Made in China 2025: Implications of Robotization and Digitalization on MNC Labor Supply Chains and Workers' Labor Rights in China

AuthorRonald C. Brown
Ronald C. Brown
Multinational companies (hereinafter the “MNC(s)”) operating
their labor supply chains in China must determine if their business
will benefit from China’s current push to robotize certain
manufacturing industries by 2025.1
Despite the huge challenges, countless manufacturers in China
are planning to transform their production processes using robotics
and automation at an unprecedented scale. In some ways, they don’t
really have a choice. Human labor in China is no longer as cheap as
it once was, especially compared with labor in rival manufacturing
hubs growing quickly in Asia [O]ne solution, many
manufacturers—and government officials—believe, is to replace
human workers with machines.2
Over the coming decades, a labor shortage will force Western
brands to remake their China operations or pack up and leave. The
changes will mark a new chapter in the history of globalization,
where automation is king, nearness to market is crucial and the lives
of workers and consumers around the world are once again
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1 For a brief introduction, see Scott Kennedy, Made in China 2025, CTR. STRATEGY INTL STUD. (June
1, 2015), https://
2 In Shanghai, the “Cambridge Industries Group, faces fierce competition from increasingly high-tech
operations in Germany, Japan, and the United States. To address both of these problems, CIG wants to
replace two-thirds of its 3,000 workers with machines this year.” CIG Gerald Wong stated, “It is very
clear in China: people will either go into automation or they will go out o f the manufacturing business.”
Will Knight, China Is Building a Robot Army of Model Workers, MIT TECH. REV. (Apr. 26, 2016),
“Three-quarters of all industrial robots operate in four sectors: computers and electronic goods; home
appliances and components; transportation equipment; and machinery. That’s partly because
automation makes financial sense in these industries and partly because of the limited nature of the
existing technology.” Ben Bland, China’s Robot Revolution, FIN. TIMES (June 6, 2016), https://
3 Kathy Chu & Bob Davis, As China’s Workforce Dwindles, the World Scrambles for Alternatives,
WALL ST. J. (Nov. 23, 2015),
scrambles-for-alternatives-1448293942. On the other hand, other views have been expressed. “Indeed,
the concern among lower-income countries is precisely that, while China moves up the value chain and
acquires new comparative advantages, it continues to encapsulate within its borders the wage-sensitive
chunks of the cross-border supply chain. Thus, the fear is that China, being a vast country of multiple
regions with varying end owments, is not only acquiring new comparative advantages, but also keeping
its existing ones, whereby China would straddle the full span of technologies and labor intensities.”
Philip Schellekens, A Changing China: Implications for Developing Countries, WORLD BANK (May
2013), (quoting YUSUF,
The intersection of digitalization and labor and employment laws
raise issues that are both old and new.4 Labor unions and employees
have dealt with the impacts of automation for generations. Now that
comes in dynamic waves, however, with digitalization and
robotization of the workplace. 5 It is referred to as the fourth
industrial revolution using the breakthrough technology of cyber
physical systems. 6 In Germany this revolution is led by the
Government and called Industrie 4.0 and it “connects embedded
system production technologies and smart production processes to
pave the way to a new technological age which will radically
transform industry and production value chains and business models
(e.g. “smart factory”)”. 7 In China, this government-led industrial
revolution is called Made in China 2025. 8 It is argued that the
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CHINA AND INDIA (Washington, DC: World Bank, 2010).)
4 The Future of Jobs Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution,
WORLD ECO. F. (Jan., 2016),
embargoed.pdf. See also Melody Guan, Rise of the Robotic Workforce, HARV. POL. REV., available at
5 “Is it automation or digitalization? Is there really a difference? Or is it just a matter of degree? You
could argue that digitalization is just extending automation. However, Gartner uses digitalizationto
emphasize that the goal is to create and deliver new value to customers, not just to improve what is
already being done or offered. Take for example a nurse’s clipboard, used for bedside patient
monitoring in hospitals. Simply replacing the paper forms with tablet devices is not in itself digitization.
Of course, there are benefits in doing this, such as faster and more accurate data entry into the electronic
health record system than could be achieved with manual transcription. However, what if we redesigned
the work using smart machines and the Internet of Things? Machines can do most of the monitoring,
data collection and incident reporting, leaving nurses to do things only humans do well, like touch, talk,
observe and empathize. The machines can monitor patient vital signs continuously, potentially alerting
the nurse to a problem sooner than might otherwise have occurred with only periodic checks. The end
result is a better outcome for the patient and the nurse.” Susan Moore, Digitalization or Automation
Is There a Difference? GARTNER (June 12, 2015),
digitalization-or-automation-is-there-a-difference/. See also Guan, supra note 4.
6We will have a fourth industrial revolution,says Professor Detlef Zühlke, a lead researcher in the
factories of the future. And that fourth revolution is all about making factories less stupid. See James
Temperton, A ‘fourth industrial revolutionis about to begin (in Germany), WIRED (May 21, 2015), See also Cyber Physical Systems and Industry
Digitalization, 2B1ST CONSULTING (Apr. 7, 2015),
manufacturing-basics-and-mains-goals/. The preceding three industrial revolutions are 1.
mechanization, water power, steam power; 2. mass production, assembly line, electricity; 3. Computer
and automation. See Industrie 4.0, WIKI (Nov. 24, 2015), Industry_4.0.
7 “Smart industry or ‘INDUSTRIE 4.0’ refers to the technological evolution from embedded systems to
cyber-physical systems. Put simply, INDUSTRIE 4.0 represents the coming fourth industrial revolution
on the way to an Internet of Things, Data and Services. Decentralized intelligence helps create
intelligent object networking a nd independent process management, with the interaction of the real and
virtual worlds representing a crucial new aspect of the manufacturing and production process.”
INDUSTRIE 4.0 Smart Manufacturing for the Future 6, GTAI (July, 2014),
manufacturing-for-the-future-en.pdf. In the U.S., similar programs are underway. See President Obama
Launches Advanced Manufacturing Partnership, OBAM A WHITE HOUSE (June 24, 2011), https://
8 Inspired by Germany’s Industry 4.0, it uses “the Internet of Things to connect small and medium-sized
companies more efficiently in global production and innovation networks so that they could not only

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