The robots are coming, but not just yet. Hong Kong’s Crystal Group is the world’s largest clothing manufacturer. It’s the kind of labour-intensive industry that seems ripe for automation. But the company has now made it clear that it intends to continue betting on a human labour force. It contends that this is currently a more cost-effective option than machines in developing markets.
This throws India’s textile export failure into particularly sharp relief. The sector accounts for about 10% of manufacturing production and employed 51 million people directly and 68 million people indirectly as of 2015-16. These numbers would have been higher if India had been able to up its game as China lost ground due to rising labour costs. Instead, export targets have been missed by large margins while countries such as Vietnam and Bangladesh have capitalized on labour arbitrage.
The window to take advantage of low costs while preparing for eventual automation is not large. If the industry is to regain lost ground, it will have to do better than it’s done so far.