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Mainland China CEOs to Feel Full Impact of Automation and AI Within Three Years

19 December 2018

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Companies in mainland China will start to feel a significant effect from automation and AI within just three years as trends in the workplace continue to accelerate, which will have a major impact on the future of jobs and skills in the region, according to recruiting experts Hays.

A new report launched by The Economist Corporate Network and sponsored by Hays, ‘AI, Automation and the Future of Jobs and Skills: The role of the CEO in shaping tomorrow’s workplace in Asia’ surveyed more than 500 business leaders across Asia to share their thoughts on automation, AI and what this means for jobs and skills in the region.

“The Economist Corporate Network report shows that for businesses in Asia, automation and AI are here and now, and for CEOs in mainland China this situation is especially urgent,” says Simon Lance, Managing Director for Hays in Greater China. “40% of business leaders surveyed in mainland China believe that the full impact will be felt within three years, meaning they need to act quickly to adequately prepare their workforce.”

CEOs across Asia concur about the quick increase in the influence of AI and automation. In this year’s survey, 12.2% claimed that their businesses are already experiencing the full impact, more than double the 5.9% who claimed the same in 2017. In South Korea, half (50%) of CEOs questioned said that the full impact will be felt within three years, while 58.3% of respondents in Hong Kong believed that they would feel the full impact of AI and automation on their business in one to three years’ time.

Against the backdrop of these rapid changes, the report finds that business leaders in Asia remain overwhelmingly confident that automation and AI present a big opportunity for businesses. Of those surveyed, over 70% perceive automation and AI to present an opportunity compared with a threat. Respondents also revealed an overwhelmingly optimistic stance towards the economic benefits that AI will bring. Over the next five years, survey respondents expect AI to have a positive impact on growth (90%), productivity (86%), innovation (84%) and job creation (69%) in their country/region and industry.

Business leaders within Asia displayed varying degrees of confidence in how to best maximise these new technologies. In mainland China, 45% of CEOs strongly agree that they are aware of how to leverage big data. The region is a world leader in this field and many companies both private and state-owned have been utilising big data for commercial purposes for many years.

In keeping with mainland China’s traditional approach to industrial planning, the State Council 2017 document set targets: by 2030 mainland China should be a global innovation centre in AI, with the total output value of AI industries reaching Rmb1trn (US$151.5bn) by that year. In line with this goal, the government is providing a supportive policy environment and financial support for industrial upgrading through automation, as well as for AI development.

However, automation and AI do not always have a positive impact on business or society. The report finds that creating redundancies and making certain job categories obsolete are among the potentially negative outcomes. Moreover, only a small number of CEOs think that automation and AI will create more positions in their business.

The question of how new technologies will affect wider society is an important one for business leaders, who acknowledge that some workers will be more affected by automation and AI than others. Interestingly, the number of respondents who expect gender and age to be a variable influenced to a high degree by the effects of AI and automation has markedly decreased.

In terms of skills, CEOs continue to expect low-skilled workers to be the most affected, with an overwhelming 75.6% expecting them to be strongly affected or extremely affected. Furthermore, a markedly higher proportion (40%) of business leaders in mainland China expect low-skilled workers to be extremely affected, compared with only 10% of those surveyed in Japan.

“Due to the labour-intensive nature of the workforce in China’s service and manufacturing industries and the belief among local business leaders in the rapid encroachment of AI and automation on the workplace, there is a sense that low skilled jobs are at risk,” notes Simon. “This may create short term pressures on this workforce but with supplementary education and training these workers could be reskilled to adapt to the opportunities that will be created in the new economy.”

With 64.7% CEOs now believing in an approach based on accelerating the arrival of these new technologies, compared with only 35.3% of those who prefer to soften the impact, AI and automation will have a very real impact on the workforce soon.

Yet despite the need for well trained workers, the report finds that there is an ambivalence among business leaders about how prepared they are to skill up their employees. Of those surveyed, only 1.5% agree that they have the right structures in place to develop existing employees, while 22% disagree and 48.4% are neutral. Furthermore, only 23.6% of businesses surveyed often or regularly use external training, down from 29.5% in 2017, with most preferring to train talent through internal resources.

“While CEOs acknowledge that skilled employees are key to the workplace of the future, more could be done to implement the most effective practises to help companies develop their existing workers,” notes Simon. “Business leaders should evaluate their preparedness to train talent and consider involving eternal specialists more closely in their automation and AI strategies.”

You can download the full report from here:

https://www.hays.cn/en/ceo/index.htm