Tariff fears accelerate AI adoption among Chinese manufacturers

Caption language: en · Fetched: 2026-09-27

How China finds its next engines of growth is one of the big themes at this year's Future China Global Forum. From new technology to changing business models and opportunities across the region. Now, Otelli Edwards and Tan Chu Yi are there speaking to the people at the heart of that transformation. And so it's over to you guys now. >> All right. Well, thanks so very much for that, Glenda. So, Chu Yi, I know it's certainly been a fascinating 2 days, the last couple of days that you've been here. It's so interesting to see just how quickly AI is moving. And also how the businesses are actually using it. So, Chu Yi, it was all hardcore for you in day one, and today I've got day two, but I want to know what stood out for you yesterday. >> It was a really good look inside uh China's AI surge.

And it's not just about the large language model chatbots. It's physical AI. That's, you know, AI that's out there doing jobs in the real world. Uh and we've all seen the dancing robots. And there's a whole bigger world of physical AI out there. There are the, you know, autonomous AI drivers uh doing driving in tough conditions like on the airport tarmac, whether they are patrol vehicles, shuttle buses, also moving the baggage around. And they're also transforming, you know, AI agents transforming work that's being done on time in Chinese inside Chinese factories. Uh the implications are there, and that's being discussed here. There are real questions about um jobs, for instance. And on the macro level, there's a competition uh between countries, but also between businesses.

And the big question is uh for companies now is who's going to be fastest at adopting and adapting the technology. And for the people whose jobs disappear, it's about reskilling. >> That that's that's certainly a key question that, you know, everyone here at the forum is asking. And the thing as well is I think we we often assume with big companies, they have the advantage when it comes to AI, right? I mean, more data, more resources, more money, and all of that. But apparently, we're are seeing smaller firms in China that's adopting AI more readily than these larger ones. So, what is exactly driving that? >> They're smaller, they're more agile, faster decision-making turnaround. That's really the fast answer from, you know, the people that I've been talking to. One of them is the founder of Shanghai's Black Lake Technologies.

They sell the AI agents that are that they say are transforming China's factory floor. Let's uh hear it from him. >> Well, we have one of the agents is called a engineering agents that converts design files into work processes within 45 seconds. Whereas, if it's done by human beings, it usually took about 3 to 5 hours. So, that's that's the powerful part of our AI. >> 45 seconds, you said? >> 45 seconds, even less. >> Give me an example of what exactly that kind of decision is. >> Uh all kinds of decisions. So, like this is we talk about robots, it's a buzzword. But, robots really they are replacing the the low-end workers where their hands and legs are the production tools. But, there are about 30% of professionals on the shop floor. They are called workers, but they are skilled workers or experts.

So, they they are no longer involved in the manual production process, but their brain is using making decisions such as plan and schedule, procurements, equipment maintenance, uh industrial engineering, quality assurance. So, all kind of works involving human experience and and expertise are now gradually automated by agents. >> Isn't that quite scary that, you know, your technology use solutions is are increasingly doing what, you know, factory managers do? So, what does that mean for the people who do those jobs today? >> Well, if China manufacturing still positions self as a standardized production, low margin, I think it would be dangerous as you described. But the reality is a lot of the China manufacturers are are pushing so hard to transforming themselves into agile manufacturing.

So it will be a co-piloting model where human decisions they still have a great base for the model improvement and stuff. >> You've talked about the challenge of getting small family-run factories to buy your technology, to buy into AI. What does it take to convince an SME that AI would actually make money? >> Contrary to the public belief, at least in my field, the mom-and-pop shops, factories, they are adopting AI much faster because China Chinese people in general, people love to get the actual results instead of using the pool tool to gradual improvement, gradual efficiency optimization. It's just they're very pragmatic and they they see the results. And the the the they are cost-conscious. As long as your token generates much greater value than the token cost, that's a fast decision.

>> You know, have tariffs, geopolitics changed the questions that your customers ask you? >> A lot of them have always been imagining, what if tariffs actually happened and imposed? What's my advantage? So in China they actually pushed a lot of SMBs to transform in a much faster way. And their budget digital transformation agenda AI has actually increased due to their fear for potential tariffs. So So now I would say even if tariff was imposed again, I think China, compared to 3 to 4 years ago, is at a much resilient uh as far. >> So the rivalry between the US and China and tariffs have been pushing China's SMEs to up their AI budgets.

And the BlackLake CEO also told me that trade barriers actually pushed his clients, his customers, the Chinese manufacturers, to set up overseas, and they brought his AI agents with them and into the local market. >> Good to know. Thanks so very much, uh, Cherry, for that. Certainly fascinating to see just how some of China's smaller manufacturers are moving quickly to put AI to work. And that's also the big question here at Future China is how can AI help businesses grow and do things better?