Internet & Tech

Rise of the machines

China becomes the world’s biggest robot market

Humanoid robots are seen during a photo opportunity at the University of Bonn in Bonn

And now, the robot world cup

In June last year Elon Musk unveiled a new technique allowing quicker swapping of battery packs. For comparison purposes, a standard Audi A8 was shown being filled with petrol. Tesla’s robotic system swapped the batteries in two of its Model S sedans in about 90 seconds. The Audi driver, by comparison, took four minutes. The point was clear: new robotic technology could give Tesla cars yet another advantage over conventional vehicles.

According to Taiwan’s Business Today magazine, the “robotic arm” deployed in Tesla’s battery swap event was produced by Hon Hai Precision, the world’s biggest electronics manufacturer. Musk also told shareholders last month that Tesla plans to expand its cooperation with Hon Hai. And Business Today suggests Hon Hai’s growing expertise in making robots is the reason.

Besides its Tesla relationship, Hon Hai has also announced it will partner with Japan’s Softbank in making the Pepper, a humanoid robot equipped with an “emotion engine”.

Currently, industrial robots are most commonly employed in the car industry, where machines account for 80% of the production ‘workforce’, according to China Electrical and Machinery Industry, a magazine. But a robot-led revolution is starting to reshape other industries too. Take white goods producers, Haier. Its chief executive Zhang Ruimin told a conference last month that the company cut its workforce by 16,000 to 70,000 last year. Another 10,000 employees will be laid off this year because of the emergence of industrial robots.

China bought 36,560 industrial robots last year, up nearly 60% from 2012. It meant Chinese companies bought one in five of the robots sold globally, overtaking Japan for the first time.

Now many of the international robot makers like Swiss firm ABB and Japan’s Fanuc have operations in China. China News Weekly magazine says there are nearly 100 domestic producers too, with about a 10% share of the growing market. That is leading to hopes that the technology is becoming more affordable. Qu Daokui, chairman of the China Robot Industry Alliance, told the China Daily that average prices have dropped 50% over the past five years. Qu is also the president of Siasun Robot, China’s biggest robot marker by market value. Siasun’s market capitalisation has climbed to nearly Rmb20 billion ($3.2 billion) from Rmb4.8 billion five years ago.

The Chinese authorities are keen to support the development of what it terms the domestic ‘intelligent equipment’ sector. The 12th Five-Year Plan, which runs till 2015, wants to boost revenues from the sector to more than Rmb1 trillion, and envisages that 30% should result from homegrown patents.

That is why at least a dozen industrial robot zones are being planned by different local governments. For example, Shanghai has set aside a zone for robot producers, while Chongqing is building a similar park. Local officials are predicting it will produce Rmb100 billion worth of sales annually.

But China Electrical and Machinery Industry says the robot makers need to temper some of their enthusiasm. It’s worried that Chinese production capacity may exceed global demand as early as next year. “It is difficult for us not to recall the unpleasant lessons in the new energy market, when government support quickly drives a new industry into overcapacity,” the magazine wrote. “With robots are we able to avoid the same mistake?”


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.