rid of the control of multinationals over the global value chain and create our own national industrial value chain through building self-owned high-end industrial chain,” he said.
The progress of productivity in any form needs to be supported by corresponding consumption power. Henry Ford invented T-shaped production lines of automotives. But if he did not pay his workers two times of their original salaries, no one could afford his cars. This is the strategic significance of upgrade of consumption and local market.
“The global division of labor was deformed before the financial crisis. In China it was the pattern that production in rural areas subsidized cities while production in cities subsidized foreigners,” Li Caiyuan said. The Chinese market looked vast but actually the income for residents was very low, which shrank the real market demand. In addition to the excessive open of the market caused the reliance on foreign technologies and underdevelopment of local industrial chain.
The present “re-industrialization” in Europe and America means “to shut its door to foster and support its own emerging market. The market barriers and trade protectionism are certain to happen. It is necessary to know that the advanced technologies in the United States are hard to be exchanged. China must be aware of it.
In Li Caiyuan’s opinion, China must follow its own road of“internal recycling” by expanding local market and strengthening local enterprises like what the United States did in the last century. When the income of Chinese people multiplies, their consumption power could increase to feed China’s own highend manufacturing. This could provide promotional and sustainable power for China’s economic growth.
He admitted that it is very difficult for China to seek transformation now. “With a large population, weak technologies, less influential currency, big bubbles…, there are a lot of disadvantages. But we have enough motivations as no one wants to‘exchange a plane with 800 million pairs of trousers’.”
This technological innovation in the post-financial-crisis period is said to be able to change the fate of American manufacturing as its cost is lower. Thus the “made in America” could defeat the “made in China” and the United States can erase the 100-billion-USD deficit of the clothing trade with China and Vietnam.
This automatic sewing machine controlled by computers can replace the manpower and finish designed clothes needle by needle. No human beings will be seen in the production line. This represents the main direction of the “re-industrialization”in the United States after the financial crisis. People call it the“revolution of automation” or the “revolution of robot”.
Steve Dickson, founder of this clothing company, said that the “automatic robots can bring the manufacturing of mobile phones, computers and TVs back to the United States”.
Columnists for the Washington Post commented that the robotic technology has been put into several fields, including medical skills and manufacturing. “Robots do not sleep or take holidays. They cannot be distracted or ask for increasing salaries. Therefore it is cheaper to use robots than to us human beings.”
They further forecasted that the new industrial reform caused by artificial intelligence, robots and digitalization allowed American companies to set up plants in where they are and create various kinds of products. “The American robots can directly compete with Chinese laborers in the coming future.”
This is definitely bad news for Chinese enterprises which have been trapped in the “low-income trap” featured with increasing salary, improving raw material price and shrinking exports orders. A man could win the competition with another man with diligence, hard work and minimum requirements of salaries. But these advantages cannot be maintained when the competitor becomes the cold and heartless robots?
Then the question came out: can the Chinese manufacturing be killed by robots?
Blocking up the “Made in China”
Defeat human with robots. It is one of the strategies of American “re-industrialization”.
When the international financial crisis broke out, the U.S. president Obama and many American enterprises began to call for the “return of manufacturing”. They announced the plan of reconstructing the global competitive situation of manufacturing in the next 20 years through the development of highend manufacturing. From “de-industrialization” to “re-industrialization”, what the United States is going through is not limited to the return of manufacturing. The main goal is to take the dominant place in the new round of technological innovation and industrial competition.
After the reflection over the financial crisis, Americans have already realized that the long-term “outsourcing” policy could lead to the hollowing of its domestic industry and several social defects. Yang Jianwen, fellow of the Shanghai Academy of Social Sciences, said that developed countries finally got to understand that high-end technologies and finance are very lucrative but they could provide a limited number of working opportunities. In addition, the high requirements for these positions make it hard for ordinary people to benefit from economic development driven by them. The income gap is getting broader and the unemployment rate is increasing, causing furious social contradictions and unrest.
For developing countries, the global division of production tasks in “outsourcing” is also defective, which now gradually becomes visible. The long-term use of cheap labor force led to the generation of “World Plant” but is no longer sustainable as the income gap is increasing as well.
The “outsourcing” simultaneously intensified the internal contradictions in developed and developing countries. Salary increase became the common appeal of people in different countries. However, the limitation in human resource stops developed countries from taking back the “manufacturing with low profits” and they must continue to progress to the high end and take back the long-lost traditional manufacturing through subversive technological innovation.
Yang Jianwen said that the “re-industrialization” of developed countries is to be realized by taking international market. A combo of attacks with the integrated use of politics, econo- my, diplomacy, military and trade are taken to boost the market share to drive domestic enterprises’ reproduction and expansion of reproduction for reducing the unemployment rate and social contradictions.
Influenced by the European debt crisis, the EU members are also close to consensus about “re-industrialization” in emergent situations.
