China's industrial robot market has ranked as the world’s largest for four consecutive years. The compound annual growth rate (CAGR) of industrial robot sales hit 31% from 2011 to 2016, making China the world’s undisputed leading market for robots. Nevertheless, how much potential remains in China's robot market? Can domestic robot companies compete against the “Big Four” and fully capture the dividends brought by robot replacement of manual labor? These are the two questions of greatest concern to industry practitioners and investors. This report reviews the rise of Japan’s industrial robot industry from the 1970s to the 1990s, analyzes driving factors for robotics development including labor shortages, massive demand from downstream industries and policy support, and draws comparisons with China’s current situation, revealing striking similarities. Lessons from the US-Japan trade war also show that the United States failed to halt Japan’s manufacturing upgrading, and will not hold back China either.
The industrial robot market was projected to reach 150 billion RMB by 2020. China's industrial robot industry entered a period of rapid growth after 2010, registering a 31% CAGR in sales volume between 2011 and 2016. In 2016, China sold 87,000 industrial robots, accounting for nearly one-third of global sales. Although China is the world's largest industrial robot market, there remains a substantial gap in penetration rate and adoption level compared with advanced manufacturing economies. In automobile manufacturing, a sector with high automation, robot density is only one quarter of that in South Korea. Sectors such as electronics still hold huge demand for replacing human workers with robots. Estimates indicate that the market size for industrial robot bodies plus system integration in China would reach 150 billion RMB by 2020.
Favorable fundamental demand paired with policy support builds a robot powerhouse. Japan, known as a robot powerhouse, started with imitation. Labor shortages, booming automotive industry and strong policy support directly and indirectly helped Japan achieve global dominance in robotics. These same factors are prominent in present-day China, where labor shortage has increasingly become a bottleneck restricting manufacturing growth.
Face up to technological gaps and strive to catch up. At present, domestic industrial robots still lag significantly behind the world’s advanced players represented by the “Big Four”, especially in high-end six-axis robots. Foreign suppliers such as Nabtesco almost monopolize the market for core components like precision reducers. To achieve breakthroughs, priority must be given to core components including reducers. Reducer manufacturers such as Zhenkang and Leaderdrive have achieved rapid progress in recent years.
Key recommended targets: Focus on companies with strong R&D and innovation capacity, high-end product layout and proprietary core technologies. ESTUN with outstanding R&D strength is strongly recommended; Tuosida with prominent channel capabilities is also recommended.
