In late March, Apple, the world’s largest company by market value, and Foxconn, the world’s largest contract manufacturer, signed an agreement to improve working hours, pay, union representation and health and safety conditions for the 1.2m workers at the Chinese assembly plants that crank out iPhones, iPads and other products.
Many observers were relieved to see Chinese manufacturers having to contend with a shorter working week and better labour standards, and were pleased that wages would increase. Others saw it as a good-news story about a big multinational company making significant concessions to workers. Critics, however, cast the deal as little more than a face-saving exercise in corporate social responsibility.
All of these interpretations fail to understand the broader importance of the announcement. We are witnessing a profound shift in China’s industrial strategy. To understand why, one needs to recall the more momentous Foxconn announcement in August to deploy about 1m industrial robots in its assembly factories over the next three years. (According to the International Federation of Robotics, the total number of industrial robots deployed in the world is a little less than 1.1m.)