Lam said withdrawing from Shenzhen cannot solve the problems faced by Hong Kong's traditional manufacturers. But, transforming to "Industry 4.0" - which further embeds automation and data exchanges in manufacturing - can.

He's confident that with such an upgrade, SAR manufacturers can introduce intelligent factories in the United States and Europe in a bid to become more market-driven rather than labor-intensive.

Robots are not only helping Hong Kong manufacturers in Guangdong, but also becoming their consumer products to attract new markets.

Jetta Co Ltd - a Hong Kong toys manufacturer based in Guangzhou - is changing course by investing in innovative electronic products and high-tech toys.

Chief Executive Officer Huang Dazhi said in October that only 30 percent of the company's products lacked any electronic element.

The boom in startups and innovative makers in Guangdong has also inspired traditional manufacturers with a stream of new products, and some startups have even become part of their new client base.

Hong Kong-based Lung Cheong Toys Ltd (LC Toys) organized a competition in Dongguan last month, drawing more than 8,000 participants. Those with projects relating to interactive robots, virtual reality devices and early education robots for children were among the winners who managed to seal manufacturing contracts with the company.

LC Toys used to produce non-electronic toys, but has now shifted its focus to educational robots for children, as well as service robots for smart home and healthcare robots for elderly people.

It has upgraded its Dongguan factory to become a development and research headquarters to innovate robot workers and products.

Leung Chung-ming, managing director of LC Toys, said the development of the second-child economy and a rising elderly population on the mainland will create new opportunities for the company.

However, manufacturers still have to confront critical problems, such as technology and talent, according to Guan Hongling, associate professor at the Center for Studies of Hong Kong, Macao and the Pearl River Delta at Sun Yat-Sen University.

A recent survey by the university showed that more than one-third of companies in Shenzhen with Hong Kong investment lacked technology in upgrading themselves, while another 30 percent were short of talent.

While larger companies with high profit can invest in smart manufacturing, it's not easy for smaller ones to execute, Guan said.

Liu said industrial smart robots still remain too expensive for some factories. To solve the problem and encourage more Hong Kong manufacturers to upgrade, Guangdong's local government recently enacted several policy changes to aid the industry.

Dongguan now promises to pay for these manufacturers' robot workers in advance, with companies obliged to repay the costs after they have become profitable.

"When the cost of robots and human workers has struck a balance, it'll be the best time to launch more intelligent machines in the market," Liu said.

But, he warned that robots are only one aspect of industrial upgrading, and companies should also set up a digital management system.

"Digitalization is the key to 'Industry 4.0', which could help make business decisions more effectively and precisely based on 'big data' analysis, instead of an individual's experience," he added.

grace@chinadailyhk.com

(HK Edition 11/23/2016 page1)