“It’s the most humbling thing I’ve ever seen,” said Ford’s chief executive about his recent trip to China.
After visiting a string of factories, Jim Farley was left astonished by the technical innovations being packed into Chinese cars – from self-driving software to facial recognition.
“Their cost and the quality of their vehicles is far superior to what I see in the West,” Farley warned in July.
“We are in a global competition with China, and it’s not just EVs. And if we lose this, we do not have a future at Ford.”
The car industry boss is not the only Western executive to have returned shaken following a visit to the Far East.
Andrew Forrest, the Australian billionaire behind mining giant Fortescue – which is investing massively in green energy – says his trips to China convinced him to abandon his company’s attempts to manufacture electric vehicle powertrains in-house.
“I can take you to factories [in China] now, where you’ll basically be alongside a big conveyor and the machines come out of the floor and begin to assemble parts,” he says.
“And you’re walking alongside this conveyor, and after about 800, 900 metres, a truck drives out. There are no people – everything is robotic.”
Other executives describe vast, “dark factories” where robots do so much of the work alone that there is no need to even leave the lights on for humans.
“We visited a dark factory producing some astronomical number of mobile phones,” recalls Greg Jackson, the boss of British energy supplier Octopus.
“The process was so heavily automated that there were no workers on the manufacturing side, just a small number who were there to ensure the plant was working.
“You get this sense of a change, where China’s competitiveness has gone from being about government subsidies and low wages to a tremendous number of highly skilled, educated engineers who are innovating like mad.”
High-tech transformation
It’s also a far cry from the cheap “Made in China” goods that many Westerners have associated with the “workshop of the world” in the past, underscoring how much cash has been poured into upgrading China’s industrial processes.
Far from being focused on low-quality products, China is now viewed as a leader in rapidly-growing, high-value technologies such as electric vehicles (EVs), batteries, solar panels, wind turbines, drones and advanced robotics.
A big part of that transformation is down to the country’s focus on automation – which has been encouraged by the ruling communist government and heavily supported with state subsidies, grants and local government policies.
Figures recently released by the International Federation of Robotics (IFR) show this has led to a dramatic and high-tech transformation of China’s industrial base over the past 10 years.
Between 2014 and 2024, the number of industrial robots deployed in the country rocketed from 189,000 to more than two million.
These can typically include everything from robot arms used for welding, assembly and loading, spider robots used for high-speed “pick and place” movements and overhead gantry robots for precision tasks such as 3D printing.
The overall number of robots added in China last year was 295,000, compared to 27,000 in Germany, 34,000 in the US and just 2,500 in the UK.
And while it would be easy to put this disparity down to population size alone, China also blows its western rivals out of the water when it comes to robot density. It now boasts 567 robots for every 10,000 manufacturing workers, compared to 449 for Germany, 307 for the US and 104 in the UK.
More automation is seen by many as good for productivity, the all-important measure of how much an economy gets out of what it puts in.
Many analysts also note that China’s growing share of worldwide manufacturing gives it increasing leverage over global supply chains – and would make it a formidable opponent in a war.
But alongside Beijing’s stated desire to dominate industries of the future, Rian Whitton, an expert at Bismarck Analysis, says increased automation is also an attempt to mitigate the impact of the country’s ageing population.
“China has quite a notable demographic problem but its manufacturing is, generally, quite labour-intensive,” he says.
“So in a pre-emptive fashion, they want to automate it as much as possible, not because they expect they’ll be able to get higher margins – that is usually the idea in the West – but to compensate for this population decline and to get a competitive advantage.”
As part of its so-called Made in China programme, local authorities have offered large tax breaks that reimburse firms for a fifth of their spending on industrial robots. This is under a policy known as “jiqi huanren” – which translates to “replacing humans with machines”.
Western manufacturers in trouble
But this technology, coupled with the vast output of Chinese manufacturers, spells serious trouble for traditional Western brands.
The most visible sign of this upheaval is on our roads, where Chinese-made electric and hybrid cars are taking a growing share of sales.
In Britain, Shenzhen-based BYD multiplied its September sales by a factor of 10 this year – overtaking far more established brands such as Mini, Renault and Land Rover.
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