Global Courant
By David Kirton
RUICHANG, China (Reuters) – When Steven Du took over his parents’ factory that produced temperature control systems in Shanghai, one of the first changes he made was to turn on the factory’s heating in winter – something his frugal ancestors didn’t do. liked to do.
“If you don’t improve their environment, the workers aren’t as happy and it’s harder for them to do their best,” said the 29-year-old. “The change is worth the extra cost.”
Du, like tens of thousands of other young Chinese factory bosses, inherits a basic manufacturing company that can no longer rely on the labour-intensive model that has made China the world’s largest exporter of goods.
A shrinking and aging workforce and competition from Southeast Asia, India and elsewhere are making at least a third of China’s industrial base — its low-end manufacturers — obsolete, Chinese academics say.
This all-or-nothing mission of technical upgrades and practical changes falls largely on a group of people in their 20s and 30s known as “chang er dai,” or “the second generation of factory,” a pun on the derogatory term for spoiled, rich kids, “fu er dai”.
“When I change, I try to save my family business from bankruptcy,” said Zhang Zhipeng, a research assistant at the Shenzhen Research Institute of High-Quality Development and New Structure, who estimates that about 45,000 to 100,000 of this cohort are in various stages of the takeover of up to a third of China’s private manufacturing companies.
The large-scale generational shift, which is taking place as China’s growth prospects deteriorate, is the first in the country’s private sector since the changer dai’s parents became industrialists in the decades following Mao Zedong’s death in 1976.
Reuters interviewed eight changer dai for this report, who described their efforts to bring family businesses into the modern era with efficiencies while facing challenges such as labor costs, labor shortages and, in some cases, disagreement with family members about how best to move forward. to go .
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Du spoke on the condition that his company not be named to protect the privacy of his semi-retired parents, who he said were in their 50s and left much of the factory business to him.
Like his peers, Du grew up with a level of comfort and opportunity his parents never dreamed of.
He attended high school and university in New Zealand, specializing in electrical engineering. He moved to the United States and worked at Apple supplier Foxconn in Wisconsin. He studied Taiwanese and Japanese production methods, aimed at reducing inefficiencies.
Those skills would come in handy in a factory the Chinese state set up in 1951 and privatized in 2002.
His father’s business acumen and mother’s hard work helped transform the factory into a supplier to major Chinese appliance manufacturers. It also sells components used in temperature control systems for shopping malls, computer rooms, battery cooling and medical equipment.
But manufacturing processes remained largely unchanged until Du took over in 2019. He introduced specialized industrial software that cuts through accounting, ordering, purchasing, deliveries and other processes previously handled by humans, Du said.
He remodeled the factory floor to allow fork lift trucks to move around easily, rearranging storage and production units to minimize the physical strain of a workforce whose average age is around 50. An employee now walks 300 meters to complete the more complex tasks, instead of a kilometer, and takes less than a third of the time to do it.
While his mother spent hours micromanaging production, most days around 4 p.m. Du ends up in a gym he set up at the factory for workers to use before driving home.
“Young people like to be lazier, but laziness is actually an expression of progress,” he said.
Du has raised wages 10-20% over the past three years to keep turnover below 5%, but says his factory is 50% more efficient.
“Factories have to switch to high-quality production or are doomed to fail because their costs are rising,” says Zhang, the researcher.
A ‘MOTHER’S SON’
Zhang Zeqing estimates that he has achieved similar efficiency gains by digitizing processes since he and his parents started managing their egg products factory in Ruichang, a city in the southeast.
At Yixiang Agricultural Products in Ruichang City, workers in green uniforms place duck eggs in cups attached to a conveyor belt that feeds a vacuum packing machine. A new screen above the machine shows the speed at which the eggs are sealed and estimates the average output per worker, as well as the time and manpower required to pack 10,000 eggs.
Barcodes track all products from farm to factory to store, enabling supervisors to track orders, production and delivery on their phones and make decisions based on real-time data.
“We used to put this all on paper by hand,” said the 30-year-old. “All the internal data was confused. It led to a lot of waste.”
Like five of the other money changers who spoke to Reuters, Zhang never intended to take over the factory. He wanted to study landscape design in France.
But he felt he had to step in, at least for a few years, and convince his now 55-year-old parents that technical upgrades and establishing new distribution channels on e-commerce platforms were worth investing in.
Something had to be done, he thought, because “frontline workers are getting older and young people are less willing to work on the frontline”. China has a record number of unemployed young people, but many of them have university degrees and prefer not to work in factories, even if they take jobs below their level of education.
Zhang’s parents resisted at first, as they were unwilling to spend money on a business they thought was doing well. But eventually they gave in.
Sales have increased 35% annually since he came on board.
“Sometimes I wonder why our e-commerce was successful while others failed. A manager of a company told me that because you are your mother’s son, she will support you infinitely, that is, even if you fail,” Zhang said.
‘TOO CHALLENGING’
Certainly, China as a whole is improving its industrial complex in more significant ways than the changes being made by young factory managers like Du and Zhang.
Some segments, such as the highly robotic electric vehicle industry, are distorting global markets thanks to government subsidies, foreign capital and know-how.
Chang er dai, however, helps to lift the bottom, which is also important for maintaining China’s share of world production, two industry experts told Reuters.
Some of the technology Zhang introduced came from Black Lake Technologies, a company founded by Zhou Yuxiang that counts more than 1,000 changer dai among its customers.
“In recent decades, many Chinese factories modeled on revenue growth, so very few of them paid attention to production efficiency or digitalization,” said the 34-year-old, who also sees herself as a changer dai. he does not manage his parents’ business.
“They usually manage their operations with stacks of paper. More sophisticated factories may use Excel, but that’s all.”
Tian Weihua, an academic specializing in manufacturing upgrades at the Science and Technology Innovation Research Institute, a government think tank, says changer dai’s tech-savvy and foreign experience gives them a better chance than their parents at keeping companies competitive in a new environment of higher costs, weaker foreign demand and emerging manufacturing centers in cheaper, less developed countries.
But “technology upgrades don’t cure all ills,” Tian said, adding that further steps will be needed, including in product innovation.
Not all change er dai will get there.
After studying textile design at the University of Arts in London, 29-year-old Zhang Ying took over her family’s clothing factory in the eastern city of Ningbo in 2017.
But the company struggled. Wages had more than doubled within a decade to more than 7,000 yuan a month. There was a shortage of workers, mainly migrants from the interior provinces. She wouldn’t dare fire them.
Last year she took time off to have a child and left it to other managers. She has no intention of returning.
“It was too challenging: the pressure was too sudden and too great. I got hives from the stress and had to be on medication for a year, so I stopped,” she said.
(Reporting by David Kirton; editing by Marius Zaharia and David Crawshaw)
