East Asian Robotics: Automation Ramps Up

Shoveling money toward Tokyo
Japanese robot makers are learning to yodel. FANUC and Yaskawa Electric, for the second year in a row—with a hearty thank you to China—beat out European robot giants ABB and KUKA in the all-important category of profit margin.

As reported in the Nikkei Asian Review, FANUC rocketed to an amazing net profit-to-sales ratio of 24 percent while Yaskawa rang in at a more-than-respectable 10 percent. ABB’s margin is forecast at 7 percent, KUKA’s at 4 percent.

Key factor for the Japanese producers’ wider margins is that both have in-house production capacity for critical core robot components like servomotors and inverters, says Morgan Stanley’s Yoshinao Ibara. 

Sales to China accounted for $751 million out of Yaskawa’s total of $3 billion in sales. Yaskawa now wants to lift its global market share well above its present 10 percent, and supplying robot parts to Chinese rivals is the means.

With China possessing barely one percent of the world’s robot patents, dependence on Japan (and Europeans) will continue for the near term; and, of course, Yaskawa intends to use its IP advantage for as long as possible.

Additionally, Yaskawa’s joint-venture robot plant at China’s Wujin High-Tech Industrial Zone, Changzhou City (opened in 2013), is operating at capacity.

Yaskawa looks primed to easily build on its 10 percent share. FANUC, with a massive commitment to cellphone assembly equipment, is predicting a major downturn from its sky-high 24 percent as phone sales soften.

Although robots sit at number two on China’s top ten ‘must-have’ list for Made in China 2025, the country’s domestic robot industry, although having made remarkable strides since 2013, cannot keep up with the frantic pace of factory automation. Foreign robot producers look well-ensconced to maintain their edge; Japanese quality, abundance, ease of access, and business acumen are realizing huge profit days, with many more ahead.

With cobots, the playing field is much more level; China has three superior cobot makers that can easily compete or out-compete any foreign cobot: AUBO, Elephant Robotics, and Han’s Robot. Given China’s two-million-plus factories, especially hundreds of thousands of SMEs, plus plump government subsidies for industrial robots, plus a hometown edge of being China’s own, the domestic cobot advantage is China’s to lose.

As Seeking Alpha refers to them: Cobots: The PCs of the Robot Era.

Add to that potential mega-market, China’s distinct advantage in artificial intelligence (AI), and the idea of the “smart” Chinese cobot begins to loom larger than life. None of China’s foreign robot producers can begin to match China’s AI chops; and five years from now it’ll be near impossible to find an “unsmart” cobot. Do the math; China would have to do something extraordinarily stupid to miss out on smart cobots.

Across the Korea Strait
Standing on tip-toes on Japan’s Tsushima Island one can make out the coast of Korea, some 550 miles distant. With Korea’s very talented robotics ecosystem, quality manufacturers, and solidly mature robot industry—plus a very needy China—it seems a given that Korea should be basking in a chunky robot market with China…its next-door neighbor and largest trading partner. Sadly, that’s not the case.

As a March headline in BusnessKorea splashed out: Robot Industry Competitiveness—South Korea Lagging Behind in Robot Industry.

“The Korea Association of Robot Industry and the Industry-Academic Collaboration Foundation of Kwangwoon University announced on March 5 that South Korea’s robot industry is lagging much behind those of Japan, the United States and Germany.

What’s up with that?
A country-wide survey of 87 of Korea’s robotics experts surveyed in five evaluation categories: price, quality, manufacturing, human resources, and technology, came away with scores ten points distant from the three leaders. All from a country with a robot to worker ratio the highest in the world.

Upstart China, with one of the lowest ratios on the planet, bested Korea in three out of the four segments: specifically, manufacturing, personal service robots, and professional service robots.

Last year, Asian Robotics Review carried the headline Korea Awakens, Reacts…and Accelerates; and that Korea’s robot sales were forecast to Hit $25B by 2022; and that Korea has been ready since it’s 2014 proclamation Intelligent Robots Development And Distribution Promotion Act to maximize its robotics prowess. It hasn’t happened…yet.

Lots of distractions hampered Korea’s advances. The downfall of former Korean president Park Geun-hye (24 years in the slammer); rockets flying overhead courtesy of Kim Jong-un; and China’s displeasure with U.S. THAAD missile batteries on a Korean golf course. The latter earned Korea a boycott by the Chinese public on everything Korean from Hyundai SUVs to vacations to robots. A major financial ouch! Lone survivor, K-pop!

Okay, Korea smudged out last year as an anomaly, and here in 2018, will try to begin again, if it can.

The Ministry of Trade, Industry and Energy (MOTIE) has ponied up $467 million through 2020 to fund the Joint Robot Industry Development Initiative, which covers lots of domestic robot issues, but specifically tabs robots as “one of the new export industries”. Emphasis on “new”!

Industrial robots and service robots will be reinvigorated within Korea, but as for exports, it’s the cobot that is getting the big push. MOTIE’s February announcement of the Intelligent Robot Industry Development Strategy (notice emphasis on “Intelligent…”) is a clever strategy whereby Korea will “aggressively promote the market of collaborative robots [cobots] that are frequently used in manufacturing and established a medium and long-term development strategy to secure the competitiveness in key components for robots.”