Hong Kong enterprises operating in the Pearl River Delta (PRD) are increasingly resorting to automation to trim costs.

The trend has emerged as a rapidly appreciating yuan, soaring rents and rising labor costs force Hong Kong manufacturers to resort to renting or building their own factories on the mainland, mainly in the PRD, to keep their heads above the water.

"Rising labor costs is the biggest worry for Hong Kong corporations operating on the mainland," said Stanley Lau Chin-ho, chairman of the Hong Kong Federation of Innovative Technologies and Manufacturing Industries (HKFITMI). "Automation, including application of robots, will be used more broadly in the future."

Norman Chan, a committee member of the HKFITMI, said: "In labor-intensive industries, such as metal and plastic manufacturing, automation is definitely a trend since it will increase the output per person."

Among the federation's members, about 2,000 member companies of HKFITMI have hired more than five million employees on the mainland, mainly in the PRD region.

Chan, who is also director of sales and marketing of Ka Shui Group - a Hong Kong-listed company specializing in metal die casting - said the corporation has not expanded its staff size, but automation application has helped the enterprise gain a yearly 20-percent increase in revenue since 2012.

Wages on the mainland have continued to climb in the past few years, with Shenzhen ranking on top of major mainland cities in the growth of minimum wage ahead of Beijing, as well as Shandong and Shanxi provinces.

"As rising labor costs pose a challenge to many Hong Kong corporations based in the PRD, enterprises are relying more on automation than personnel," Chan said.

"Three years ago, a robot may cost 300,000 yuan ($49,032) to 400,000 yuan. But, it's much cheaper now and we can import a simple and relatively-lower-accuracy robot from Japan, Switzerland and Sweden at a minimum cost of 20,000 to 30,000 yuan," Chan said.

Ka Shui has been using robots in its production streamline for flaming plating instead of manually for more than 10 years. "Besides reducing operating costs, it also improves the quality stability of products," Chan added.

gladdy@chinadailyhk.com

(HK Edition 10/23/2014 page8)