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Robot supply overflow in China may lead to overheated market and lack of interoperability

Wed 29 Oct 2014

“Everybody wants to become a robot manufacturer now because it’s sexy,” said Stefan Sack, CEO of robot manufacturer Comau Shanghai Engineering, in a report to Reuters recently, noting that small manufacturers in the Chinese industrial sector were “coming up like mushrooms” under Beijing’s 2011-2015 five-year economic plan, which targets growth in the robotics sector.

In 2013 China overtook Japan as the world’s biggest market for robots. According to the official Xinhua news agency, the country now boasts 420 companies engaged in the manufacturing of robots, with over 30 active or planned industrial parks exclusively devoted to robotics.

Beijing’s bid to create 4-5 ‘champion’ firms, devoted to a target turnover of 13,000 robots, seems to have been hampered by a lack of centralised organisation and regulation, leading to a situation of overgrowth in new local markets, and the possibility of supply outstripping even the current vigorous demand for robot manufacturing.

Andrew Polk, an economist at Beijing’s Conference Board research house, believes that the Chinese robotics market is worryingly fragmented. “You get a directive on the central front to build robots or whatever” he noted. “and everyone moves to create their own local champions. They are doing this at a point where wages are rising, but their comparative advantage is still relatively cheap labour. They could be pushing this too hard too early.”

Figures from the China Robot Industry Alliance state that three quarters of the 37,000 robots sold in China throughout 2013 were manufactured outside the country, but domestic robot production has recently tripled under stimulus from Beijing, which aims to grow the Chinese-made robotics market to one third by 2015.

Official Chinese statistics cite 54 listed Chinese companies as having invested in robotics manufacturing, with eighty per cent first-time investors.

Zhou Tufa, the division chief of Zhejiang province, says that the region is facing a significant worker shortage which needs to be addressed by robots. In an interview in Hanzou, Tufa observed: “ We have new constraints on resources, input factors, and the environment; we need to adjust our economy’s structure.”

But the Chinese internal market’s response to the government’s call-to-arms on domestic robot supply risks more than just over-fragmentation, which the market can eventually solve by consolidation, but a potential kingdom of reigns in terms of programming languages and internal technology standards – a problem likely to issue not just from attempts at vendor lock-in, but also because the market is expanding so rapidly that even the will towards interoperability, where it exists, may struggle to keep ahead of actual manufacturing initiatives.

Assistant director of manufacturing operations Frank Chuang observes in Reuters’ report that “If we don’t carefully select the robots, then in the near future we will generate not just programming language issues but also maintenance issues.’


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