Western Executives Confront Harsh Realities of China’s Manufacturing Edge

Western executives from the automotive and green energy sectors are returning from recent visits to China with a heightened awareness of the country’s rapidly advancing manufacturing capabilities. Many express a sense of humility and concern regarding the potential competitive disadvantage that Western nations may face, particularly in the electric vehicle (EV) market.

Ford CEO Jim Farley highlighted the urgency of the situation during an interview with The Verge last month, stating, “We are in a global competition with China, and it’s not just EVs. And if we lose this, we do not have a future at Ford.” This sentiment reflects a growing anxiety among Western leaders about the pace of innovation and automation in China’s manufacturing industry.

On his part, Andrew Forrest, founder of mining company Fortescue, revealed that his recent trip to China led him to abandon plans for in-house production of EV powertrains. He remarked, “There are no people — everything is robotic,” underscoring the prevalence of automation in Chinese factories. Many executives shared experiences of touring “dark factories,” where operations continue around the clock without human oversight, relying entirely on robotic systems.

The shift in China’s manufacturing approach is evident. Greg Jackson, CEO of British energy supplier Octopus, noted, “You get this sense of a change, where China’s competitiveness has gone from being about government subsidies and low wages to a tremendous number of highly skilled, educated engineers who are innovating like mad.” According to the International Federation of Robotics, China has outpaced Germany, the United States, and the United Kingdom in deploying industrial robots, marking a significant shift in global manufacturing dynamics.

This shift is not merely driven by a desire to enhance profit margins through automation. As analyst Rian Whitton of Bismarck Analysis explained, “China has quite a notable demographic problem, but its manufacturing is, generally, quite labor-intensive. So in a pre-emptive fashion, they want to automate it as much as possible… to compensate for this population decline and to get a competitive advantage.”

China’s ambitions extend beyond just manufacturing. The nation has committed to integrating artificial intelligence (AI) into its economic framework, seeking to make it a critical growth engine over the next decade. Additionally, advancements in China’s space program have raised concerns about the country potentially surpassing the United States in significant technological milestones, such as lunar exploration.

The implications of these developments are already being felt, especially in the EV sector. While the United States has implemented protectionist measures to support domestic manufacturers, Chinese-made EVs are gaining traction in European markets. Sander Tordoir, chief economist at the Center for European Reform, emphasized, “Robotics, if deployed well, can lift the productivity of your economy greatly. And if China is extremely good at it, then we should try to catch up because, like China, a lot of Europe is aging.”

Currently, the United States maintains restrictions on Chinese EV imports, which has provided temporary relief for domestic producers. Yet, Farley pointed out the stark reality, stating, “The competitive reality is that the Chinese are the 700-pound gorilla in the EV industry.” He personally experienced the formidable competition firsthand, noting his preference for the Xiaomi electric vehicle, which he imported from Shanghai to Chicago.

As Western executives grapple with these challenges, the urgency to innovate and adapt intensifies. The growing dominance of Chinese manufacturing and technology underscores the need for strategic responses from Western industries to remain competitive on the global stage.