Chinese robot makers upbeat on sales

Economic slowdown, revival in labour market and worsening export demand fail to dampen their optimism

PUBLISHED : Friday, 29 July, 2016, 10:07pm
UPDATED : Friday, 29 July, 2016, 10:23pm

Manufacturers of industrial robots in southern China remain optimistic about meeting their sales targets this year despite an economic slowdown, an unexpected revival in the labour market and worsening export demand.

Guangdong Jaten Robot & Automation, a Guangdong-based maker of automated guided vehicles such as driverless forklift trucks, aims to achieve 200 million yuan in sales this year, double last year’s amount.

“Sales already reached 150 million yuan in the first six months of this year. We are very optimistic about reaching our goal,” Jaten’s vice-president Chen Hongbo said.

“We already see new markets starting to use robots to automate their production lines, like manufacturers of household appliances, kitchen and bathroom products … The whole industry expects this rapid growth to go on.”

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Chen said Jaten hoped to grab a larger slice of the market after having invested more than 20 per cent of its annual revenue in research and development since 2013 to launch new and competitive products.

He Zexian, sales director of LXD Robotics, one of the Pearl River Delta’s biggest robot makers, expected the company to record a jump of more than 50 per cent in revenue for the first half of the year from a year earlier.

“We are very likely to keep the same growth rate in sales in the second half of this year,” he said.

In April, He said the company only managed to achieve half of its 300 million yuan sales target last year as most competitors were forced to engage in a price war.

LXD’s robots are used in jobs hazardous to human health, such as polishing, welding and moving heavy freight. Carrying a price tag of 800,000 yuan to 1.5 million yuan, each of its polishing and burnishing robots can replace as many as six humans.

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Suo Liyang, deputy general manager of Anhui province-based Affluence & Eternity Robot Technology, which produces robot-related speed reducers, also said he saw sales at the company increase 40 per cent in the first half from a year ago.

Despite the economic slowdown in China, all three executives believe the robotics industry will continue to thrive in the next two decades in the face of soaring labour costs and the vast amounts of subsidies and tax breaks from the central and local governments to spur manufacturing upgrades.

Before, it’s a very big headache to recruit and keep workers. But things have changed this year. Maybe it’s because many factories shut down last year
Li Zhiguang, founder, Looksee Group

“It’s China’s national strategy to boost the domestic robotics industry in the coming years. I believe the mainland market will keep booming in the wake of strong government incentives such as subsidies at the provincial and city levels,” Suo said.

In a five-year proposal released in April, the Ministry of Finance, the Ministry of Industry and Information Technology and the National Development and Reform Commission vowed to make significant progress by 2020 in the production capacity, creativity and competitiveness of the robotics industry.

Last year, about 68,000 industrial robots were sold in the country, up 17 per cent from a year earlier. But the growth rate slowed from 56 per cent in 2014. Figures for the first quarter or the first half of this year are not available.

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In fact, industry players should be braced for more challenges ahead. Some bosses of labour-intensive factories said they now had second thoughts about automating their production lines after seeing signs of easing in the chronic labour shortage this year.

“I was thinking of investing about 500,000 yuan to deploy the first batch of industrial robots at my factory last year,” said Li Zhiguang, boss and founder of Looksee Group, a Guangzhou-based garment enterprise. “I dropped the idea later because I found it really costly to maintain the robots. Besides, they are not flexible enough when it comes to cutting the fabric into certain shapes for different designs.”

He said he started to notice the easing in labour shortage in the Pearl delta this year.

“Before, it’s a very big headache to recruit and keep workers. But things have changed this year. Maybe it’s because many factories shut down last year,” Li said.

Jeff Lin, who runs a building materials business in Shunde, Guangdong, has also changed his mind about automation for his company.

“One of my clients from Southeast Asia bought more than 20 aluminium containers from Guangdong last year for the local construction market. But so far this year, he has only imported six from China,” he said. “I see no need to speed up automation in the coming months.”

Private investments in China increased 2.8 per cent year on year in the first half of the year, slowing from the 3.9 per cent pace in the first five months and the 5.7 per cent rise in the first quarter, official data showed. That was a far cry from growth of more than 20 per cent in the past decade.