How China will dominate the global robotics market
China had 262,900 robots in operation at the end of 2016, and Macquarie Research expects that number to more than double to 614,200 robots by the end of 2018, by which time China will have around 25% of total installed robotics systems in the global market.
China’s auto industry has been the largest adopter of industrial robots, with Macquarie estimating that 70% of China’s total installed robots are used in the auto sector. Cost savings and efficiency from automated robotics have helped China become the world’s largest auto producer.
Future demand for industrial robotics systems in China is expected to come from other industries, including electronics, machinery, and mining sectors. Macquarie’s projection of demand in China for 351,000 extra installed robots between 2015 and 2018 estimates that alternative industries in China will demand 251,064 robot units, or close to 70% of the total increase.
China Installed Robot Base & Growth Rate (YoY %)
And by 2018, Chinese demand for robotics systems will dominate the global market because China’s manufacturing sectors will adapt to the new technology and account for about a third of all new robots installed in the world market, taking China’s share to more than a quarter of total installed robot capacity.
Chinese companies are positioning themselves to grab a share of China’s increasing demand for robotics systems. That’s why Midea, a China-based electrical appliance manufacturer, recently acquired Kuka, the German robot maker, and a controlling stake in Servotronix, the Israeli automation company, as part of its plans to dominate the market.
And this fits with the China government’s strategy for China-based robot makers to control 50% of the domestic market for robots by 2020. China will have to manage challenges from labor scarcity, higher labor costs and the need to transition the manufacturing sector away from its labor-intensive foundations to one more dependent on technology.
Macquarie forecasts that robotics sector names like Hon Hai, the Taiwanese electronics company, Midea, and Han’s Laser, a China-based laser company, are best set to benefit from China’s growing demand for robotics equipment, which is estimated by IDC, a technology research firm, to support a market for robotics worth USD 59.4 billion by 2020, or close to half the USD 133 billion forecast to be spent on robotics in the Asia-Pacific region.