Antonio Tajani, vice chairman of the European Commission, recently said that Europe now was facing serious financial crisis. To turn this crisis into an opportunity, the industry in Europe needs to be boosted because industry is the main contributor to the entity economy. The European Commission thus put forward the idea of“new industrialization”, focusing on technological innovation and structural renovation. It aims to change the energy structure oriented by hydrocarbons for the efficient and sustainable utilization of resources. Meanwhile the new production method should be greatly promoted, including robots, digital technologies, advanced materials and recyclable energy.
“This will cause damages to the upgrade and transformation of China’s manufacturing industry,” said Chi Fulin, executive director of the China (Hainan) Reform & Development Institute. Europe and America are building new trade barriers with “re-industrialization” and are trying to take back the dominance in the international industrial competition via carbon tax, laborer standard and social responsibility.
In his opinion, China is now in a predicament in which developed countries take the high-end manufacturing while the low-end manufacturing is moving to emerging countries. The advantages of Chinese manufacturing from the low cost are gradually impaired but its new competitive advantages have not been formed yet.
According to the statistical data, the monthly salary for ordinary workers in manufacturing is 1000 yuan in Vietnam and 600 yuan in India. In comparison, the salary for workers in the eastern coastal areas of China is 2500-3000 yuan. One typical example is Nike. China was once the biggest manufacturing base for this American sportswear brand and 40% of its shoes were made there. But now Vietnam has replaced China as Nike’s largest manufacturing base in the world.
Arm China’s Manufacturing with “Robots”
Foxconn, the largest outsourcing company in Taiwan, has already announced the plan of using 1 million industrial robots in three years to control the cost. The company even invested to build an industrial park of robots in Jincheng, Shanxi to produce industrial robots by themselves.
Since the serial suicide cases of its employees in 2010, Foxconn has already increased the salary of its workers for several times and established plants in inland provinces of China. Foxconn now employs over 1 million workers in mainland China. And if the plan of using robots is successfully implemented, the number of robotic workers is not smaller than the workers of blood and flesh.
According to the analysis, Foxconn is now using “low-end robots” – the robotic arm. Each of these devices cost over 100 thousand yuan. This robotic arm could work for 24 hours a day, three times of an ordinary worker, whose yearly salary is around 30-40 thousand yuan. Therefore, the cost of using a robotic arm for a year is equal to employing three employees for one year. The cost can be taken back within one year and profits would come in the following year. The increasing labor cost in China pushed up the cost of“made in China”. If the “plan of robots” is successful, it could help Foxconn break the “ceiling of need for labor force” and carry out the “strategy of globalization”. Foxconn has definitely planned to invest 12 billion U.S. dollars in Brazil and its arms have been extended to Vietnam and India.
Terry Guo, who is widely blamed for the over-strict management, wants to use “robots” to completely change the profile of Foxconn. “We do not want human beings to be controlled by machines; instead, we should control them and give the boring and repeated workload to them so that our employees are able to do more things.”
Indeed, intelligent robots can do better than men in the links of polishing, burnishing, laser-branding, jointing and coating during the process of assembling and processing iPad and iPhone. They are also more suitable in working in flammable and explosive environment.
This is the general trend of industrial upgrade. “China wants to be the kingdom of manufacturing, for which the most important factor is to turn demographic dividends to wisdom dividends,” Terry Guo said. With the utilization of robots, manpower is moved to the part with higher added value. Those young workers who are tired of boring work can learn how to control, maintain and repair robots as engineers of applications and software of robots.
It seems that China is slower than developed countries in arming its manufacturing industry with robots. The trend began to emerge in 2008 when the labor cost had an obvious increase. Industrial robots were seen in the manufacturing. In 2008, 7,500 robots were sold, taking one third of the total amount sold in the 24 years before.
After that, the use of robots was greatly spread. According to the statistical data, China imported 23.4 thousand robots in 2010, up 130% year on year. In 2011, the number of imported robots increased by 62% to 38 thousand units.
According to Xie Baihui, president of the International Association of Mold, Hardware and Plastic Suppliers, the robot industry in China will meet an important turning point in the“12th Five-Year Plan” (2011-2015) as the market demand will drastically develop at a 15%-20% pace year on year.
Presently, robots are mainly used in the manufacturing of autos. In the future, they will be widely used in the mold crafting, mechanic processing, jointing, heat processing, surface coating, assembly, examination and stowing as a standard device. They will play an active role in the automation of China’s industry. Many international robot makers, like Kuka, ABB, Fanuc and so on, now consider China as a market “that must be taken”.
“Presently there are only tens of thousands of industrial robots in the manufacturing industry of China, much fewer than Europe, America and Japan. But the potential in China is too huge,” said Dr. Gu Chunyuan, director of ABB’s robot business in China. “China will have the largest number of robots equipped in the next few years. We all know that point.”
Local companies do not want the market of their home to be taken by foreigners. The research and development of robots in Shenyang and Xi’an are developing very quickly and more and more robots are used in the Pearl River Delta.
