China robotics industry cools down as top maker of robot waiting staff slashes jobs

A major Chinese maker of robot waiting staff is cutting jobs in the company, in a sign that the country’s robotics industry is cooling down, as the prospects of profitability remain remote.

Shenzhen-based Pudu Technology, which received 1 billion yuan (US$149 million) from investors including Tencent Holdings, Meituan and Sequoia Capital in a fundraising round last year, will start laying off employees, according to a leaked letter from founder and CEO Felix Zhang Tao.

“We’ve decided to cut some operations and businesses of our company to survive. It’s a difficult decision,” Zhang wrote, adding that private equity investments in the country have dropped to their lowest point in decades.

Pudu has to make a profit to “survive the long winter”, said Zhang.

Two employees at Pudu confirmed the authenticity of the letter.

While the letter did not specify the size of the job cuts, about 800 people could be laid off, according to a report by iFeng, the news portal affiliated with Hong Kong-based Phoenix TV.

Pudu did not respond to an email request for comment.

The struggle experienced by the six-year-old start-up shows the challenges faced by China’s once-booming robotics service industry.

As China’s population ages and labour costs rise, some people have hoped that robots could gradually replace humans in service jobs from cleaning to catering. Pudu, along with Shanghai-based Keenon Robotics, has been one of the industry’s most talked about start-ups.

In 2020, Pudu and other service robot companies joined the front line in China’s fight against Covid-19, deploying robots to deliver food and medicine to hospitals, disinfect public spaces, measure the body temperature of patients and help diagnose illnesses using questionnaires provided by doctors.

Research firm IDC estimated in a report last month that China’s commercial service robot market, which includes robot waiters, doubled in size in 2021 to reach US$84 million.

While the sector has seen a number of unicorns buoyed by private equity money, Zhang said: “There is still a fundamental problem to be solved in the commercial robot industry, which is that the entire industry is almost unprofitable.”

“The essence of business is to make money, so from this perspective, the entire industry didn’t meet the basic standard,” wrote Zhang, a graduate of the Hong Kong University of Science and Technology.

Despite the difficulties, Zhang said Pudu was still trying to “become the first profitable commercial robot maker”.