A Stanford University study states that China installed seven times more robots than the U.S. in 2023. Chinese companies are adapting to AI integration for cost-cutting, quality control and competitive advantage over the U.S. in these tariff wars.
According to a report by Mary Meeker, a venture capitalist, it would be hard for other countries not to buy from China due to its AI potential to transform manufacturing.
Last month, China released an action plan for digital supply chain development by 2030. The plan seeks to use AI, blockchain, and other technologies in the manufacturing and agriculture sectors and mentor 100 digital supply chain leaders.
Chinese companies get a head start in manufacturing through AI integration
Oshri Cohen, Cybord CEO, believes the company’s AI-powered quality control tools will help it find big buyers in China in 2025. He added that Cybord uses supervised machine learning to identify flaws based on patterns in its manufacturing component database.
According to him, the flaws include counterfeit, defective, and tampered components. Siemens has already started integrating the tool into its factory management system.
In 2023 China accounted for 32% of global manufacturing value added, while US was 19%.
But China installed over 50% of new industrial robots, while US was 10%.
So ROBOT INTENSITY of China manufacturing is going up much faster than in the US. pic.twitter.com/9oOlnVKoOR
— steve hsu (@hsu_steve) March 29, 2025
Cohen, former vice president of supply chain at Nvidia, expects that geopolitical pressures to diversify the supply chain would make Chinese factories more competitive. He said that factories will return to China, but unlike in the past decade, China will be a statement of high-quality products.
Karel Eloot, a Shenzhen-based senior partner at McKinsey, said that Chinese companies are a real driving force in the world when it comes to digital transformation and the use of digital analytics and automation in manufacturing.
Automation levels are uneven in some sectors. According to the Stanford University report, autos require fewer workers than production lines such as apparel, which still rely on human hands to run machines.
Eloot revealed that since McKinsey and the World Economic Forum started tracking factory digitization in 2018, use cases have increased to 189, of which 41% are based in China and spread among different industries.
GE Healthcare, AstraZeneca, Schneider Electric, and Midea are some of the companies involved. Hisense-Hitachi joint venture in Qingdao, China, uses generative AI to reduce time spent on inefficient meetings and instead directs the next shift of workers to immediate issues.
AI integration helps China’s supply chain mitigate tariff risks
The European Union recently raised concerns about a possible trade war. The EU has already prepared countermeasures in response to Trump’s plan to impose a 50% tariff on steel imports. The Organization for Economic Co-operation and Development (OECD) has reduced its outlook for the world economy, blaming the U.S.-China trade war.
OECD revised its forecast that global GDP growth will fall from 3.3% in 2024 to 2.9% in 2025 and 2026. Jean-Marc Briquet, Global Sales Director at Datategy, revealed that the most affected sectors include retail and consumer goods, automotive, electronics, steel, and aluminum.
A Datategy report explained that using AI to gather intelligent data across the value chain is one fundamental advantage. It added that AI will help gather geopolitical changes, supplier ratings, pricing trends, logistical performance, and real-time tariff updates for supply chains.
According to the Datategy report, standardizing workflow and tools across functions and regions, as well as automated compliance and regulatory monitoring using AI, would help companies scale supply chain operations without rapidly increasing their workforce.
Karel Eloot, Senior Partner at McKinsey, revealed that companies in China are constantly looking for ways to improve productivity, from the supply chain to the consumer. He added that the competition is very high among companies in China.
Jens Eskelund, President of the EU Chamber of Commerce, said last week that the supply chain has become very efficient from a cost perspective. He added that to compete, one must be in China. He was mostly concerned about the country’s plans to invest heavily in self-sufficiency.
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