July 05, 2017      

The Chinese robot market has been the largest one in the world since 2013. Despite the already high sales level, robot sales rose again by 30% last year. The International Federation of Robotics expects that China will be responsible for 40% of the worldwide demand by 2019.

STM’s newest research supports this assessment. The growth momentum will continue in 2017 and beyond, according to experts from leading foreign and Chinese robot manufacturers, component suppliers, and systems integrators. Rising labor costs and a still low level of automation, as well as the increasing abilities of intelligent and collaborative robot solutions, will fuel this growth — not to mention the ambitious goals of the Chinese government.

3,400 companies, but who is really relevant?

At the same time, the market is still very fragmented and intransparent. According to the Chinese Ministry of Industry and Information Technology, the number of companies in the robotics sector has risen from just under 300 to more than 3,400 since 2012. Many of them are small companies with limited prospects for the future. However, powerful players from the traditional mechanical engineering industry or dynamic Internet companies are still entering this field.

In our comprehensive research, we have identified and analyzed the relevant manufacturers of industrial robots in China. STM found that there are 27 manufacturers of robots in China that have a significant size and noteworthy technological capabilities. We have also considered 12 other companies that are not producing in China.

Foreign manufacturers dominate, domestic manufacturers compete in simple, marginal applications

Foreign manufacturers are still responsible for about 70% of Chinese robot sales. Local robot producers pick up, albeit from a small base. Sales of the leading seven indigenous robot manufacturers grew by an average of 36.7% last year. Of the seven leading foreign manufacturers in China, the figure was 26.6%.

However, the strong growth of domestic producers was also driven by extensive subsidies. The majority of their robots are simple handling devices, even the proportion of six-axis robots has steadily grown over the past three years. Local manufacturers are competing in low-margin applications such as loading and unloading, and increasingly in simple welding applications.

Foreign manufacturers are working on concepts for intelligent flexibility, as well as simpler and safer usability.

Cobots are a growing area for the Chinese robot market.

Comprehensive description of integrators

Over 80% of the sales in the Chinese robot market are conducted through system integrators. They are important sales channels for suppliers of automation products, as well as for manufacturing companies that are looking for the right partners to implement their automation projects on site.

We estimate the total number of companies in this area in the low four-digit range. While most of them are small and very specialized firms, there are others with several thousand employees. Some of them have already set up offices in Europe and North America to be closer to their suppliers and to serve their international customers, including German automobile groups, overseas.

In our database, which is based on years of work experience in the Chinese robot market, we have described the 300 most relevant robotics system integrators in China. Due to the fact that China is responsible for over 70% of the world’s production of computers, communication equipment and consumer electronics, there are unique competencies for complex production solutions for this area. The same might happen for production solutions for batteries, as the country is trying to position itself as the lead market for e-mobility.

Lack of native key components is supposed to be reduced

The Chinese robotics industry is still suffering from a lack of powerful key components such as controls, servomotors, and reducers. Accordingly, an average of about 70% of the production costs of domestic robots is currently being passed on to foreign suppliers. Due to their comparatively low unit numbers, local robot manufacturers also have significantly higher purchasing prices than internationally leading companies.

According to the plans of the National Manufacturing Strategy Advisory Committee, this is supposed to change in the foreseeable future as a result of the development of strong domestic suppliers. It remains to be seen how fruitful these efforts are.

Outbound M&A will continue, partnerships will open new possibilities

With the acquisition of German robot manufacturer KUKA, Midea was responsible for one of the most spectacular acquisitions for China last year. In February 2017, the company took over the majority of Israeli specialists for Motion Control Servotronix.

Although we already see that tighter capital controls from the Chinese side have an impact on the outbound M&A activities, we expect that strategic deals that are consistent with the Beijing objectives will continue to be approved.

In May, Midea also announced that it would join the Japanese robot manufacturer Yaskawa to enter the nursing robots business. The Chinese robot market is profiting from the know-how of the Japanese, who in turn benefit from Midea’s market access. The boundaries between industrial and service robots are blurring — a phenomenon that we will be able to observe more often in the future.

Strongest growth in collaborative robots and AGVs

The overwhelming majority of our interlocutors are confident that the sales targets of the Chinese government for the 13th Five-Year Plan will be more or less achieved. The amendment to the funding guidelines for a more sustainable development of the domestic robot industry announced at the beginning of February 2017 will accelerate the market adjustment. However, it is expected that this process will take several years.

The strongest growth is expected in the segment of low-cost, collaborative robots with ease of use; partly with integrated machine learning and machine vision skills. Depending on market availability, growth rates of more than 50% per year could be achieved while starting from a low level.

Strong growth is also expected in the area of automated guided vehicles (AGVs). Both the automotive and electronics industries as well as the growing e-commerce sector require more efficient logistics solutions.

AGVs are a growing part of the Chinese robot market.

Due to the increased use of collaborative robots in assembly processes, it is expected that the electronics industry in particular will gain in importance as a sales market. However, the automotive sector will remain the most important target sector for the time being.

Developments in China robotics will affect the global market

China’s manufacturing sector needs to modernize to remain competitive internationally. The upgrade is also an integral part of the government’s “Made in China 2025” strategy.

Foreign technology is needed for the technological upgrade of China’s manufacturing sector. It is an attractive market for leading foreign industrial automation companies, and some of them are deploying their newest technologies in China. Smaller foreign automation vendors are following these examples. Not to forget the aggressive outbound M&A strategies of Chinese robot firms and their innovative potential.

For all these reasons, Chinese robot developments will shape the industry globally. The sheer size and the competitiveness of its market are driving technology and business-model innovations by both foreign and domestic companies. Companies that succeed here will leverage their strengths in other markets.

Despite a widespread lack of local know-how, uncertainty concerning quota goals for its domestic companies or obscure new cybersecurity laws, China is still likely to become a global lead market in smart manufacturing and the robotics industry.

More About the Global and Chinese Robot Markets:

About STM

STM was founded in 1995 by Joachim Stieler in Lorrach, Baden-Wurttemberg, Germany.

STM is 100% family-owned. We are neutral and independent in our research, and thrive on trustful long-term relationships with our international customer-base.

Our team in Lorrach combines country-specific competencies for Europe, North America, Russia, and India. In 2011, we started an office in Shanghai to better serve our clients’ needs in China and Asia.

We provide market insights and business development services for technology companies. These are intended to help our customers do the following:

  • Enter foreign markets or enter new industries;
  • Identify opportunities for new products and services;
  • Define design and specifications according to current and future market opportunities; and
  • Select strategic partners or acquisition targets, conduct the due diligence and support the M&A process.