Chinese robot makers face off against European and Japanese rivals at home

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DALIAN, China – Chinese industrial robots still have some catching up to do in terms of technology, but they are around 30% cheaper than their Japanese and European counterparts, an opening that Chinese manufacturers should exploit to gain ground in their market interior.

After being beaten for years by Japanese Fanuc, Swiss actor ABB and other powers, Chinese industrial robot manufacturers have gone on the offensive, increasing their capacities to increase their domestic market share by 30%. to the target set by the government of 50%.

Nanjing Estun Automation, China’s top performer on the domestic market, is one of them.

Estun is building a new location that “will accelerate the growth of the robot industry,” a statement read Tuesday from officials in Foshan, a city in Guangdong province near Hong Kong, after the city sold land to the company.

The site, slated to open by 2024, is expected to serve as a factory and research and development center, likely harnessing laser and sensor technologies from Carl Cloos Schweisstechnik, the longtime German company Estun acquired the year last for around 200 million euros ($ 234 million). The company is expected to work on high precision welding robots there.

Estun also plans to open other production and R&D sites that are expected to come into operation from 2023. To finance these activities, the company last month obtained shareholder approval to raise around 800 million yuan ( $ 123 million) through the issuance of new shares.

The private company, founded in 1993, acquires cutting-edge technologies by buying at least five Western companies since 2016, including those in Italy, the United States and Germany. The shopping spree has quintupled revenues in five years to reach 2.5 billion yuan by 2020.

The acquisitions helped Estun to grow. It ranks eighth in China’s industrial robot market, the only domestic player in the top 10, according to research firm MIR.

Estun is not the only one to increase his capacity. At least seven companies have unveiled plans to bolster their facilities so far this year. Siasun Robot & Automation, which bought a South Korean company in 2018, is expected to spend around $ 222 million on a new factory, among other milestones. Efort Intelligent, which has acquired four foreign peers by 2019, is due to complete a factory by the end of 2023.

The push for increased production comes at a time when the Chinese robot market is booming, mainly to the benefit of multinational giants.

Industrial robots are essential to the Made-in-China 2025 initiative, aimed at transforming the country into a high-tech manufacturing powerhouse. The aim is not only to increase production capacity, but to increase production efficiency and stimulate technological advancements.

Seeing industrial robots as the key to improving productivity and accuracy in factories, the government has offered generous grants to advance research and development.

Determined to maintain its market share, ABB is also building a robot factory in China. (Photo by Shin Watanabe)

Sales of industrial robots in China doubled between 2016 and 2020 and are set to jump 48% in the five years to 2025, according to forecasts from the MIR. But Chinese robot makers are not benefiting much from the market growth, accounting for just 29.2% in 2020. Their share will not grow more than around 39% in 2025, predicts MIR.

Chinese factories prefer foreign-made robots “because their movements are more precise and they are more durable,” said a Chinese industry insider, acknowledging that there is a technology gap in decelerators and other basic parts and software.

Instead, Japanese and European players are the leaders, with nine of the top 10 – including Fanuc, ABB, Yaskawa Electric and Germany’s Kuka – taking the majority of the market.

However, these high-performance robots from foreign players are expensive, which means that only a small number of companies can afford them and has in turn hampered the spread of industrial robots in China. The country ranks 15th for robot density – the measure of the number of robots used per 10,000 workers – with 187 units, far behind Singapore’s 918 and South Korea’s 868.

Many mid-sized manufacturers in China are unable to harness robotic resources, and this is where domestic robot manufacturers see their opportunity.

“Industrial robots are becoming more and more common thanks to the rise of Chinese producers, whose prices are about 30% lower than those of foreign companies,” said an analyst at MIR.

As these China-made robots offer improved technologies through overseas acquisitions, they become attractive alternatives to overseas-made machines for many mid-sized manufacturers. The increase in the number of companies that employ industrial robots will also likely help raise the overall level of Chinese manufacturing.

But gaining market share will not be easy as foreign competitors are also stepping up their investments.

ABB will open a new factory in Shanghai in 2022 and Fanuc will upgrade its factory in the same city in 2023. Yaskawa is building a factory to manufacture basic parts near an existing robot factory in Jiangsu to shorten lead times.


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