Robot Automation and the East Asian Workforce

Manufacturing technology is a "resource-liberating force" that will create abundance in new tech skills, good jobs at fair wages, and a life with promise

“We are different from our animal ancestors in that we are not content to merely survive,
but have been incredibly busy making up new itches that we have to scratch,
creating new desires we’ve never had before.
This discontent is the trigger for our ingenuity and growth.”
—Kevin Kelly, “The Inevitable: Understanding the 12 Technological Forces that Will Shape Our Future”

“When seen through the lens of technology, few resources are truly scarce; they’re mainly inaccessible.”
—Peter Diamandis

Making resources “accessible” with technology
​Faster than anyone expected, East Asia is mounting a full-scale assault on the Fourth Industrial Revolution. Korea, Japan and China are each engaging with their individual national strategies and are hip deep in making them happen as soon as possible.

Korea’s is wrestling with its Development of a Fully Fledged Robotics Industry through Convergence with Other Industries; Japan’s challenge is its Robot Revolution; and China it’s Made in China 2025 and the 13th Five-Year Plan (2016-2020).

For Japan and China, the action is focused on building out the Factory of the Future; for Korea, the plan is to nearly double its population of direct consumers through the financial acquisition of Vietnam.

See related: Korea Adds Robotics to Smart Vietnam Strategy​

The world’s oldest societies need the newest technologies to survive. Robot-driven automation tops the list.

Much of the time, in the near-frenzy of the storm and stress of building out their respective futures, the teeming populations of East Asia can be easily overlooked.

Pundits and media experts forecast extreme hardships for them, like losing their jobs and livelihoods by the millions, forced into mass migrations, wracked by fatal fertility problems, or growing old, senile and decrepit.

All of it is true, but it’s not terminal. Far from it!

Lagging far behind the technical transformations taking place, the populations of all three of these countries are similarly making an assault on the Fourth Industrial Revolution; and as long as their respective leaders don’t drastically err or give up on them, the manufacturing technology from the Factory of the Future, as a “resource-liberating force”, will deliver up an abundance of new tech skills, good jobs at fair wages, and a life with promise.

Although the portents seem grim, the reality is that this is the same course of previous industrial revolutions, carrying with it both transformational angst and great hope as humanity struggles to push new technology into primacy.

However, this time around, as Klaus Schwab, founder and executive chairman World Economic Forum, warns: “In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.”

The reality for the East Asian workforce is that they are pioneering a future that every one of us on the planet will sooner or later have to follow. It’s surprise, shock, job loss, social hardship, even terror, evolving, according to Schwab, “at an exponential rather than a linear pace”, the speed of which has “no historical precedent.”

The difference for East Asia, and why it is the first to experience this gauntlet of change, is that it didn’t choose to contend with the Fourth Industrial Revolution, rather, the Fourth Industrial Revolution was thrust upon it.

The inevitable
The faster Korea, Japan and China can reach their objectives, the faster their populations will be emancipated from general uncertainty, work insecurity, physical rigors, and an unshakable foreboding that something bad is hurrying near.

 Kevin Kelly, in his remarkable new book, The Inevitable: Understanding the 12 Technological Forces that Will Shape Our Future, summarizes it well: “I celebrate the never-ending discontentment that technology brings,” he writes. “We are different from our animal ancestors in that we are not content to merely survive, but have been incredibly busy making up new itches that we have to scratch, creating new desires we’ve never had before. This discontent is the trigger for our ingenuity and growth.”

Of course, it’s not easy to be so philosophical when your dinner plate is empty and you cannot provide for your family. But remember, that unpleasant future is headed toward Asia anyway, and every Asian can sense it. The Fourth Industrial Revolution is humanity’s way of dodging the bullet: intellect driving technology to avoid disaster in order to create change for the better.

Whatever the rest of the world can do to ease Asia’s current hardships will inure to the benefit of everyone else on the planet, when their turn comes. For most surely, in a relatively brief period of time, such a turn will come to all.

