China's Demand For Robots Set To Grow 20% Annually For Next 20 Years, Becoming Country With Most Robots

 @SophieXSong
on September 13 2013 12:22 PM

China’s burgeoning robot market is set to grow rapidly for the coming decades, and will overtake Japan and the United States as the country with the most robots. The growing demand is fueled by manufacturers' need for cheaper labor, as the nation’s once-legendary labor wages continue to rise each year.

China currently has just one-fifth the number of robots of Japan, and a third the number the U.S. and Germany each have, but it won’t be long before China overtakes developed countries to have the most robots in the world, owing to its unmatched rate of growth, according to the Economic Observer.

"The total sale of robots in China last year was 28,000 units,” said Akira Mizutani, a managing director of the direct sales company of the Yaskawa Electric Corporation (TYO:6506), a Japanese manufacturer of robots and other machinery. “It will be about 30,000 this year. And it's going to continue to grow by 20 to 30 percent a year for quite a while."

Although the robotics industry in China is only beginning to take off, Tao Xibing, the managing director of Qingdao Kingerobot Automation Co., believes the strong growth will be maintained for the next 10 to 20 years, owing to China’s increasing demand for manual labor replacement.

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

China’s economy has for the past two decades or so relied on the country’s ability to cheaply manufacture goods, which was possible because labor was abundant and wages were low. But now, as China becomes wealthier, wages are also growing at an annual rate of between 10 and 20 percent. Monthly wages in coastal areas can be as high as 2,500 yuan ($409) to 3,000 yuan, much higher than wages in Vietnam, India and other developing nations, according to the Economic Observer.

The price of robots, on the other hand, is falling by 4 percent every year. In Japan, for every 10,000 manufacturing workers, 300 robots are used -- in China, just 10 robots are used for the same number of workers, which means the potential robot market in China is huge.

A number of provinces and cities have already set up operations to begin manufacturing robots, but domestic production may not be up to speed for some time. China still lacks the capability to manufacture certain key parts, and is reliant on major foreign robot makers. Research and development in the sector also remains limited in China.

"China's own brands account so far for only 5 percent of the local market," said Mizutani. "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."

Chinese leaders have had a history of fostering important sectors with government funding, and there is some indication that they are paying close attention to the robotics industry. Wang Weiming, deputy director of the Industrial Equipment Department at the Ministry of Industry and Information Technology, said recently 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, according to the Economic Observer. "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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