Most of us see China as either totally black or a murky shade of grey. If you were told that there are happy and satisfied workers in China you would smirk at me, but it’s true.

It’s also a fact that there are many miserable factory workers toiling in dark makeshift sheds working fifteen hour shift. China is at a critical stage of development.

Sociological changes are forcing companies to offer better salaries and working conditions, bringing down profit margins. Factory workers are getting smarter and demanding more. 

Chinese communist administration’s real test will be to transition smoothly from old smoke stacks to modern digital industries and from the sweat shops to value added factories.

If this does not happen quickly, you could see a dramatic change in the industrial landscape of China.

Old type of factories are either evolving or dying

This was a phenomenon which was witnessed by Americans of the previous generation. The main advantage of manufacturing in China was availability of cheap labor.

Automation meant loss of job for workers and was therefore avoided.  As is evident from news coming from Foxconn, workers are demanding higher wages and better working conditions.

This means that Chinese manufacturers are no longer able to arbitrage labor. The only solution is to upgrade infrastructure and deploy latest technology.

Management can no longer take workers for granted.

Higher quality standards

Considering the fact that manufacturing in China is no longer confined to sweat labor and is now increasingly using high technology, quality has become a significant factor in choosing manufacturing hubs. 

Chinese factories are now offering services like design of PCB and microelectronics chips, intricate manufacturing processes requiring advanced robotics and routinely delivering high-tech components to auto industry.

All these activities need a high level of quality assurance. Smoke stack era factories have been either forced to modernize or shut shop.

Government policies and economic subsidies are linked to modernization which has given a fillip to businessmen wanting to upgrade their infrastructure.

Fly-by-night operators

Despite all the exciting developments taking place in China, fly-by-night operators are still having a gala time.

Gullible American and European businessmen, lured by cheap labor, are falling victim to middlemen, who disappear after taking a hefty advance.

This has given a bad name to Chinese manufacturing and outsourcing. You should be suspicious of people who offer to get work done at unreasonably low rates. Such conmen always leave a trail behind them and careful research on the internet would certainly reveal their murky antecedents.

Size does not matter

In this era of advanced and complex manufacturing, what matters most is the management. Even big corporations depend on small and niche manufacturers to produce critical components required in assembling larger products.

As such, it’s the small factories which churn out high quality goods.

Conclusion

• Chinese manufacturing is at cross roads.
• Factory workers are smarter and demanding higher wages and better working conditions.
• There is a shift from mass production to quality.
• These changes have impacted the way manufacturing is evolving in China.

American and European businesses that are innovative in their approach can benefit significantly from this scenario.