Getting it done
So how are these three countries going to pull off better economies for themselves that will sustain a better life for their people as East Asia slips under the full force and effect of the Fourth Industrial Revolution?

Korea will not turn its industry and expertise to contending with Japan or China in a race to the Factory of the Future. Korea, as the quiet man of advanced robotics and automation in East Asia, will eventually take the best of both Japan and China’s advanced factory technology for itself.

Rather, Korea has already turned its considerable influence south to Vietnam in order to quickly expand its markets (Vietnam population 95 million; Korea 50 million). And Vietnam is all for Korean financial intervention.

See related:Korea Adds Robotics to Smart Vietnam Strategy​

For Korea, Vietnam is a real coup for its economy and people. It bodes well for Korea that Vietnam would rather travel a long distance by sea to Korea than take a short train ride to China. That testiness with China goes back hundreds of years to the ancient princes of North Vietnam and the emperors of China.

The prize for Korea’s beleaguered economy (cut deeply by reductions in trade with its number one trading partner, China) is in for crisp revitalization with 95 million new consumers to serve and 95 million hard-working employees at the ready. With a free trade agreement in place, plans for both Vietnamese as consumers and employees have been in place and working extremely well since 2014.

According to Trading Economics, Vietnam ranks number 14 in the list of countries by population; with a population density of 789 people per square mile; and a median age of 30.8 years.

Vietnam is a prize in the rise: GDP in 2019 ($261 billion) projected  by Statistica to hit $394 billion by 2024.

Vietnam: the Most Preferred Investment Destination for Korean Companies
Just in manufacturing in 2019,  “Vietnam attracted $13.35 billion worth of FDI from Korea…69.7 percent of the total Korean FDI to Vietnam.”

Korea, since 2017 has been Vietnam’s best at foreign direct investment (FDI), beating out even Japan’s FDI for the first time. Among 58 countries and territories that have invested in Viet Nam, Korea is the country’s largest source of FDI ($35.8 billion in 2017).

For steady acceleration in economic growth and consumer wealth, Vietnam could not have engaged with a better partner than Korea. Korea is the all-time jet setter when it comes from going from poor to rich status.

As Wolfgang Heller, robotics and market analyst, pointed out way back in 2011: “In 1960, South Korea was poorer than two-thirds of the nations in sub-Saharan Africa. Today, it’s the world’s most digital nation, with a per capita income of nearly $29,000, higher than New Zealand ($27K) or Portugal ($22K).

Surely, Vietnam would like to learn how to elevate its per capita GDP from $2,345 in 2017 to Korea’s lofty heights.

Already, Vietnam’s electronics’ exports have ramped up from $8 billion in 2008 to $94 billion today (2017). The likes of Samsung, LG, Hyundai and all the big boys from Korea, plus Korea’s expertise in robotics and automation will ensure that the Factory of the Future doesn’t bypass Vietnam. Korea has greatly expanded its presence into Vietnam life by investing in everything from operating supermarket chains to gyms and exercise franchises.

In return, the economic opportunity coming north to the Korean people is without precedent, even from its trade with China.

Joint shipbuilding in Hai Phong harbor, for example, is on the move. Korea, which fell from number one shipbuilder to sixth, has a chance to revitalize itself in Vietnam, something that would have been a big no-no with China. Last year, Vietnam secured more shipbuilding contracts than Korea, yet desperately needs Korea’s high-tech shipbuilding expertise.

Great future move for institutionalizing the Korea-Vietnam relationship would to have every college and technical school graduate, regardless of major, spend three to five years in Vietnam, with Vietnamese grads doing likewise in Korea.

Things come easier for Japan than they do for Korea or China. Maybe it’s really not that way, but it always seems so.

