Resurgent China Open for Business Once Again

Staying focused in a pandemic
In the COVID-spawned new normal, with global economies reeling and sales of industrial robots, cobots, and automation tech at new-normal lows, or worse, one place is thriving and looking more like the old normal than one riven by plague. That place, of course, is China.

China is resurgent, and with added gusto.  It’s kind of remarkable to watch it unfold. Given the pandemic and a Sino-America trade war of volatility, uncertainty and heavy tariffs, you’d think that China would be reeling. It’s not; it’s growing, and never really lost step with automating its manufacturing and logistics. Remarkably, the pandemic seems to have just slowed things down for a while.

As Reuters pointed out: “China’s recovery has been gaining momentum as pent-up demand, government stimulus and surprisingly resilient exports propel a rebound. Industrial firm profits grew 19.1 percent year-on-year in August to $89.8 billion. That compares with a 19.6 percent increase in July and is the fourth straight month of profit growth.”

An amazing recovery for a country with virtually no known allies or friends or anyone to lean on for help anywhere in the world, except for its own people. Other countries merely refer to themselves as China’s trading partners, and that’s seemingly all there is to the relationship. China has had to dig itself out of both the COVID and trade war holes…by itself, and has done a commendable job of it.

Of quarantines and robot sales
China is back to being China again. And once again as well, plane loads of foreign sales people with empty order books will soon enough trek its colossal landmass writing orders, and then fly home with those order books filled.

As everyone knows, China buys more industrial robots, automation gear and machine tools than anyone else; and it pays all its bills. That’s a sought-after customer type, and these days the prized customer is buying. Not yet as much as pre-COVID, but still a lot (see chart).

The U.S. and the EU will recover their robot-buying zest later than sooner. That’s a trend that will continue, and every maker of industrial robots, logistics robots, mobile robots, cobots, grippers, and robot parts are adding more pages to their sales books and readying to converge on China again. Many are already there.

In the face of adversity and snubs to friendship from other countries, the Chinese carry on remarkably well with a homegrown brand of determination and resiliency that’s quite admirable. Maybe just call it Chinese grit. And the world of automation has taken notice.
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The Sino-American trade war has made China stronger. “After reopening in late February and early March, China’s factories began an export blitz that is still gaining steam. Exports soared in July to their second-highest level ever, nearly matching the record-setting Christmas rush last December. The country has grabbed a much larger share of global markets this summer from other manufacturing nations, entrenching a dominance in trade that could last long after the world begins to recover from the pandemic.”

Reshoring manufacturing to the U.S. has been less than modest. According to a member survey by the U.S. China Business Council: 97 percent of U.S. businesses operating in China reported that their operations are profitable, and 87 percent said they had not relocated and had no plans to relocate any of their activities. More than three-quarters of U.S. firms say they are doing better or as well in China compared to overall operations globally. Revenue for U.S. firms in China is $500 billion; a kingly sum that companies are reluctant to leave behind.

Although 500,000 jobs have been reshored to the U.S., many were confronted by much higher U.S. labor costs, so ultimately, thousands of returning jobs detoured to Mexico or into the arms of an industrial robot. Many of those manufacturers who did leave lament leaving behind the skills, expertise, and speed that they relied upon in China, all the while praying that they don’t lose China’s massive customer base in the shuffle.

“Many companies that are moving some facilities out of China — including Samsung, Hasbro, Apple, Nintendo and GoPro — are relocating to countries where wages are even lower. While U.S. trade with China fell sharply last year, imports from Vietnam, Taiwan and Mexico swelled.” And now, during COVID, the U.S. has 300,000 fewer manufacturing jobs than when President Trump took office.

Vietnam, Thailand, Malaysia lead supply chain relocation decisions