1.7M Robots Working in China's Factories
The Rise of China's Robotics Industry:
Modernize or Perish!
Unlike most developed nations trying to automate themselves, China set out a bold plan (emphasis on “plan”), which it has stuck to for a decade of ever-rising success
“The ambitious state-driven plan to retool China’s industries is not being pushed just by the Communist Party’s top leaders. Instead, the drive is also coming from the bottom up: from the businesses and cities across China that know they must modernize or perish.”
—Li Yuan, New York Times
The Rise of China's Robotics Industry: Modernize or Perish
Busy hands
Every nation knows that big undertakings take big money that’s only available from big government, especially a nation the size of China.
Although many industrialized nations have paid lip service to the critical importance of robot-driven automation, few have actually committed to it and taken action, and none have achieved success anywhere the equal of China’s.
In addition to China, only two other of the world’s industrialized nations have developed distinct plans to automate their respective countries using robots and robotics technology. Korea’s 4th Intelligent Robot Basic Plan (2024-2028) is up and running successfully and growing; Japan’s New Robot Strategy, announced in 2015 (running 2016-2020), is mostly a paper plan with limited national success to show for itself.
China is no stranger to massive undertakings. It’s been regularly pulling off mind-boggling projects since the Yellow Emperor…millennia ago. In modern times, beginning in 1979, the rapid transformation of Shenzhen from a small fishing village to a global tech hub kicked off a mega building spree. The Three Gorges Dam is another, along with the largest high-speed train system in the world, the Kela Power Station is yet another, then there’s the South-North Water Transfer Project, plus ten thousand other engineering projects since the 1980s.
Former paramount leader Deng Xiaoping felt confident that as long as the Chinese people kept their hands busy and continued to work together on large development projects China would be just fine. He seems to have been correct.
Automating China may be the most ambitious undertaking yet. And it all begins with and depends on robots. In a 2014 speech, Xi Jinping called for a ‘robot revolution’ in China, emphasizing robotics vital role in boosting productivity and encouraging the nation to embrace automation with the same intensity it does high-speed rail and renewable energy.
The transformation ahead
China’s automation burden is gargantuan. The number of robots needed to automate the country’s over 6 million factories and 11,000 warehouses is staggering. It’s like every resident of Madrid, Spain, having his or her own factory. Over $4 trillion or 40% of China’s GDP comes from these factories. In comparison, the U.S. with 20,000 factories pumps out $2.3 trillion or 10% of America’s GDP.
This universe of Chinese factories, built mostly over the last thirty years, is what has powered China to go from producing less than 3 percent of the world’s manufactured goods in 1990 to over 25 percent today. For example, better than 7 of every 10 electronics products sold worldwide are produced in China.
All of which is critical because China’s universe of factories and their millions of workers are what created and sustains the way of life that every Chinese citizen benefits from today. China’s middle class sprang up during those same 30 years and now numbers over 500 million people, larger than the combined population of the European Union.
With a declining population of factory workers and newer generations of young people who shun factory work, something needs to be done to maintain factory output, its enviable GDP, and the country’s modern way of life.
This universe is getting an ambitious and hurried automation makeover, without which China will end up a Humpty Dumpty on its Great Wall. China’s reply to the widening need for robots is simple and bold: Spend. Spend a lot, spend it wisely, and spend it fast. Most importantly, spend to leap ahead. Spend to ensure technological advancement.
Thousands of its factories will be razed or converted to warehouses, thousands more built anew, others will be gutted and renovated, and still tens of thousands more will merely swap out humans for machines. Whatever the final census, the universe will still be the biggest ever built.
Greed and corruption stalked the plan:
Humanity has anointed the robot for that noble global task. Asian Robotics Review has been following the build-out since 2017. We have chronicled China’s fabulous successes, plus those parts it would wish to do over again, as well as the dark side: the greed and corruption that stalked China’s great race to automate?
Here’s China’s plan and what it has accomplished so far:
China's Robotics Industry: A Government-Driven Ascent to Global Leadership
China’s robotics industry has experienced remarkable growth, transforming the nation into a global leader in robotics and artificial intelligence. This ascent is underpinned by strategic government initiatives, substantial financial support, and robust industry collaboration. This article explores the multifaceted approach China has adopted to cultivate its robotics sector, examining the impact of government policies, subsidies, and collaborative efforts on the industry’s competitiveness and innovation.
Strategic planning and government support
The Chinese government has been instrumental in propelling the robotics industry forward through a series of well-defined strategic plans and policies. These initiatives provide a clear roadmap for the industry’s development, ensuring that robotics becomes a critical component of China’s economic advancement.
Key strategic plans include:
- The “14th Five-Year Plan for Robot Industry Development”: This plan aims to accelerate the application of robots across various sectors, integrating robotics into the broader economic framework.
- “Made in China 2025” (MIC2025): Launched in 2015, this initiative identifies robotics as a key sector for upgrading China’s manufacturing capabilities, emphasizing the need for innovation and technological advancement.
- “Robotics Industry Development Plan (2016-2020)”: This plan focused on enhancing innovation, improving the quality of domestically produced robots, and expanding their application across diverse industries.