Japan’s tradition of excellence in improving and innovating upon the way the world does things, in seeing advantage in an existing system and then coaxing that advantage into going way beyond what all others thought to be sensible and feasible, is without peer.

Like a series of lucky stars pushed into the skies over Japan by Ebisu, the Shinto god of good luck, all the elements for Japan’s race to the Factory of the Future are in place…and all at once. Incredible!

From this point forward is where the Japanese excel the rest of the world by a wide margin.

“For Japan and for Japanese manufacturing, they’ve been here before: this is another of those classic moments when Japan gathers itself together and creates a new industrial empire.”

As was mentioned in Japan Races to the Factory of the Future: “Since the 1930s, Japan has been visited six times by an industrial divine wind: in the 1930s manufacturing Dodge trucks; in the 1950s after buying Bell Labs’ plans for the first transistorized computer; with Joe Engelberger’s robot in the 1960s; with W. Edwards Deming in the 1960s for management and manufacturing; in the 1970s for creating the modern automobile industry; and now here in 2016 for its sixth with the Factory of the Future.

The technology is a marriage of Japan’s advanced robot technology and America’s information technology. FANUC, an industrial robot maker, and Cisco, the communications network developer; and they’ve already made $38 million wiring together smart factories, with GE—of all people!— using the team to connect up 100 of its factories.

Adding even more class-A strength to that squad comes from Rockwell Automation, as well as the Japanese artificial intelligence (AI) start-up called Preferred Networks (PFN).

And now, just to add another giant to the already potent mix, Japan’s Masayoshi Son, chairman and chief executive officer of SoftBank, has plunked down $32 billion for the U.K.’s ARM Holdings.

As the Nikkei Asian Review put it:  “Although ARM is small in scale…it’s the cornerstone of the smartphone chip market. One official at a leading chipmaker said ARM had ‘no rival at present.’

“ARM captured its current unique positon thanks to the widespread use of smartphones.”

With miniaturization, digitization, and Moore’s Law cascading from smartphones and into robotics, ARM holds a great advantage for providing the chips that power the Industrial Internet of Things (IIoT).

Japan now has in its hands on all of the elements necessary to make the Factory of the Future purr with an ability to pump out countless billions of dollars. And that’s just the potential success on the home front in Japan.

This IIoT industry will be larger than any industry previously built by Japan, namely because all other industries will depend on IIoT for the future. Toyota, for instance, will need to retool with IIoT tech in order to survive the coming world of smart factories. That means every one of Toyota’s present-day factories will need retrofitting for IIoT!

The Factory of the Future is of enormous and incalculable benefit for Japan and its people. This new industry will put millions of people to work while adding a whole lot of swagger back into Japan, Inc.

Better still, the Japanese are not building the Factory of the Future just for its home market, although there are decades of IIoT retooling awaiting tens of thousands of factories in the homeland. Rather, as with all of their former industrial triumphs, it’s being built for export! Yes, just like a Camry.

China’s great size (1.3 billion people) can be its own worst adversary as well as its own best advantage when it comes to finding employment for millions of workers in the coming race to the Factory of the Future.

In migrant workers alone, China has 160 million; that’s half the population of the U.S. Millions of those workers found new homes for a decade or more in places like Shanghai, Shenzhen and Guangzhou, which will now turn them out by the hundreds of thousands to return to their hometowns  to the west.

Foxconn turned out 60,000 workers from just one factory in Kunshan, in Jiangsu province. Another 600 Jiangsu companies look to trim their headcounts as well.

With tens of thousands of robots being deployed or soon to be deployed along China’s east coast, lots of worker confusion, anger, and social unrest could well follow in the wake of the potential millions of ensuing layoffs.

Added to that grim picture is the advent of KUKA and Huawei initiating their own race to the Factory of the Future, and things could turn from grim to worse in a hurry.

