Trade war tariff threat, rising costs drives Hong Kong manufacturer to automate Chinese factory to survive

Eastcolight’s new 70 million yuan (US$10 million) factory in Guangdong province has reduced its workforce to 300 from a peak of 2,000 by investing in 50 robotic arms

Its capacity is set to increase by 25 per cent this year as the company seeks to focus on China’s domestic market

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Eastcolight’s labour force has been trimmed to 300 from a peak of 2,000, significantly reducing production costs to remain competitive, even though the capacity is set to increase by 25 per cent to 600,000 units per month this year. Illustration: Perry Tse

Published: 6:00am, 9 Jan 2020Updated: 1:52pm, 26 Nov 2020

A factory in the southern Guangdong province, just over the border from the casino hub of Macau, offers a new face of “Made in China”. Gone are the army of uniformed Chinese migrant workers manning manual production lines, in their place an automated intelligent production centre equipped with 50 robotic arms that rarely take breaks or make mistakes.

The new factory, belonging to Hong Kong-based toymaker Eastcolight in the town of Shenwan, which is part of the city of Zhongshan, has been in operation since early last year. Its newly installed solar panels are likely to generate a tenth of the plant’s electricity, while dormitories with private amenities and exercise equipment are provided for employees.

The labour force has been trimmed to 300 from a peak of 2,000, significantly reducing production costs to remain competitive, even though the capacity is set to increase by 25 per cent to 600,000 units per month this year.

Faced with the developing trade war between China and the United States, it was the final push Johnny Sze Chun-hong, Eastcolight’s director and vice general manager who inherited the factory’s management from his parents, needed to make the one-off investment of 70 million yuan (US$10 million).

The trade war got our customers worrying, and that forced us towards automation

Johnny Sze Chun-hong

Sze still needed to keep a close eye on the plans by US President Donald Trump to levy additional tariffs on Chinese imports before Christmas over fears the duties, which were eventually halted as part of the phase one deal discussions, would raise the retail price of his toy microscopes and telescopes.