These strategic plans are complemented by significant financial incentives, designed to encourage investment and growth within the robotics sector. The government provides subsidies for robot purchases, with an average subsidy rate of approximately 17.5% of the equipment cost. Tax incentives are also available for companies investing in research and development (R&D), providing crucial financial support as businesses expand and seek public listing. Furthermore, the government has facilitated the establishment of robotics industry investment funds through market-driven approaches, ensuring a steady flow of capital into the sector.
Investment in research and development
Recognizing the importance of technological innovation, China has invested heavily in R&D to strengthen its robotics industry. National science and technology projects, along with key R&D programs, have significantly boosted research efforts. These initiatives aim to address critical bottlenecks and promote cutting-edge advancements in robotics technology.
One notable development is the government’s approval of plans to build a national robotics innovation center. This center is designed to tackle common challenges and foster collaboration among researchers and industry players.
Local government initiatives
In addition to national-level policies, various local governments have introduced their own initiatives to accelerate the growth of the robotics industry. Cities such as Hangzhou, Chongqing, and Nanjing have released specific robotics policies aimed at promoting innovation and concentrating business entities in the sector. These local initiatives complement the national strategy, creating a comprehensive ecosystem for robotics development.
Government-industry collaboration
Collaboration between industry leaders and research institutions is a cornerstone of China’s approach to robotics development. The government actively fosters partnerships to drive innovation and ensures that research is translated into practical applications.
The National Robot Innovation Center, a joint initiative between academic institutions and companies, exemplifies this collaborative approach. Launched to boost industrial transformation and upgrading, the center serves as a hub for innovation and technology transfer.
Impact of Government Subsidies
Government subsidies have played a pivotal role in enhancing the competitiveness of Chinese robotics companies. These subsidies have enabled companies to increase their investments in R&D, leading to technological advancements and innovation. Additionally, financial support has helped reduce production costs, making Chinese robots more price-competitive in the global market.
Subsidies have also encouraged the adoption of robotics across various industries, creating a robust domestic market for Chinese companies. Increased demand has allowed firms to achieve economies of scale, further enhancing their cost competitiveness.
However, the impact of subsidies is not without its challenges. Larger firms tend to benefit more, potentially exacerbating market concentration. Additionally, while subsidies can enhance overall automation, they may also increase automation dispersion, potentially reducing efficiency.
Incentives for robotics startups
The Chinese government offers a range of incentives specifically designed to foster growth in the robotics sector. These key incentives include:
- Financial Support: Subsidies of up to 60% on computing power, with a maximum of 10 million yuan in vouchers, as well as substantial financial incentive packages in cities like Shenzhen and Beijing.
- Tax Incentives: Tax breaks for companies investing in R&D, encouraging innovation and technological advancement.
- Funding for Key Components: Subsidies of up to 30 million yuan to support companies obtaining crucial components such as semiconductors and operating systems.
- Incubation Support: Funds allocated to incubate the latest innovations and develop commercial breakthroughs.
- M&A Financing: Financial support for mergers and acquisitions to strengthen the industry.
Driving innovation through collaboration
The collaboration between government and industry is a key driver of innovation in China’s robotics sector. This collaboration is facilitated through a coordinated approach that emphasizes better coordination between industry management, technology, finance, and policy sectors. Industry associations play a crucial role in monitoring progress and providing feedback on policy implementation. University-business partnerships are encouraged to develop high-level professionals and foster innovation.
Local government involvement is also essential, with local authorities tasked with addressing major issues and ensuring companies adhere to safety and environmental standards. Furthermore, the government supports open-source projects and businesses within the robotics sector through innovative financial services, promoting a culture of open innovation.
Impact of “Made in China 2025”
The “Made in China 2025” (MIC25) initiative has had a profound impact on the global robotics market. It has accelerated China’s progress in robotics, making it a formidable competitor in the global market. Chinese companies have established a strong presence in various tech sectors, challenging established global players.
The plan has prompted other countries to reformulate their technological and economic policies to maintain competitiveness. However, MIC25 has also sparked trade tensions and led to protective measures by other countries to counter China’s technological ascendancy. Global companies are reassessing their supply chains, with some moving production out of China to mitigate risks.
Robot-related patents
China’s leadership in robot-related patents, holding approximately two-thirds of the global total, is crucial for several reasons. Patents ensure China’s technological independence and reduce reliance on foreign innovations. A strong patent portfolio can generate significant licensing revenues and attract foreign investment. Leadership in patents allows China to shape global standards and norms in robotics technology. A robust patent landscape fosters a culture of innovation, attracting talent and encouraging further research. Patents provide a competitive edge in negotiations and partnerships with other countries and companies.
Market impact and future outlook
The concerted efforts of the Chinese government and industry have yielded significant results. China has remained the world’s largest market for industrial robots for 11 consecutive years as of August 2024. The country’s industrial robot production reached 430,000 sets in 2023. As of July 2024, China held about two-thirds of the global total of effective robot-related patents.
China’s government-led approach to developing its robotics industry has positioned the country as a global leader in robotics and AI innovation. Through strategic planning, financial incentives, and fostering industry collaboration, China has created a robust ecosystem for robotics development. As the global robotics landscape continues to evolve, China’s policies and innovations will undoubtedly play a pivotal role in shaping the future of this critical industry. The country’s strategic focus on robotics and AI, backed by comprehensive government support, has positioned it as a formidable force in the global technology arena.