Automation trend in China: How do multinational supply chain players upskill their workforce locally?

Automation is reshaping the supply chain industry. With these changes, multinational logistics companies in China are struggling to upskill their workforce locally. Yang Bin, Professor at the Institute of Logistics Science and Engineering and Dean of the Shanghai Maritime University graduate school, shares his views on this local concern and advice to retain and attract these professionals.

According to the study Talent management issues for multinational logistics companies in China: observations from the field, there is a shortage of qualified university graduates for open positions in logistics companies, partly due to China's nascent higher education. What are your thoughts?

Professor Yang Bin: Chinese higher education in logistics started around 2000. In 2021, there are 694 categories of logistics in China, spread over 500 colleges and universities across the country. Among them are 525 categories of logistics management, 141 categories of logistics engineering, where most of the automation-related jobs are needed, 7 categories of procurement management and 39 categories of supply chain management.

The direction of China's higher education reform in logistics aims to meet the needs of industry, eliminate barriers between disciplines and specialties, optimize the specialty and curriculum system, and develop multi-skilled talents who possess both management and engineering knowledge and skills.

Automation is becoming an increasingly important part of the supply chain and requires rapidly evolving skills. What is the impact of automation on the Chinese manufacturing industry? What types of automation systems are currently in vogue?

Professor Yang Bin: China, which has all the industrial categories in the United Nations industrial classification, is a real market for supply chain service providers, and the Covid-19 pandemic has fueled the automation trend.

In addition to the increasingly automated production devices used in manufacturing companies, automated warehousing and warehouse/distribution integration systems are widely used in logistics, supply chains, and other traffic areas, such as urban distribution and major ports. Digitization, smart technologies, and automation solve supply chain nodes, such as procurement and distribution execution and logistics operations.

What is the impact on logistics jobs in China?

Professor Yang Bin: Although there are many Chinese people, the proportion of the working population is declining as the birth rate is decreasing and aging is accelerating. In a nutshell, we need more automation at work in China.

Automation will help China's manufacturing industry reduce the use of human resources, as it is and will be replacing people to a greater extent. It will lead to changes in the workplace, with some jobs disappearing and others appearing. We should be happy that automation is freeing people and making life easier and better. Isn't that what we are looking for? At the same time, it is difficult for automation to replace everything, and the development of smart science will take time.

On the other hand, automation will optimize the knowledge and skill structure of human resources and improve the supply chain’s efficiency, stability, and resilience.

What reasons can explain the significant challenges of multinational logistics companies to attract qualified candidates? What are Chinese candidates looking for?

Professor Yang Bin: More than 10 million graduates come out of Chinese universities yearly, yet employment is a big problem. China has abundant human resources, and the total number of talents specialized in automation is considerable, but the demand for this specialization is also very high.

Concerning salary conditions, in recent years, the Chinese seem more inclined to a stable and long-term career development environment.

Therefore, the challenge for multinational logistics companies is to convince their employees that their investment and development in China are strategic, long-term, and promising. When companies offer competitive salaries and a stable, long-term career development environment in big cities, it is not difficult to find suitable candidates.

How should multinational enterprises in China recruit and retain them?

Professor Yang Bin: It is imperative to improve the level of understanding of Chinese culture and social background by multinational companies. Multinational logistics companies must establish strategic partnerships with universities that match the company's positioning and professional needs to obtain a stable pool of young talent.

For experienced professionals, multinational logistics companies must hire them through a variety of market-driven channels. In the past 40 years of China's reform and opening up, Chinese people have gained a more comprehensive and objective view of the world and have also strengthened their self-confidence in economics, culture, and other aspects. Perhaps multinationals should do more localization, such as employing more localized executives.

How can companies ensure that adopting automation in their supply chains is ethical and fair to workers in China?

Professor Yang Bin: This question, which focuses on technological ethics, raises an inevitable trend. If the application of automation can improve efficiency, cost control, supply chain reliability and security, stability, resilience, and much more, it should be promoted.

Chinese workers need to adjust their knowledge and skill structure to meet the needs of new jobs.

How do you see the future of the supply chain?

Professor Yang Bin: In the next 5 to 10 years, China will maintain its status as a major manufacturing country. It will occupy a central position in many industrial chains, and its ability to allocate various elements of resources in industrial and supply chains will be enhanced.

With the improvement of technological innovation capabilities, China will be better able to coordinate the efficient and reliable operation of industrial and supply chains, and the country's know-how will gradually move into the high-end area of the value chain. Digital and intelligent technological innovation will stimulate the transformation of the supply chain, and more products and service models will emerge.