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The Fight for China's Robots
Summary:It's only a matter of time before China overtakes the United States and Japan to become home to the most robots in the world. The world's largest robot maker hopes to overtake ABB to become the biggest supplier of robots to this expanding market.

By Pang Lijing (庞丽静)
Issue 635 , Sept 2, 2013  
News, page 3
Translated by Laura Lin
Original article: [Chinese]

Yaskawa Electric Corporation is the world's largest robot manufacturer, and the general manager of the company's direct sales company Akira Mizutani (水谷春林) had just two things on his mind before flying back home to Japan: how to stay ahead in global sales of rival ABB, the Swiss-based multinational company specializing in power and automation technology, and how to catch up to them in China. Mizutani spends half of his time in China and is planning to build an integrated base for application and development for Yaskawa in the eastern city of Qingdao.

Akira estimates that Yaskawa will sell about 300,000 robots worldwide this year — more than ABB's estimated 250,000 and more than the third-largest company in the industry, FANUC Corporation's, 230,000 to 240,000.

But he has work to do in China. "Yaskawa hasn't put major efforts into the Chinese market before now, so our sales volume is not the top one here," Akira says. That honor goes to ABB, which has moved its production, R&D and sales to Pudong, Shanghai.

Enormous Potential

China currently has just one-fifth the number of robots in Japan, and just one-third the number found in the United States or Germany. But Akira says it's just a matter of time before China overtakes the United States and Japan to become the country with the most robots in the world.

"The total sale of robots in China last year was 28,000 units. It will be about 30,000 this year. And it's going to continue to grow by 20 to 30 percent a year for for quite a while."

Qingdao is, in fact, Yaskawa Electric's second foothold in China. In June, it opened a plant in the Jiangsu Province city of Changzhou (常州).

When completed, the annual production capacity of the new plant in Qingdao will be 12,000 units. Yaskawa enjoys preferential land and tax perks in the robot industry park made available by the local government.

A local government-led robotics industry is developing quickly in numerous places in China. Last June, five of China's key robotic enterprises signed an investment agreement with the Chongqing Institute of Green and Intelligent Technology, a organization under the Chinese Academy of Sciences, and established a presence in a robotics industrial park in the city. Several other places such as Tianjin and the northeastern province of Heilongjiang are also actively cooperating with research institutions to build their own local robotics industry demonstration bases.

Although the robotics industry is only just beginning to take off, demand will grow at a minimum of 25 percent a year over the next 10 to 20 years, says Tao Xibing (陶喜冰), general manger of Qingdao Kingerobot Automation Co. (青岛科捷自动化设备有限公司).

"The first role of a robot is to replace manpower so that simple and repetitive heavy physical labor is no longer needed," says Tao. "Second, it is to improve efficiency. Third, it is to ensure product quality."

Statistics shows that China's manufacturing wages are growing at an annual rate of between 10 and 20 percent. Meanwhile, robot prices are falling by 4 percent every year.

China has a structural labor supply-and-demand discrepancy, says Gu Shengzu (辜胜阻), vice chairman of the Financial and Economic Committee of the National People's Congress.
Thus China is a big, but not strong, manufacturing country. Monthly wages in the coastal areas are as high as 2,500 to 3,000 yuan, which is a lot higher than in Vietnam and India.

Wang Feiyue (王飞跃), director of China's State Key Laboratory of Management and Control for Complex Systems (SKL-MCCS), says that for every 10,000 manufacturing workers in Japan, 300 robots are used — whereas in China that number is just 10. So there's a huge potential market for robots in China, the widespread use of which will improve the country's overall manufacturing level.

Beijing, Shanghai, Zhejiang, Guangdong, Chongqing and Liaoning have all already set up their own robot industry federations. The purpose is to join together related enterprises within the industry and promote its development.

China's Constraints

Up until now, China has relied on imports for critical infrastructure components such as motion controllers, which impacts on the industry's development, says Cai Hegao (蔡鹤皋), member of the Chinese Academy of Sciences and professor at the Harbin Institute of Technology.

Gu Shengzu says the biggest problem in developing China's robotics industry is that key parts are not all locally available, and R&D for key components is still very limited.

One industry source says that China's robotics manufacturers import the majority of key components from Yaskawa and two other Japanese producers that dominate betweeen 80 to 90  percent of the world's motion controller market share.

Akira thinks that there's no shortcut for China's development of the robotics industry. State or strong business-led long-term R&D investment is a must.

"China's own brands account so far for only 5 percent of the local market," he says. "The government is going to encourage using its own domestic products, so greater efforts in supporting this industry are expected, so as to accelerate the sector's growth."

China's Ministry of Industry and Information Technology (MIIT) is paying a lot of attention to the sector's development. Wang Weiming (王卫明), deputy director of the Industrial Equipment Department at MIIT, said a few days ago that a relevant policy concerning the industry will be announced in the near future.

"As a leading global manufacturing powerhouse, China is experiencing labor shortages and a growing problem of rising labor costs year after year," Wang said. "Within the past 50 years of industrial robot development, no country has ever had such a huge demand emerge in such a short period of time."

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