There's a Problem in China—Robots

False Reports

Late May, it was reported that Apple supplier Foxconn slashed 60,000 jobs to make way for robot automation of its factory floor. Subsequent reports and Foxconn statements in Chinese media revealed that the reports were false, fruits of overly enthusiastic bureaucrats in the manufacturing town of Kunshan.

And this is a growing trend on the mainland.

The Chinese government is betting on more automation and robotics to maintain its manufacturing supremacy in the world. Increasing wages and low labor costs of neighboring Southeast Asian neighbors have pushed China toward promoting robotics in factories, and becoming the world's biggest market for robots.

But this has created its own host of problems—and that's not even counting the typical worries of worker layoffs and mass displacement.

The Chinese demand for robots has created a bubble that is currently being exploited by swindling companies, taking government subsidies with nearly nothing to show for it.

Duping Government

A Bloomberg column suggests as much. Due to most of China's robots being imported from other countries, it has embarked on a crusade for homegrown robotics: 77 local governments have pushed policies, subsidies, and developed infrastructure to encourage robotics. Shenzhen hands out $76 million in annual subsidies to support the industry. Guangdong Province is shelling out $55 million this year.

And that sort of money attracts a specific type of con. According to the column, scams to snag subsidies are proliferating. Many companies with little or no experience in robotics are receiving huge handouts from the government.

But even with all the subsidies, a great robotics industry is still slow in coming. 85% of the robots sold in China are foreign-made, while those produced domestically are largely reliant on foreign components.

The column ends by a suggestion for a more intelligent approach to growing the industry: staying away from direct grants to companies, and funneling money to basic research at universities and institutes.