China’s robot sales to grow 20pc this year but boom times are over

PUBLISHED : Monday, 12 December, 2016, 7:26pm
UPDATED : Monday, 12 December, 2016, 10:37pm

The mainland Chinese robotics industry is expected to see about 20 per cent growth this year, similar to last year’s level but down from the high rate of growth seen in 2014, according to industry insiders and analysts.

About 80,000 industrial robots are expected to be sold on the mainland this year, up 20 per cent year on year, according to forecasts from two industry guilds, the GG Robotics Research Institute and the China Artificial Intelligence Robot Industry Alliance.

Growth in the industrial robot market on the mainland slowed in 2015, with sales up 16 per cent year on year to about 66,000 units, compared with the more rapid year-on-year growth of 55 per cent in 2014 to 57,000 units.

In the first 10 months of this year, a total of 56,604 industrial robots were sold in China, according to the latest figures from the National Bureau of Statistics.

There were several impediments to robot industry growth this year that prevented it from reaching the levels of 2014, said Zhang Xiaofei, founder of the GG Robotics Research Institute. “The manufacturing market is tough in China this year following an economic slowdown, while costs for those domestic industrial robot makers remains high because of the lack of development of technology breakthroughs in core components for mass production.

“Government incentives such as subsidies are not as attractive and generous as 2014 and earlier last year,” he said.

The fever in investing in robotics has come to an end for the time being
Wang Cairong, China Artificial Intelligence Robot Industry Alliance

Investment in robotics is becoming cautious, especially by venture capital investors, he added.

The automotive and 3C (computer, communication and consumer electronic) industry were the two biggest customers for industrial robots, accounting for about 60 per cent of sales, Zhang said.

Tao Yuxia, sales manager for LXD Robotics, one of Guangdong’s biggest robot makers, said the company saw a big jump in sales this year. “I think our annual sales this year will reach about 200 million yuan, more than 50 per cent over last year,” she said. “About 60 per cent of clients are manufacturers from the Pearl River Delta, 10 per cent from overseas and the rest from other provinces.”

But earlier this year, the company had expected its annual sales for 2016 would reach 300 million yuan – a sign that China’s “robotic fever” is cooling down.

Driven by government policies to replace human labour with robots, about 3,000 new robot-related companies – robot makers or automation solutions suppliers – have emerged since 2014, mostly in the Pearl River Delta and Yangtze River Delta, according to Wang Cairong, secretary general of the China Artificial Intelligence Robot Industry Alliance. And as of September this year, more than 100 publicly listed mainland enterprises had invested in the robotic industry.

“But the fever in investing in robotics has come to an end for the time being,” Wang said. “The large amount of capital investment flocking into the market has slowed after finding that the market is not so highly profitable,” he added.

Despite the impressive sales growth figures, most domestic robot makers and system integrators are not profitable because of fierce competition, Zhang said. “Most Chinese robot manufacturers are facing the same dilemma they faced a year ago – they are still relying heavily on imported materials and lack the technology to independently produce high-end industrial robots,” he said.

Both Wang and Zhang believe that industrial robot sales will continue to see flat growth next year amid the uncertain economic environment.

Low-and-middle-end industrial robots – like a four-axis robot or the SCARA robot – would contribute to a large quantity of sales next year because of their affordability, according to Zhang.

Regardless of the economic situation, the need to replace human labour with robots due to soaring labour costs and inflation will drive demand over the long term, according to the two industry experts. Growth will also be driven by manufacturers in the chemical, food and consumer goods industries, they said.

The average price of industrial robots sold in the current market will continue to decrease next year because of the fierce competition, Zhang said, meaning the profitability of most domestic robot makers would be lower than this year.

Mainland China is already the world’s largest market for industrial robots, accounting for a quarter of global sales, according to the International Federation of Robotics. The country’s annual sales target for industrial robots in the manufacturing sector is 150,000 by 2020.

Meanwhile, China’s consumer robot market is plagued by low-quality products, overinvestment and too much duplication, Wang warned.

Industry insiders saw that the market was depressed in the past few months of this year, according to Wang Gang, a spokesman for Ingdan.com, a one-stop supply-chain platform that links technology start-ups and entrepreneurs with contract electronics manufacturing partners in China.

“Consumers were not interested in consumer robots priced at 1,000 yuan or above. We suggest those start-ups try to sell their products to second-and-third tired cities priced at about 500 yuan,” Wang said. “Many consumer robots designed in China are based on an android [operating] system and are just like a smartphone with a robot look, which can be only used as an expensive toy for children,” Wang said.

“Last year, automated waiters that were able to take orders and deliver food to customers’ tables made local headlines at Shenzhen’s hi-tech fair. This year, they were all gone. It will be extremely tough for domestic consumer robot start-ups to lure investment in the current market,” he said.

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