China: Rise of the Robots


Reading time ( words)

China overtook Japan in 2013 to become the world’s largest market for industrial robots and a 53 per cent jump in domestic sales last year means the country now accounts for a quarter of the global market. But we believe this is only the beginning, given the low use of robots in China’s production plants.

The huge numbers of Chinese rural workers migrating to the cities were critical in supporting the country’s economic growth. But the days of cheap labour are coming to an end: wages are rising and, consequently, the industrial sector is slowing down. Slower economic growth means productivity and efficiency need to increase. Investment in automation is part of this process.

China has only 30 industrial robots per 10,000 manufacturing workers, compared with the global average of 62. But China's total number of robots is forecast to double to 400,000 by 2017, overtaking the EU and North America and reaching the current global average for robots per worker. We think sales will exceed 100,000 in 2017.

That suggests annual growth averaging 29 per cent since 2013 and we expect continued high double-digit growth over the next three years.

Three major trends will boost the market. First, China’s working-age population is now shrinking for the first time and the average age of the overall population will increase as a result of the 1960s baby boom. As China’s labour force gets older, it is also becoming better educated, which should gradually transform the employment market.

Second, between 2004 and 2013 China’s manufacturing real wage increased by 14 per cent a year. With labour cost no longer a clear competitive advantage, manufacturers have started looking for alternatives and robots are increasingly attractive. We calculate it now takes only about 2.3 years to recoup the costs of robots, compared with 10 years in 2008.

Workers’ attitudes are also important. In the 1980s and 1990s, manufacturing employees felt they were in a stable profession that came with social status. Now, despite higher wages, they have higher aspirations and mundane jobs can lead to greater labour turnover and lower efficiency, encouraging automation.

Third, the government is likely to provide tax and subsidy support for automation companies. In May, the Made in China 2025 strategy was outlined – a 10-year plan for an innovation-led economy. It focuses on automation, component localisation, information-technology and clean-energy manufacturing and includes research and development funding, tax benefits, cross-border merger support and intellectual property rights protection.

China’s automation companies should benefit from accelerated depreciation schemes, insurance subsidies and government funding.

President Xi Jinping called for an “industrial-robot revolution” in 2014, signalling the state’s support for China’s automation industry. Since then, a series of policies have been released that either benefit the country’s automation makers through VAT refunds and direct subsidies or help purchasers through tax deductions.

On top of these state-level policies, a series of initiatives have also been launched at the provincial level. A few provinces have initiated Machines for Man schemes that aim to replace labour with robots and nurture leading local automation firms via favourable lending terms and direct subsidies.

Share

Print


Suggested Items

Today’s MilAero Options: Outsourcing—‘Everybody’s Doing it’ Not so True Today

06/27/2016 | Marc Carter
There was a time, not so many decades ago, when that most commonly-stated mantra (“lower labor costs”) behind offshoring printed circuit fab (and some assembly) operations, still had some case-by-case validity.

New Tools for Human-Machine Collaborative Design

04/25/2016 | DARPA
Advanced materials are increasingly embodying counterintuitive properties, such as extreme strength and super lightness, while additive manufacturing and other new technologies are vastly improving the ability to fashion these novel materials into shapes that would previously have been extremely costly or even impossible to create.

Inkjet-printed Liquid Metal Could Bring Wearable Tech, Soft Robotics

04/08/2015 | Purdue University
New research shows how inkjet-printing technology can be used to mass-produce electronic circuits made of liquid-metal alloys for "soft robots" and flexible electronics.



Copyright © 2021 I-Connect007. All rights reserved.