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  • This is the new smart logistics center of China's largest retailer, JD.

  • The 500,000 square meter facility is packed with the latest supply chain technology.

  • But it wasn't too long ago that tasks such as

  • shelving and packing were done manually by employees.

  • Jiahao's situation highlights a bigger trend in Chinathe push toward automation.

  • The chinese labor market faces some big challenges,

  • including an aging population and rising wages -

  • issues that automation could help relief.

  • It's still rapidly evolving that aging population is a reality.

  • China's now facing the challenge of potentially getting old before it gets rich.

  • JD.com's massive logistics park in Dongguan, south China

  • can handle 1.6 million orders a day.

  • Let's take a look inside.

  • After an order is placed, packages are transported to a sorting facility, which is fully automated.

  • There are 800 of these sorting chutes, which help divide up packages

  • destined for China's many different regions.

  • China's working age population shrunk by more than 5 million people in the last decade,

  • as births dropped.

  • That makes automation at places like JD logistics park,

  • even more necessary.

  • Qin Jiahao has been working at JD for around six years.

  • A large part of his job has become automated too.

  • What tasks do you do different now versus before?

  • So how did the Chinese labor force get here?

  • It all started in the late 70s when China enacted its one-child policy

  • to control its rapidly growing population.

  • Between the 1940s and the 1980s, the country's population doubled in size,

  • from over 500 million people to more than 1 billion.

  • Over the next 40 years, that growth slowed to 40%.

  • Today, the country's population is a whopping 1.4 billion

  • more than four times the size of the U.S.

  • However, the proportion of China's working age population is falling,

  • dropping 6.8 percentage points from 2010 to 2020.

  • Despite efforts to reverse the trend, births fell in 2020.

  • That was the fourth-straight year of decline.

  • Automation, of course, is one of those big opportunities

  • and by that we include digitization, both to the customer, and more importantly,

  • up the chain back to suppliers.

  • That is really going to be the driver of increasing all of that productivity.

  • In the financial sector, about 10 years ago, if you looked at the average productivity

  • of a financial worker in China, compared to say Europe, it was maybe 20%.

  • Now it's closer to 40, or 50%.

  • So still lagging, but to have that degree of change, in the course of almost five years

  • is almost unheard of.

  • It's not just the factories and warehoues that are seeing more automation.

  • China's focus on areas like artificial intelligence is spurring rapid advancement

  • in areas like driverless transportation.

  • The southern Chinese city of Guangzhou is a hub for some of China's tech companies

  • to test their driverless cars.

  • One such start-up is WeRide.

  • Users can hail one of the company's robotaxis or ride on its driverless bus.

  • Driverless cars could make jobs such as taxi drivers redundant

  • and may even be applied in long-haul transportation modes eventually.

  • I caught up with WeRide's CEO Tony Han

  • to talk about the issues autonomous driving could solve.

  • One is the shortage of labor, especially in the concept of aging society.

  • In China, and also in U.S., in most of the developed countries,

  • human labor are getting more and more expensive.

  • People need better pay, need more welfare.

  • Think about if you want to get a chauffeur, you want to get a driver,

  • it's entirely expensive.

  • To call a taxi sometimes in a more metropolis city and in some big cities,

  • is also very expensive.

  • Can we find a cost-effective way to supply this kind of transportation service to everybody?

  • Through autonomous driving with development of artificial intelligence,

  • we are able to make the car drive all by itself with the input of all kinds of sensor.

  • The other problem is things like we can make the city greener.

  • Do we really need that hundreds of thousands of cars in the city?

  • And all over the city, you probably need one-tenth of the autonomous driving cars

  • to finish all these kind of transportation requests

  • and we can reduce the carbon dioxide emission to a big extent.

  • But of course, increasing automation could also lead to jobs disappearing altogether.

  • With that brings challenges on how to reskill the population for the new age.

  • One study estimates that up to 220 million workers may need to transition between jobs

  • by 2030, in part due to automation.

  • The good news about automation is that it actually works,

  • that it intends to improve quality, reduce cost, reduce time required

  • all these good things.

  • The bad news about automation is that it actually works.

  • As in, it takes out the human resources.

  • And China's going to get it just like everywhere else to us,

  • except bigger, because China is bigger.

  • So, 226 million Chinese people will probably have to find a new job

  • in over the next 10 or 15 years because of automation.

  • That, of course, is a massive challenge for the employer, but the employee,

  • but also for government and for society as a whole.

  • And companies will have a key role to play.

This is the new smart logistics center of China's largest retailer, JD.

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How China is using automation to reshape its economy | CNBC Reports

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    Summer posted on 2021/05/24
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