Listen to this article

The new year has brought new opportunities for industrial automation in China, with robot sales volume hitting 45,000 units in 2014 and expected to reach 100,000 units by 2017, according to the China Robot Industry Alliance.

However, even though the nation’s market has overtaken Japan’s in terms of size, Chinese manufacturers are still catching up to foreign businesses.

China still has a lower ratio of workers to robots than other industrialized countries, at 30 per 10,000 workers, according to Report Buyer Ltd. Rising wages and improvements in robot capabilities are leading Chinese manufacturers to shift from labor-intensive processes. This presents an opportunity for both foreign and domestic suppliers.

Demand for automation still growing

Sales increased by 12 percent from 2012 to 2013, and the International Federation of Robotics predicted that demand from automotive, electronics, and food production will lead to 25 percent growth in the robotics market in the next few years.

For example, electronics manufacturer Foxconn hopes to replace as much as 70 percent of its current assembly-line workforce in China with robots by 2018. This has received wide attention because Foxconn employs about 1 million people in China, and the company is known for making iPhones and iPads.

A BBC documentary in December criticized the working conditions among Apple?s suppliers in China.

Similarly, Midea Group hopes to reduce its workforce from 30,000 to 20,000 in 2018. Midea Group is the third largest home appliance maker in the world, and the $18.7 billion company plans to serve China?s booming middle class, currently estimated at 300 million and expected to double in size and buying power in the next decade. It plans to accomplish the workforce reduction without reducing output by automating steps including the final testing of air conditioners.

China chases Japanese robot manufacturers

In 2012, foreign companies made 96 percent of industrial robot cell products sales in China, said Report Buyer Ltd. Four of the largest suppliers were FANUC, Yaskawa Electric, Kuka Robotics, and ABB Engineering. These enterprises have entered into partnerships with local manufacturers and opened plants in China, but most competition is still coming from Japan.

By contrast, Guangzhou Yardway Industrial Robots Ltd. (a.k.a. Start To Sail Industrial Robots Co.) sold only 400 units in 2012, and it was the largest among Chinese industrial robot manufacturers. Both the Chinese government and investors are interested in opportunities to build up production, and some consolidation is likely.

Anhui Efort Intelligent Equipment Co. is a participant with 14 other enterprises and universities in an industrial park project that is expected to go live this year. The project received $350 million (RMB2.2 billion) in investment in 2013 and is planned to produce 10,000 robot bodies, core parts, and peripheral equipment annually.

In addition to rising wages, another impetus for increasing automation is the slowdown in China?s manufacturing industry in the past year. Despite an uptick last month, the HSBC/Markit purchasing managers’ index has shown weakness as a result of high corporate debt and uneven demand for exports.

Foreign manufacturers will likely find potential partners more easily in this environment, while Chinese companies will continue to seek inefficiencies and invest in increased automation.