China Robot Market Likely to Continue Rising, Despite Trade Disputes

Beijing. Credit: Nikolaj Potanin https://creativecommons.org/licenses/by-sa/2.0/legalcode

July 09, 2018      

The world’s largest manufacturer and second largest economy is making waves in robotics. From any angle — industrial strategy, emerging markets, or international partnerships — there are many opportunities for suppliers looking at the China robot market.

Trade tensions with the U.S. and concerns about Chinese investment in European automation companies notwithstanding, this East Asian dragon is working on a combination of interdependence and newly grown domestic capabilities.

Industrial robot growth

This year, the China robot market is projected to grow by 20%, with an estimated 80,000 industrial robots expected to be sold, predict the International Federation of Robotics (IFR) and ABI Research.

For some perspective, compare that with the 56,604 industrial robots sold in mainland China during the first 10 months of 2016 — 60% of which took place in the automotive and “3Cs” industries of computers, communications, and consumer electronics.

While a 20% growth is nothing to scoff at, there were concerns that “boom time” pace might have slowed. As the South China Morning Post pointed out, experts believed that “industrial robot sales will continue to see flat growth.” In 2016, Chinese companies produced 30% more industrial robots than they did during the same time in 2015.

However, in 2017, a total of 141,000 industrial robots and unmanned vehicles were sold in China, said GB Times, an increase of 58% from the year before.

Even if sales growth rates will be less dramatic than in recent years, projections expect the China robot market to benefit from continued increases in demand. Thanks to the passing of new laws intended to automate China’s supply chain, sales of industrial robots will double in 2018, according to some estimates.

The IFR’s World Robotics 2016 stated that China will be the world’s single largest user of robots, surpassing Europe and the U.S. On the production side, Xinhua.net noted that 1,686 China robot companies were created last year, for a total of more than 6,500.

By 2020, investing news firm ValueWalk reports that China wants to join the Top 10 grouping of nations when it comes to robot density, or number of robots per 10,000 human workers. The country reportedly want to increase its robot density count from 36 to 150 per 10,000 workers.

Emerging applications boost China robot market

Until now, automation in China has been mainly limited to the factory floor. Now, it is being used in new ways.

For example, Zhou Jiangong, chief executive for the China Business Network, told the South China Morning Post that artificial intelligence could write business news stories based on such macro-economic data as the consumer price index and gross domestic product figures.

Manufacturing demand and improving quality have led to the surprising 58% increase in robot sales, said Xiaogang Song, president of the China Robot Industry Alliance, at the recent Automatica trade show (see below).

In addition to the government’s “Made in China 2025” strategy, investments are flowing to efforts for “Designed in China,” reported Wired. The country last year increased its research and development spending by 14% to $279 billion, said Wan Gang, science minister.

Meanwhile, The Times of India reported China is using intelligent robots to “detect suspicious people and raise an alarm.” These robotic custom agents are already in place southwest of Shanghai in Guangdong province. Law enforcement authorities are turning to robots, artificial intelligence, and drones, raising concerns about civil liberties.

More benevolent are AI applications such as Biomind, which is intended to improve tumor diagnoses. Chinese companies are also working on robots for hospitals and retail.

Not all AI is an automatic success or competitive threat, however. For instance, Baidu has struggled with its smart speaker, which was intended as a competitor to Amazon Alexa or Google Home.

Chinese Internet of Things company G7, logistics provider GLP, and NIO Capital are working together on autonomous trucks. Intel’s Mobileye unit is working with Baidu’s Apollo consortium on self-driving passenger vehicles.

Horizon Robotics and other Chinese startups are working to put 30 million self-driving cars on Chinese roads within a decade, despite a study by KPMG that rated the country’s preparedness for autonomous vehicles as “low.”

In addition, Chinese companies are developing aerial drones to deliver food and carry up top a ton of cargo. Speaking of drones, market leader DJI was in talks to raise funds against a valuation of $15 billion, even as it faces a backlash from U.S. security users.


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Domestic, international initiatives

The private sector is taking aggressive steps to lead the China robot market. For instance, China’s Alibaba, Taiwan’s Hon Hai Precision Industry (Foxconn), and Japan’s Sharp have partnered to create a robotics alliance. Its objectives include the adoption of a new model for patents and the fueling of artificial intelligence innovations.

Similarly, Chinese internet providers Alibaba, Baidu, and Tencent have become joint shareholders in Foxconn Industrial Internet around its $4.3 billion initial public offering. This has implications for industrial automation and IoT.

Despite these international partnerships, China is also taking steps to stop importing robots and robotics parts and start producing them domestically.

Currently, in China, “key components” of a robot account for 70% of the total cost — and 80% of these components are imported, according to a CCTV report.

In China, four out of five industrial robots are manufactured in foreign countries. Out of the 56,000 industrial robots sold in China in 2014 (25% of all sales globally), only 16,000 (30%) came from Chinese companies.

To boost domestic production of industrial robots, China launched a robotics patent pool. China has also strengthened patent protections, both to respond to foreign criticism and to protect its own nascent industry.

Even as purchases in the China robot market slow down from past years, the reality is that the appetite still exists. The nation’s ambitions are getting bigger as it sets long-term goals.

The focus of executives and policymakers should no longer be how China is comparing to the past, but what China’s plans are for the future.