Robots coming

As the world prepares for the Fourth Industrial Revolution, global experts ponder how to deal with its impact on jobs

The future of work in a world dominated by robots was central to the discussion of some of the world's leading thinkers in China's Northeast coastal port of Dalian.

The World Economic Forum Annual Meeting of the New Champions, also known as the Summer Davos, which has been running since 2007, is now an established event on the international conference calendar.

The gentle warm breeze coming off the Bohai Sea may contrast with the snowy, wintry landscape of the Swiss village that hosts the parent event in January, but the debates at the forum - held between June 27 and 29 - were no less searching.

"During the 10 years the meeting has been held, the China economy has advanced significantly. There is not only a more important need for China to connect with the world, but an increasing need for the Chinese perspective to be heard," he says.

The key theme of this year's meeting was how the so-called Fourth Industrial Revolution - which will bring in not just robotics but the widespread adoption of artificial intelligence, the internet of things, autonomous vehicles, 3-D printing and nanotechnology - can be inclusive and not leave people behind.

Earlier revolutions, such as the first triggered by steam power by Britain in the 18th century, the second by mass production techniques pioneered by companies like Ford in the US in the early 20th century and the third, the digital revolution, which has seen the advent of Facebook, Micrososoft and Chinese giants Tencent and Alibaba, have all been disruptive.

What distinguishes the fourth is that it is likely to take place over a shorter period of time and have enormous implications for the world of work.

According to a survey by EEF, the UK manufacturers' organization, 80 percent of the respondents said robotics could dominate industry by 2025, with the potential to destroy not just manufacturing jobs but those in the service sector, particularly in financial services.

Xu, speaking in the city's Conrad Hotel on the eve of the event, believes it could mean a fundamentally different way of working.

The 54-year-old is one of China's most eminent technology figures. He is deputy director of the advisory board of the Zhongguancun National Demonstration Zone, known as China's Silicon Valley, and also chairman of Tsinghua Holdings, the technology investment arm of China's Tsinghua University which has assets of 350 billion yuan ($51.47 billion; 45.28 billion euros, ￡39.70 billion).

He believes the revolution will eventually benefit society, with more people working in the arts and culture sector, although this will require a more highly educated workforce.

"The Fourth Industrial Revolution will eventually make people richer, and when people become more affluent they have a greater need for culture and the arts," he says.

"In a traditional society you may think you have to go and work in a factory or a company. With robots, manufacturing will take care of itself."

Premier Li Keqiang, in his address to the forum on June 27, made it clear that he now sees innovation as the key driver of growth in China and that would be the best route to providing inclusive benefits for all.

He also called for foreign companies to play a major role in driving innovation in the country, announcing new measures that will make it easier for them to register in China.

"All companies that are registered in China will be eligible to enjoy the same supportive policies that China makes, in accordance with WTO rules, to push forward the 'Made in China 2025' strategy and promote innovation," he said.

The new industrial revolution does pose significant challenges to China, with nearly a third of the workforce still engaged in manufacturing.

Although advanced manufacturing and the development of high speed rail, aerospace and maritime engineering technologies remain central to the China's 2025 strategy, certainly fewer low-skilled people will be employed.

Edward Tse, founder and CEO of management consultants Gao Feng advisory, however, says the new technology will create a jobs crisis in China and elsewhere within a decade.

"It is going to create a lot of risks of unemployment for a large number of people. China, however, does not have any other option but to innovate, even though it is going to create quite a lot of pressures within society," he says.

Tse, also author of China's Disruptors, which examines how China's big technology companies are having an impact on global business, says the digital revolution did create many jobs that did not previously exist and that is what one has to hope for from the fourth revolution also.

"Right across China you now have Taobao villages where there are clusters of people selling products on the online store, grouping together to lower the logistics costs."

Jean Liu, president of Xiaoju Science and Technology, the company behind Didi Dache, the mobile taxi app that has taken China by storm with more than 100 million users, said at a panel discussion at the opening of the meeting that technology will create new, unexpected jobs.

"We are at an important juncture. Technology is changing all industries, including mine, which is transportation. It is a question of human survival and development," she said.

Liu added that Didi had itself created new work for many of the 70 million drivers who now collect money through the service.

"A number of the mare people who have been laid off by heavy industries," she said.

Vishal Sikka, chief executive officer of Indian technology services group Infosys' US operations, told the same discussion group that the workforce certainly had to somehow become more educated to cope with the challenge.

"Education is the answer to this problem. The march of technology is inevitable, and we have to move forward because there is no alternative," he said.

"With self-driving cars, for example, the software technology does not fall from the skies. It is written by people like us. There is no reason why this can't generate thousands of jobs. It is about creating the jobs of the future."

Shu Yinbiao, chairman of the State Grid Corp of China, the world's largest utility company and the second largest in the Fortune Global 500 rankings, was also optimistic.

He said new energy technology would be at the forefront of the new industrial revolution, and that would also create jobs.

"Energy has been the trigger for the previous three industrial revolutions, and we now must be ready to meet the challenge of the fourth," he said.

Thomas Luedi, Asia managing partner for energy and process industries for management consultants AT Kearney, who was also attending the forum, said the revolution posed more questions than there were yet ready answers for.

"If you automate you take away shop floor labor and create jobs for engineers to maintain the robots and also for data analysts. The challenge is what you are going to do with the people who have gone by the wayside and where you find that engineer who can maintain the robot."

Zhu Ning, Oceanwide professor of finance at Tsinghua University, who was one of the moderators at the forum, believes the new industrial revolution might not deliver the sudden shock that many people seem to be fearful of.

"If you look at artificial intelligence, or AI, the term was first coined in 1956. I think it still really depends on how or where the really important breakthroughs will come that will determine the speed of change," he says.

