A worker carries an unpainted chair in a furniture factory in Dongguan, Guangdong province. The traditional Chinese-style furniture is mainly for export. (Photo provided to China Daily)
Guangdong Lianying Furniture Co started its online business only after the company, based in the southern manufacturing hub of Dongguan, set up a sales office in an electronic business park two years ago.
The company, which has been engaged in traditional furniture manufacturing for 15 years, suffered several consecutive drops in sales due to sluggish demand for factory and school dorm room furniture after the global economic downturn in 2008.
"We were almost on the edge of bankruptcy in 2012 when the company generated less than 10 million yuan ($1.53 million) in annual sales," said Zhang Xilin, chief executive officer of Lianying Furniture Co.
The company responded to the sluggish growth by setting up an office in the e-commerce park, with more efforts being made in business-to-business services to reduce production and labor costs.
"We found a new market online－sales grew quickly and production efficiency increased significantly," said Zhang.
The e-commerce park, which was once the workers' dormitories for a Microsoft Nokia mobile phone factory in Nancheng district of Dongguan, now accommodates 120 online sales offices for local traditional manufacturers, which have developed strong needs to upgrade their business amid sluggish market demand.
The park was designed by the government as an incubator where traditional enterprises or products transform and upgrade via digital operation.
"In the past, traditional manufacturers like us did not know about the customers' needs and expectations. But the Internet has helped us learn more about global market trends," said Zhang.
According to Zhang, the company's sales grew quickly to 30 million yuan in 2015, and he expects this figure to reach 100 million yuan in 2016.
"The current number of online orders has exceeded the number of offline orders in the past. All of our sales are now done online," Zhang told China Daily.
Online sales are not the only factor driving the company's growth, as Zhang noted that the company also introduced smart equipment such as robotic machinery to its processing lines.
"We have invested more than 3 million yuan to buy smart equipment to increase production efficiency over the past few years," Zhang said.
Like Zhang's company, a growing number of traditional manufacturers in Dongguan, which has been known as the "world's factory" since the 1980s due to its strong processing and exported products, have introduced smart equipment to upgrade their business operations.
From 2014 to 2016, the Dongguan government has allocated 200 million yuan each year to assist enterprises in carrying out a new round of technological upgrading by introducing advanced automation equipment.
Janus Precision Components Co, a Dongguan-based original equipment manufacturer for electronic components, installed 80 industrial robots that replaced around 100 of its production line staff.
"We are still processing components for international companies like Samsung Electronics Co Ltd. But the production efficiency has been greatly improved, with labor costs reduced significantly, due to the introduction of automated equipment," said Huang He, deputy general manager of Janus Precision.
Facing a labor shortage and rising costs, factories in Dongguan are seeking solutions from robots as the city shifts from thin-profit labor-intensive processing to high-tech manufacturing with high added value, according to Xu Jianhua, Party chief of Dongguan.
China's industrial robotics sector has boomed over the past few years, narrowing the gap with other countries, with sales in the Chinese market jumping 36.6 percent year-on-year in 2015, according to Xinhua News Agency.
According to Xu, Dongguan has developed about 200 companies that are engaged in producing and using industrial robots, with an annual market demand of around 10,000 robotic machines in the city.
Citing a local precision mold processing plant, which has replaced nearly 2,000 workers with 1,000 robotic arms, Xu said the introduction of robots would help greatly improve production efficiency.
"Robotic machinery, along with other smart equipment, plays an important role in upgrading local manufacturing and boosting its competitiveness in the global market," said Xu.
The introduction of smart equipment in big companies has helped expand sales and improve production, but small businesses, which are mostly engaged in labor-intensive processing, are facing great pressures, with some closing in the past few years.
"Hundreds of factories have shut down in the past year due to the global economic slowdown, but the number is limited and within a reasonable range, and more investment in high-end business is coming in," Xu said in a recent interview with domestic and overseas media groups.
