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China

China's Burgeoning Robot Economy

China currently has just one-fifth the number of robots as Japan, and just one-third as many as the United States, but as manufacturing there grows, the country is poised for big bot growth.

Workers and robots on a production line in Zhangshu, eastern China
Workers and robots on a production line in Zhangshu, eastern China
Pang Lijing

BEIJING — Yaskawa Electric Corporation is the world’s largest robot manufacturer, and its general manager Akira Mizutani had just two things on his mind before flying back home to Japan: how to stay ahead in global sales of rival ABB, the Swiss-based multinational company specializing in power and automation technology, and how to catch up to them in China. Mizutani spends half of his time in China and is planning to build an integrated base for application and development for Yaskawa in the eastern city of Qingdao.

Akira estimates that Yaskawa will sell about 300,000 robots worldwide this year — more than ABB’s estimated 250,000 and more than the third-largest company in the industry, FANUC Corporation’s, 230,000 to 240,000.

But he has work to do in China. “Yaskawa hasn’t put major efforts into the Chinese market before now, so our sales volume is not the top one here,” Akira says. That honor goes to ABB, which has moved its production, R&D and sales to Pudong, Shanghai.

Enormous potential

China currently has just one-fifth the number of robots as Japan, and just one-third as many as the United States or Germany. But Akira says it’s just a matter of time before China surpasses the United States and Japan in having more robots. “The total sale of robots in China last year was 28,000 units. It will be about 30,000 this year. And it’s going to continue at 20% to 30% growth for quite a while.”

Qingdao is, in fact, Yaskawa Electric’s second foothold in China. In June, it opened a plant in the Jiangsu Province city of Changzhou. When completed, the annual production capacity of the new plant will be 12,000 units. Meanwhile, Yaskawa enjoys preferential land and tax perks in the robot industry park made available by the Qingdao government.

A local government-led robotics industry is developing fast in numerous places in China. Last June, five of China’s key robotic enterprises signed an investment agreement with the Chongqing Institute of Green and Intelligent Technology of the Chinese Academy of Sciences and settled in Chongqing’s Two Rivers Area robotics industrial park. Several other places such as Tianjin and Heilongjiang are also actively cooperating with research institutions to build their own local robotics industry demonstration bases.

Although the robotics industry is only just bourgeoning, demand will grow at a minimum of 25% a year over the next 10 to 20 years, says Tao Xibing, general manger of Qingdao Kingerobot Automation Co.

“The first role of a robot is to replace manpower so that simple and repetitive heavy physical labor is no longer needed,” says Tao. “Second, it is to improve efficiency. Third, it is to ensure product quality.”

Statistics shows that China’s manufacturing industry wages are growing at an annual rate of between 10% and 20%. Meanwhile, robot prices are falling by 4% per year. China has a structural labor supply-and-demand discrepancy, says Gu Shengzu, vice chairman of the Financial and Economic Committee of the People’s National Congress. Thus China is a big, but not strong, manufacturing country. Monthly wages in the coastal areas are as high as 2,500 to 3,000 RMB, which is a lot higher than in Vietnam and India.

Wang Feiyue, director of China’s State Key Laboratory of Management and Control for Complex Systems (SKL-MCCS), says that for every 10,000 manufacturing workers in Japan, 300 robots are used — whereas in China that number is just 10. So there’s a huge potential market for robots in China, the widespread use of which will improve the country’s overall manufacturing level.

Beijing, Shanghai, Zhejiang, Guangdong, Chongqing and Liaoning have all already set up their own robot industry federations. The purpose is to join together related enterprises within the industry and promote its development.

China’s constraints

China relies so far on imports for critical infrastructure components such as motion controllers, which affects the industry’s speed of development, says Cai Hegao, member of the Chinese Academy of Sciences and professor at the Harbin Institute of Technology.

Gu Shengzu says the biggest problem in developing China’s robotics industry is that key parts are not all locally available, and R&D for key components is still very limited.

One industry source says that China’s robotics manufacturers import the majority of key components from Yaskawa and two other Japanese producers that have a quasi-monopoly of 80% to 90% of the world’s motion controller market share.

Akira thinks that there’s no shortcut for China’s development of the robotics industry. State or strong business-led long-term R&D investments are a must.

“China’s own brands account so far for only 5% of the local market,” he says. “The government is going to encourage using its own domestic products, so greater efforts in supporting this industry are expected, so as to accelerate the sector’s growth.”

China’s Ministry of Industry is responding very attentively to the sector’s development. Wang Weiming, deputy director of the Industrial Equipment Department of the ministry, said a few days ago that a relevant policy concerning the industry will be introduced soon.

“As a leading global manufacturing powerhouse, China is experiencing labor shortages and a growing problem of rising labor costs year after year," Wang said. "Within the 50 years of industrial robot development history, no country has ever had such a huge demand in such a short period of time.”

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