In the past decade, most of the world’s electronics and semiconductor manufacturing have moved to China in order to tap into the country’s large pool of inexpensive labor. That pool is showing signs of drying up with recent large wage increases in China following the much-reported suicides at the Foxconn plant in Shenzhen, and unrest at a Toyota plant in Guangzhou. Examples include reports that Flextronics recently approved wage increases of up to 27 percent for certain categories of production workers in the country. All signs seem to indicate that low wages will not be one of the reasons for electronics and semiconductor companies to move into China in the future. A Fitch Ratings report (see "Rising wages pose risk to tech manufacturers in China” in News China) recently stated that while first-tier technology manufacturers in China can weather the impact of rising wages in the short term, there is a risk that relocation overseas might be an option if cheap labor in China dries up in the medium term. So what will be the next move for manufacturers in China? Is relocation to lower-wage areas of the country a viable option for the long term? And what if they start to automate their production lines? Will this move erode the inherent advantages that manufacturing in China bring? These are questions that not only apply to manufacturers but also key players in the associated supply chain as well. Of the three main contract manufacturing building blocks of "Design”, "Manufacturing” and "Logistics,” China’s attraction has always lay in the "Manufacturing” portion. In order for the country to remain the choice location in this area in the long term, I believe that China needs to make a bold move and embrace industrial automation on a massive scale. Factories should be upgraded and operator-dependency reduced. This will not only take away the human error factor, but now it can be seen as a cost-effective move as well. Already robot manufacturers are getting enquires and requests from EMS companies and their competitors, who believe that factory automation makes sense in terms of reducing total costs of ownership. Brian Carlisle, CEO of Precise Automation LLC, observes that even large Chinese companies that build computers in their 20 to 30 factories are now looking at using more robotics. "Some Chinese electronics manufacturers have an internal robot group to develop their own robots to automate their factories,” Carlisle noted. As the global economy emerges from the downturn, the electronics industry is experiencing an upswing with computer and mobile phone production starting to ramp up again. These will provide new opportunities for robots to be used for ever increasing functions like assembly and testing, and Chinacould well turn out to be the "Automated Factory of the World”. | 