According to the statistical data, the Shenzen Association of Robots has recruited 64 members, which could contribute the yield of 16 billion yuan in 2011. These enterprises are growing at a 50%-60% rate per year. Local governments took the flexible “employment” measure to solve the problem of too much investment in using robots. Local companies are allowed to “use these robots before payment” and they can “fire” ro- bots with bad performance.
This April, 36 enterprises, universities, institutes, and investment institutions in Shenzhen founded the “Alliance of Production, Study, Research and Investment for Robots”. Bi Yalei, secretary-general of the Shenzhen Association of Robots, said that a time that “robots can be seen in every family and every enterprise” will come soon. Presently there are only a few established robot enterprises in China and this situation is expected to be changed in the future.
“High-end Manufacturing” Needs to Be Supported by Local Market
If men are replaced by robots, where should men work? In truth, the “re-industrialization” strategy in the United States did not have great improvement to the employment situation. In the past two years, the manufacturing enterprises in the United States had seen recovering profits. But the unemployment rate was maintained at 9%, only 1% lower than the worst time in 2009.
American scholars said in a report named “Myth and Truth: Global Manufacturing Returns Home” that the fast progress of the “re-industrialization” in the United States might deprive China of its advantages in labor cost, but it cannot bring more jobs to Americans because the positions taken back from China can be filled by robots.
Economist Li Caiyuan thought that the utilization of a variety of new technologies and techniques after the financial crisis will eliminate some old jobs but will bring about new ones. “The multiplication effect of the industrial chain tells us that a position in high-end manufacturing can bring about three or over low- and middle-end positions. For example, the production of robots can be followed by the working opportunities in training, talent cultivation, system management and production service,” he said. For the long term, the formation of emerging industrial chain cannot reduce the job opportunities for human beings.
For example, before the rising of Internet and ecommerce, it was hard to image that people can sell and buy things online. This generated the new position of online sellers. In addition, it also boosted the fast expansion of express.
Thus it is clear that the industrialization is a process where“robots take the place of men”. When robots are able to finish a lot of low-end, boring, tough and dangerous duties for men, people can spare more time and energy in the study, innovation, research, communication and artistic creation.
In Li Caiyuan’s opinion, mankind evolved from the “age of manpower” to the “age of object power”. Now they are marching towards the “age of intelligence power”. This is irreversible.
The current concerns should be that what China should do to catch up with developed countries in this new round of evolution when the United States and other developed economies are boosting technologies and emerging industries.
The “re-industrialization” and use of intelligent robots signal that the advent of a new round of technological revolution.
Prof. Jia Genliang from the People’s University of China thought that the most apparent changes brought this new technological revolution was that no men could be seen in the frontline manufacturing field since the digital automated production is used. The labor-intensive industry based on processing and manufacturing might be the history in the future.
In the time of great turning, China, which is considered the “World Plant”, might suffer a slowed economic growth if it cannot catch up with this trend. The “high-wage countries”taking the high technologies and high-end manufacturing” can defeat “low-wage countries” with behindhand technologies, just like how Great Britain defeated China and India after its industrialization.
Historically, countries relying on exporting resources and cheap labor force cannot have real development. In Jia Genliang’s opinion, China must make up its mind to independently develop self-owned core technologies without the hope of relying on others. The massive Chinese market should be fully used as the soil for fostering the self-owned technologies and indus- tries of China. “Why the Great Britain was surpassed by the United States at the end of the 19th century? The answer is not with traditional industries or the foreign market; instead, it is related with the current emerging technologies and the rigorous protection of domestic market.”
“That means we need to get rid of the control of multinationals over the global value chain and create our own national industrial value chain through building self-owned high-end industrial chain,” he said.
The progress of productivity in any form needs to be supported by corresponding consumption power. Henry Ford invented T-shaped production lines of automotives. But if he did not pay his workers two times of their original salaries, no one could afford his cars. This is the strategic significance of upgrade of consumption and local market.
“The global division of labor was deformed before the financial crisis. In China it was the pattern that production in rural areas subsidized cities while production in cities subsidized foreigners,” Li Caiyuan said. The Chinese market looked vast but actually the income for residents was very low, which shrank the real market demand. In addition to the excessive open of the market caused the reliance on foreign technologies and underdevelopment of local industrial chain.
The present “re-industrialization” in Europe and America means “to shut its door to foster and support its own emerging market. The market barriers and trade protectionism are certain to happen. It is necessary to know that the advanced technologies in the United States are hard to be exchanged. China must be aware of it.
In Li Caiyuan’s opinion, China must follow its own road of“internal recycling” by expanding local market and strengthening local enterprises like what the United States did in the last century. When the income of Chinese people multiplies, their consumption power could increase to feed China’s own highend manufacturing. This could provide promotional and sustainable power for China’s economic growth.
He admitted that it is very difficult for China to seek transformation now. “With a large population, weak technologies, less influential currency, big bubbles…, there are a lot of disadvantages. But we have enough motivations as no one wants to‘exchange a plane with 800 million pairs of trousers’.”