Eyeing China, Japan Ramps Up Robot Production

Forecasts for a steady downturn in robot and automation sales suddenly reverse—with good reason!

...but China Also Ramps Up Production!

Can money buy reality?
In March at China’s National People’s Congress, Premier Li Keqiang told the assemblage that the country is making a big push to develop advanced manufacturing while transforming and upgrading the real economy through innovation: “We will intensify efforts to implement the ‘Made in China 2025’ initiative, promote accelerated application of big data, cloud computing, and the internet of things.”

Before China’s factories can fully utilize big data, cloud computing, and the Industrial Internet of Things (IIoT), they will need to deploy armies of sensor-equipped robots. For the time being, Premier Li’s “we” will include a ton of Japanese technology and many thousands of Japanese robots, most of which are built in Japan but with an ever-growing percentage manufactured in China.

In 2016, China installed 90,000 new robots. That’s up 30 percent from the previous year and represents over 33 percent of the world total. By 2019, that number is expected to top 40 percent.

The largest beneficiary of all this robot buying is Japan.

In the first three months of 2017, Japanese robot shipments spiked to$410 million—a number unrivaled since 2010’s global financial crisis.

There was a time, right up to the opening bell of 2017, that China’s bid to produce 50 percent of the country’s robots through indigenous robot manufacturers was rumbling along with purpose. Things seemed on track to vigorously grow indigenously produced robot stocks from 16 percent to somewhere near 45 percent by 2020.

Granted it’s only been a skinny year since both the 13th Five-Year Plan andMade in China 2025 were announced; a few stumbles along the way are to be expected for any pioneer.

Now however, China’s blistering pace of automation has accelerated and is far-outpacing the likes of homegrown Siasun Robot & Automation et al to fill the need. As good as some of China’s industrial robot makers are, the job before them is nothing short of never been done before!

A constant reality is unforeseen events that keep rolling in one after the other, with each one needing immediate attention and lots of money. For example, another Singles’ Day is rocketing into view in a mere six months, with its annual 32 percent growth rate needing to accommodate for parcel deliveries on ecommerce orders coming in at the rate of a 175,000 orders a second. A second! It’s a job tailor made for robot-driven automation; a job still waiting for those robot saviors to arrive in force.

Some call it gouging
The International Federation of Robotics reports that by 2019, 40 percent of the world’s industrial robots will go to China. Foreign imports supply 80 to 90 percent of the Chinese market demand. “With strong demand comes high price, and according to the president of China Robot Industry Alliance, it is normal for foreign firms to charge a higher price when selling a unit to China compared to other developed countries where demand is less.”

“The price range to purchase and set up an imported industrial robot with application-specific peripherals is between $65,000 to $145,000.”

Partly the expensive reason why the government of Guangdong province invested $150 billion in robotics.

Japan’s two largest industrial robot makers, Yaskawa Electric and Fanuc, are feasting, each having seen their share prices jump more than 10 percent since the end of last year, multiplying the Nikkei average’s 2% gain.”

Less than a year ago both were worried about a downturn in their China sales.

Masayuki Kubota, chief strategist at Rakuten Securities Economic Research Institute, says bluntly: “The Chinese manufacturing industry can’t even talk about automation or labor-saving without technology from Japanese companies.”

It’s hard to understate Japan’s industrial robot chops: Manufacturers like Denso, Epson, FANUC, Honda, Hitachi, Kawasaki Heavy Industries, Mitsubishi Electric, Nachi Fujikoshi, Nissan, Panasonic, SONY, Toshiba, Toyota, Yamaha Motor Company, and Yaskawa Electric have captured nearly fifty percent of world production.

All of that robot firepower just across the Sea of Japan, and oh so available…for a price.

In May of 2015, Japan’s Premier Shinzo Abe challenged his robot-building samurai at the opening of Japan’s Robot Revolution Initiative Council. Abe urged companies to speed the development of advanced robotics that “could help the country overcome the handicap of a fast-aging populace and a declining workforce and to help the country to use of robotics from large-scale factories to every corner of our economy and society.” He wants robots to help to realize big changes before the Tokyo Olympic Games hit town in 2020.

Abe’s plan is to quadruple Japan’s robotics sector into a $20 billion industry by 2020.

Things take time
This assessment from The Diplomat neatly summarizes China’s robot predicament:

“Although the government has made heavy investments, half of China’s 800 robotics firms do not produce new products. Seventy to 80 percent are agents for other companies. Eighty-eight percent focus on system integration, the lowest-end in the robotics industry. Chinese technology lags far behind foreign competitors.

“As of today, controllers, decelerators, and servomotors — the core components of industrial robots — rely totally on imports. Nantong Zhenkang Machinery Limited Company, one of China’s best robotics corporations only sold 12,000 decelerators in 2016, a fraction of Japan’s Nabtesco’s annual decelerator sales of 250,000 to 300,000.

“In addition, Chinese-made core components are generally larger in size and low in output power when compared to ones made in Japan. Less than 10 percent of domestically manufactured industrial robots are of the six-axis type that can perform complex tasks like assembly, disassembly, and welding. Sixty percent are three or four-axis machines used mainly for lifting and moving weights.”

The vulnerability here is stark and bears repeating: “the core components of industrial robots — rely totally on imports.”

That is why the acquisition of KUKA by China’s Midea is so critical. Even if a KUKA robot is powered by a Kollmorgen servo motor, as is the KR Agilus, the specs, the CAD, the technology, and the expertise are resident with KUKA.

Billions of dollars of high-tech advantage hover within that KUKA/China connection, including the marriage of China’s vaunted artificial intelligence (AI) capabilities with KUKA’s machines.

KUKA, number four among the world’s top robot makers, could easily vault to number one (now held by FANUC) if China extends it preferential treatment in robot sales to its 250,000 SOEs (state-owned enterprises). “We are going to expand into more industries to be more diversified,” said [KUKA’s] German CEO Till Reuter in a March interview. “Midea will help us to open the doors.”

All that, of course, takes time. Meanwhile, Japan is selling into the gold rush that is China’s east coast factory transformation.

Mitsubishi Electric and Kawasaki Heavy Industries are expanding their plants in China, as is Yaskawa. FANUC will build a new factory in Japan to serve China’s growing demand. All are building out their capability amid China’s imperative to improve productivity and efficiency.

Hiroshi Ogasawara, president of Yaskawa Electric, sees a strong robot market ahead for Japan’s manufacturers: “Factory automation will accelerate further in China,” he said in a recent interview. “We expect similarly high growth there this year and the next. The share of the Chinese market in our business will further grow in the future.”