"I still believe this will be a lot more incremental than many currently think and we will have time to adjust to it."

With leading countries moving to the Fourth Industrial Revolution, some believe this presents an opportunity for Africa to firmly establish itself as a manufacturing center.

Much of the continent - although there are exceptions - still has an agrarian economy with many regions not yet having gone through what might be seen as their first industrial revolution.

According to the World Bank, 80 million light manufacturing jobs are set to leave China over the coming decades as the economy upgrades and, should Africa pick up a relatively small proportion of those, it could make a substantive difference.

Emmanuel Nnadozie, executive secretary of The Africa Capacity Building Foundation, which was founded in 1991 to promote development and industrialization on the continent, believes the trend is already there.

"Manufacturing companies will migrate, and so Africa can stand to benefit from this because of labor costs and the advancement of Chinese industries into a more high technological area and it will benefit from that," he said.

"It is actually happening. If you go to the high streets of New York and Washington and elsewhere in the world, you see Egyptian-made products that are being sold there and Ethiopian coffee, but the degree to which it is happening is not yet satisfactory."

Funeka Yazini April, a research specialist at the Africa Institute of South Africa, believes that where Africa fits into the various industrial revolutions is much more complex.

"The African Union industrial plan does not talk about 1.0, let alone 3.0, so let us forget about 4.0," she says.

"If you look at the Asian countries (when they began industrializing) they had a mix and the agriculture factor was there. In many countries, like South Africa, the agrarian base of the economy is missing. This was the platform on which China built its success."

One major area where the fourth revolution might help transform China is the use of new technologies in building new, green, smart and sustainable cities. According to management consultants McKinsey & Co, a billion people will live in cities in China by 2030.

"This will create commercial opportunities in China and hence jobs. We need green urbanization and creating smarter and greener cities that use energy more efficiently is key," Zhu at Tsinghua says.

Zhu is not alone in believing the new technologies will drive growth in China. A new research report, "How Artificial Intelligence Can Drive China's Growth", by management consultants Accenture, in collaboration with Frontier Economics, released at the forum predicted that artificial intelligence could accelerate China's GDP growth from its current level of 6.9 percent to 7.9 percent by 2035. Most other forecasts point to long-term growth declining as the economy moves into a mature growth stage.

The impact of AI, according to the research, will be to increase labor productivity in China by 27 percent in just 20 years.

"China has already made great leaps in the development of AI and our research shows that it has the potential to be a powerful remedy for slowing growth," said Chuan Neo Chong, chair of Accenture Greater China.

"However, as with any catalyst, it is important to remember the challenges and the risk of unintended consequences. Stakeholders must prepare themselves intellectually, technologically, politically, ethically and socially for the promise of AI."

Steve Mullinjer, regional leader, Asia-Pacific and the Middle East for Heidrick & Struggles, a global executive search company, says few companies are prepared for the disruption the new technology revolution will bring.

He estimates that the demand for executives with the technology expertise, or who can handle the change, outnumbers the actual supply by more then 10 to one.

"It is a major problem that companies will have to deal with. There is a real shortage of talent," he says.

According to the company's own research - also released at the forum - 83 percent of respondents in a survey of 558 senior executives across the Asia-Pacific face more disruption in the next 18 months.

Mullinjer, however, believes Chinese companies, inspired by the examples of companies like Tencent and Alibaba, are more likely to be able to deal with disruption than many in the West.

"Everything is new in China. The country went from nowhere to the 21st century in a very short space of time. Companies don't have the old legacy business models," he says.

"I can be in a shop in Chengdu, see something I like, order it on my iPhone and have it delivered to my home before I get home. I don't have to be bothered with taking it on the plane."

The forum highlighted that the success of the Fourth Industrial Revolution depends to some extent on the general public having faith in scientists.

Some argued this was becoming more of a challenge in the era of alternative facts and fake news, where people no longer know what to believe.

Jean-Pierre Bourguignon, president of the European Research Council, the major European Union science body based in Brussels, says it is certainly no wan issue.

"Some components of the Fourth Industrial Revolution could be blocked or slowed because of this, but I don't think the whole process will be.

"I don't think it can be stopped in any way because it is so overwhelming and it affects so many different aspects."

Bourguignon, a leading French mathematician, says that what is happening in technology will present many challenges, but that China is better placed than most to deal with it.

"This new world is not going to be the absolute best world but the fact is that it is happening and it will be transforming," he says.

"The Chinese government, in particular, is taking this head-on. As Mr (Klaus) Schwab (founder and executive chairman of the World Economic Forum) said here, China is now the fast fish in the tank. They are willing to take on these problems and have a willingness to face and solve them."

Li Daokui, dean of Schwarzman College at Tsinghua University, added a note of caution at the forum. "Innovation in many areas in China is making progress without much (international) recognition. China is strong in engineering and applied sciences, which is a good tradition from the Soviet era. We have 1 million engineers coming out of colleges every year," he said.

He added, however, that China lacks original thinking in key areas, which could hold it back in dealing with the challenges of the upcoming industrial revolution.

"Where we are missing is in basic science and also innovation in social science. This is where we are behind the United States and the West, and most people here are very conscious of this," he added.

Wang Qing, professor of marketing and innovation at Warwick Business School in the UK and now guest professor at Zhejiang University, however, believes it is important not to underestimate the way that China is targeting innovation, particularly with strategies such as Made in China 2025, which aims to give the country a competitive edge in key technologies.

"China has a lot of money to invest in the areas it wants to focus on and it has a very clear strategy. We have seen the success this has brought with high-speed rail, where it is now a world leader," she says.

andrewmoody@chinadaily.com.cn