China becomes largest buyer of industrial robots

Last updated: June 1, 2014 10:22 pm

China becomes largest buyer of industrial robots

By Tanya Powley in London

China, once the manual labour “workshop of the world”, has become the largest buyer of industrial robots, as rising wage costs and growing competition from emerging economies have forced manufacturers to turn to technology.

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The country bought one in five robots sold globally in 2013, overtaking tech-savvy Japan for the first time, in its attempt to drive productivity gains.

China bought 36,560 industrial robots last year, a rise of almost 60 per cent against 2012, according to new figures from the International Federation of Robotics, an industry group based in Germany. Japan bought 26,015 robots in 2013, with the US in third place with 23,679.

“China has the fastest-growing robot market. In a few years time China will be significantly larger than the second and third largest robot market,” said Per Vegard Nerseth, head of robotics for ABB.

Robot sales to China have increased 36 per cent, on average, every year from 2008 to 2013, according to IFR data. The further growth potential is huge: in 2012, China had just 23 robots for every 10,000 people employed in the manufacturing industry, compared with 396 in South Korea.

The increased demand for robots in China is being driven primarily by large multinational manufacturers, especially in the automotive sector. China’s car industry, the world’s largest, accounts for about 60 per cent of robot demand in the country, according to research by management consultancy Solidiance.

“Many Chinese companies would still rather watch somebody break their back trying to lift a heavy box than pay for an expensive lifting table,” said Pilar Dieter, who heads Solidiance’s Asia Pacific practice.

But advances in sensors, hydraulics, mobility and artificial intelligence are helping to make robots more flexible, precise and autonomous, enabling them to be used in a wider range of manufacturing applications.

Arturo Baroncelli, IFR president, said the capacity of robots to enter new production segments, other than automotive and semiconductors, through technology developments will ultimately fuel further growth in China.

Global robot companies, such as Switzerland’s ABB, Japan’s Fanuc and Germany’s Kuka, have been pouring resources into the Chinese market to capitalise on the country’s rapid automation. In 2011, Foxconn, the Shenzhen-based assembler for Apple, vowed to build a “million robot army” over three years to substitute for workers performing repetitive manual tasks.

“Robot manufacturing is dominated by the Japanese currently,” said Ms Dieter, who estimates that six Japanese companies account for about half of all robot sales in China. By contrast, China’s top four makers of robotics equipment have a combined market share of only about 5 per cent.

While China is the fastest-growing market for robots, Japan still has, by far, the highest number of industrial robots in operation, with more than 310,000 in 2012, compared with 96,000 in China and 168,000 in the US.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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