Photo: AP images
Credit Suisse is out with a massive report on the growth of industrial automation. Yesterday we highlighted their favourite seven stocks in the sector.The most interesting part of the report points out that China appears to be nearing an inflection point that we’ve already seen in Japan and Korea called the ‘Lewis Turning Point’.
Those countries once relied on cheap rural labour to fuel their economies, then reached a point where it dried up, and began to automate.
China’s manual labour force is rapidly declining as the population ages and more people go to school. That trend, and government programs, are pushing up wages. In order to remain competitive, the country is going to have to invest an incredible amount in modernizing its industries.
The size of China, and the fact that it is only now beginning to ramp up its transformation means that there is enormous room for growth.
The great infrastructure boom in China might be slowing, but the automation boom is just starting.
The one child policy has lead to a huge demographic shift in the country, further reducing the labour supply
The Chinese people are becoming increasingly educated, and will be looking for higher paid higher skilled jobs
Using Japan in the 70s and 80s as an example, China appears to be beginning a period of accelerating automation investment
Data from Japan, Taiwan, and Korea show rapid growth in the sector in the years after they reached China's current density
If China follows an S-curve for automation similar to Japan, the growth in coming years will be enormous
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