Foreign investments

China’s robot industry ambitions pave way for foreign investment

China is rapidly emerging as a global robotics powerhouse as the government strives for the industry to rival the world’s most innovative economies.

China has already been the world’s largest market for the application of industrial robots for nearly a decade and is a growing power in the production of industrial robots.

For the Chinese government, this is only a starting point. According to the government’s plans, China will become an innovative robotics center by 2025 and a leading robotics center by 2035.

If successful, China’s adoption of robotics will transform the nature of its manufacturing sector. To do this, however, the Chinese robotics industry requires collaboration with overseas sources of technology and expertise.

China’s booming robotics industry

According to a report by the China Institute of Electronics (CIE), China’s robotics industry was worth 83.9 billion RMB ($12.12 billion) in 2021. Of this amount, industrial robots were worth 44, 6 billion RMB ($6.44 billion), while service robots were worth 39.3 billion RMB ($5.68 billion).

The development of China’s robotics industry is the result of years of growth. From 2016 to 2020, China’s robotics industry experienced an average annual growth rate of 15%. In 2020, the operating profit of China’s robotics industry passed the 100 billion RMB ($14.32 billion) threshold for the first time, according to data from the Ministry of Industry and Technology. information (MIIT).

Globally, the robotics industry is recovering from a slight downturn caused by the COVID-19 pandemic. The International Federation of Robotics has predicted that in 2021, global industrial robot installations will grow by 13% to 435,000 units, the highest growth rate since 2018.

Going forward, the robotics industry is expected to grow at a rapid pace as the technology improves and is increasingly adopted by businesses. According to Zion Market Research, the industrial robotics industry was worth US$41.7 billion in 2021 and would reach US$81.4 billion in 2028 at a 2022 compound annual growth rate (CAGR) of 11.8%. to 2028.

How China Compares to Other Robot Powerhouses

China quickly embraced robotics due to a confluence of factors. Due to China’s strengths and efficiency in manufacturing, China is able to produce robots at a lower cost than most other countries. Additionally, the government is actively supporting industry to promote China’s rise as a high-tech powerhouse and to address anticipated labor shortages due to its rapidly aging population.

In 2021, China produced 366,000 robots, an increase of 67.9 percent from the previous year, according to Wang Hong, an MIIT official. In the first half of 2022, however, China produced 202,000 units, a year-on-year decline of more than 11%.

In 2020, China’s industrial robot usage density reached 246 units per 10,000 workers. This figure was almost double the world average of 126 and the ninth in the whole world. It was just behind the United States, at 255, but significantly behind South Korea, at 932. That year, China installed 140,500 robots, which is about 44% of the global total.

Moreover, China is the world leader in robotics patents, accounting for 35% of the global total between 2005 and 2019. In comparison, the United States accounted for around 13% of total robotics patents.

Despite China’s momentum in developing its robotics industry, it depends on foreign countries for high-end robotic components, such as those from Japan and Germany. In 2019, 71% of new robots in China came from overseas, including Japan, South Korea, Europe and the United States.

China is therefore efficient in robotics manufacturing and applications, but relies on foreign sources for innovation and high-end components.

China’s robotic ambition

The Chinese government has released ambitious plans to modernize its robotics industry, including through a five-year plan for the industry. On December 28, 2021, MIIT, alongside a number of other departments, jointly released the latest five-year plan for the industry, setting out a host of short- and long-term goals. The five-year plan aims to both enhance China’s role as a robot manufacturer and increase the application of these robots.

By 2025, the plan states that China should become a global source of robotics innovation and make breakthroughs in core robotics technology and high-end robotics products. By 2035, Chinese robotics should be among the best in the world, and robots should be integrated into China’s economic development, daily life and social governance.

In terms of more specific goals, the plan aims for China’s robotics industry to grow by 20% per year from 2021 to 2025, exceeding the global average. In addition, it aims for China to double its manufacturing robot density by 2025. In addition, China plans to build at least 500 model intelligent manufacturing factories and establish at least 150 intelligent manufacturing solution providers. .

Another key part of the five-year plan is to develop China’s capacity in the design and manufacture of the three main components of sophisticated robotics: speed reducers, servo motors and control panels. These are some of the areas where China relies heavily on foreign production, but are at the heart of many types of robots.

How China uses robots

Chinese economic planners envision using robots in a variety of roles, from supplementing human labor in manufacturing processes to supporting medical services in hospitals and aged care facilities.

Wang, the head of MIIT, said industrial robots have already been adopted in 143 industries and 52 major industry categories in China. According to Wang, robots have been a key part of the growth of emerging industries like new energy vehicles (NEVs) and photovoltaic cells.

The growth of lithium battery and NEV construction in China has been a key driver for the increased use of industrial robots in the country. In 2021, the demand for industrial robots in the lithium battery industry grew by 131%, warehouse logistics by 103% and photovoltaic industries by 51%.

An industry report predicts that by 2025, the demand for industrial robots in the lithium battery industry will exceed 67,000 units and register a CAGR of 35% from 2021 to 2025. Additionally, the demand for mobile robots in the industry will exceed 25,000 units and register a CAGR of 38% from 2021 to 2025.

Beyond these industries, the Chinese government plans to increase the use of robots in many others. For example, on August 23, 2022, MIIT, the Ministry of Agriculture and Rural Affairs, the National Health Commission and the National Mine Safety Administration jointly issued a circular on the application of robots in agriculture, construction, health and mining. The circular reflects the government’s plans to expand the use of robots across the economy, including in service sectors.

Robots in China: more room for growth

The strengths and limitations of Chinese robotics are clear. Due to the scale and diversity of its manufacturing sector, it can produce robots at an affordable price and integrate them into various facets of the economy. However, China’s robotics industry is limited in its innovation, talents and high-end industrial base.

The scale of the Chinese government’s robotics ambitions opens up significant opportunities for foreign investors, whether filling technology gaps to build robotics companies or selling to companies seeking to implement applications. robotics. As with other high-tech industries in China, entering the robotics industry requires careful intellectual property and other strategic market entry considerations to ensure long-term success.


About Us

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors in China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen and Hong Kong. Please contact the company for assistance in China at [email protected]

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