From making Nikes to urban farming
“Last October, Fu Chang Electronic Technology, a supplier to the telecommunications equipment makers Huawei and ZTE, shut its doors unexpectedly,” reported the New York Times. “The closing prompted a protest by thousands of workers in front of a government building in Shenzhen.”

Sadly, more of that is on its way.

In Dongguan, which used to supply one out of every four pairs of running shoes worldwide, is now stumbling as cheaper production bases in Asia have gained ground, says the Dongguan Shoe Industry Commerce Association. Some Dongguan shoe makers have already moved to Bangladesh. Other Dongguan production staples like furniture and garments are headed south to Vietnam and Malaysia.

The rub: low-cost, light manufacturing is being obliterated by foreign producers. The bottom line here is that what they used to produce somebody else now does it cheaper, while domestic markets won’t buy the low-end products.

So why not produce what the Chinese people will buy?

Feeding China
Like what? How about food, something everyone in the domestic market needs on a daily basis? All it takes is a little bit of mental reframing.

Dongguan could easily become a zone for “vertical” farming like Tokyo’s Spread that produces 21,000 heads of lettuce a day. Yes, daily.

Dongguan shoe makers could easily, and probably most willingly, convert themselves to lettuce farmers growing lettuce indoors on farms that go straight up to the ceiling, right there in downtown Dongguan.

China just spent $5.3 billion to buy 62 percent of the U.S. soybean yield this year; China will use it to feed cattle and pigs. Yes, cattle for beef in a traditional chicken and pork-eating population.

China has changed its eating habits while everyone was watching shoe workers lose their jobs. China now is the number one consumer of beef worldwide.

Beef cattle need food, like grazing land. At China’s consumption rate for beef, China would need grazing land about the total land area of the U.K., which just so happens to be the same amount of China’s farmland made toxic by factory expansion in the 1990s.

China also just became number one in freezer capacity in the world, taking over from the U.S., the former world leader. Freezer capacity is just an industry term that means the Chinese buy more refrigerators than Americans do.

And what do the Chinese put in all of these new refrigerators? Food.

With 25 percent of the world’s population, China has barely 7 percent of the world’s arable land. With China’s population growing and with its middle-class (160 million) looking at new and different diets, food is big. Grumbling coal miners from Jixi might like the idea of changing occupations. There’s no black lung disease from heads of lettuce.

Until the KUKA-FANUC juggernaut gets cranked up, the millions of Chinese factories and warehouses will continue to perform, eventhough robots are taking over the coastal east.

Economist, Tyler Cowen, sees China’s enormous size as a distinct advantage while waiting for robot-driven automation to knock on the door. In his recent (April 2016) paper: Economic Development in an “Average is Over” World, he demonstrates why he thinks Chinese workers will retain their jobs while growing more jobs on the domestic front:

“If there is a bright side to the Chinese situation, it is this: the country is so large, it has continued to diversify its manufacturing rather than specializing.

“If we look at the history of say industrialization in South Korea, at first the country produces all sorts of manufactured goods, if only to drive its own growth.

“As the economy matures, it trades more for the most efficient inputs and thus home country manufacturing specializes more, namely domestic Korean companies specialize in what South Korea can sell effectively in global markets. Samsung and

“Hyundai persists, but the local manufacturer of diapers may or may not prove competitive.

“That is a natural pattern for smaller countries. In China, however, the country is still producing a wide array of manufactured goods for the home market.

“The Chinese market is so large, and the value of direct access to that market is so significant, that China has not significantly specialized its exports the way many other developing nations have. That holds out some prospect for a relatively high level of manufacturing employment in China, looking forward.

“It is also possible that some of the recent measured slowdown in global trade comes from China building more fully integrated structures of production for its manufacturing, relying on domestic inputs in cases where it used to import.

“That also would help China maintain its manufacturing employment over time.”

The Fourth Industrial Revolution is stacking up to be a difficult but doable road ahead for the people of East Asia’s big three.

 See also: Taiwan: What Have You Done to Yourself?