South Korean Robots Losing Out to Cheaper Chinese Competitors

In the labor market, it is not uncommon to witness the displacement of established workers due to an influx of cheaper foreign labor, leading the affected workers to seek protection from the government. South Korea is currently experiencing this cycle, with a unique twist: the workers in question are not humans but robots.

Executives from leading South Korean robot manufacturing firms have expressed concerns that imported Chinese robots are dominating the market, making it difficult for domestic androids to compete. Although South Korean robots are technologically advanced, the Chinese robots are more cost-competitive, allowing them to secure a larger share of the market.

South Korea is a major player in the robot industry, with server robots in restaurants and robot workers in logistics firms becoming increasingly common. These robots have significantly improved efficiency and addressed the country’s severe worker shortage. The government has actively encouraged the transition from manual labor to robot workers.

The Financial Times highlights that government subsidies intended to facilitate this transition do not differentiate between Korean-made robots and imported ones. The lack of this distinction is what upsets the South Korean robot manufacturers, who feel that their domestic production should be prioritized when it comes to subsidies.

While it is essential for the South Korean government to evaluate the effectiveness of these subsidies, if they are to exist, they should apply to all robots, regardless of origin. Implementing protectionist trade policies alongside subsidies only undermines the intended benefits.

It is worth noting that the situation in South Korea mirrors similar debates about foreign versus domestic labor in the United States. In both cases, the solution lies in allowing businesses to freely choose the workers they employ, whether flesh and blood or robotic, irrespective of their place of birth or construction.

This shift towards robots replacing manual labor is not exclusive to South Korea; it is occurring in the United States as well. However, South Korea’s experience demonstrates that this evolution does not resolve debates over foreign versus domestic labor. Instead, it emphasizes the need for a flexible approach that embraces innovation and allows businesses to adapt to changing labor market dynamics.

– Androids: Humanoid robots designed to resemble and simulate human actions.
– Protectionism: The use of trade barriers or restrictions to protect domestic industries from foreign competition.
Source: Financial Times