The rise of the robot industry in China sparks investment boom
2017-10-20 10:24 Global Times
Editor: Li Yan
Overseas high-tech robotics companies have recently become a major takeover target for Chinese enterprises, as the Chinese government is pushing hard for an industry that can manufacture robots with the same quality as its foreign counterparts do.
One of the latest acquisitions is HTI Cybernetics Inc by Chongqing Nanshang Investment (Group) Co. HTI, founded in 1983, is a US veteran provider of integrated manufacturing solutions and robotic welding systems mainly used by automobile manufacturers like General Motors.
Upon the completion of the deal on October 3, Nanshang obtained a 100 percent stake in HTI for nearly $50 million, according to a press release obtained by the Global Times.
Meanwhile, Nanjing Estun Automation Co is in talks with German automation company M.A.i over 50.01 percent stake purchases worth a total of 8.87 million euros ($10.43 million).
The year 2016 was already a banner year for robotics companies' acquisitions, whereby 50 were sold for over $19 billion, according to calculations made by industry site therobotreport.com. Among them, over 47 percent involved Chinese money, with Midea's high-profile purchase of German robot maker Kuka AG drawing significant attention worldwide.
Helen Koo, CEO of the China operation at Los Angeles-headquartered Crestridge Consulting, predicted that more and more acquisitions will likely take place in the robotics industry in the future.
Successful takeover cases like the Midea-Kuka deal will encourage Chinese companies who want to seek acquisitions in the robotics sector, Koo told the Global Times Tuesday.
Besides, the high-end manufacturing and robotics industry is greatly supported by the Chinese government, making it easier for Chinese investors to pursue assets in those sectors, despite the country's tight control on capital outflow, she noted.
Crestridge Consulting was the exclusive financial advisor for Nanshang's takeover.
Koo recalled that the deal was made smoothly and that Nanshang wired the funds out roughly one month ahead of the closing date.
Gaining competitiveness
Chinese companies expect overseas acquisitions to help them obtain world-advanced robotics technologies.
According to a stock filing posted by Estun on the Shenzhen Stock Exchange in September, the company will speed up the innovation and localization of German technologies after acquiring M.A.i so as to compete with other international robotics players in China's fiercely competitive automation battleground.
China's robot market, the world's largest since 2013, is crucial turf.
"China is by far the biggest robot market in the world regarding annual sales and operational stock," said International Federation of Robotics (IFR) President Joe Gemma in a report released in mid-August.
"It is the fastest-growing market worldwide. There has never been such a dynamic rise in such a short period of time in any other market," Gemma continued.
During the 2018-20 period, robot sales in China are expected to increase between 15 percent and 20 percent on average every year.
Global automation giants seem to have already gained a strong foothold in the market, supplying two-thirds of industrial robots sold in China's booming electronics industry in 2016, according to data from IFR.
This year, more than 30 percent of the world's industrial robots are expected to go to China, and the figures could reach 40 percent by 2019, IFR data showed.
As the world's largest robots buyer, China is also beefing up efforts to boost and strengthen its own robot manufacturing industry under the guidance of the "Made in China 2025" strategy.
In April 2016, the Chinese authorities released the Robotics Industry Development Plan (2016-2020), pledging to forge an industry that can produce 100,000 Made-in-China industrial robots annually by 2020.
Analysts said that having the ability to make homegrown robots is significant for China, which is on course to automation.
"The over-reliance on foreign robot imports will lift up domestic manufacturing costs," Li Ting, director of the research center at the Chinese Institute of Electronics, told the Global Times Tuesday.
According to Li's estimates, imported robots are usually priced high, costing 80,000 yuan ($12,094) to 100,000 yuan more than domestic counterparts.
Chinese achievements
Although Chinese robot suppliers do not seize as many market shares as their foreign peers do, they are expanding aggressively.
The sales of Chinese robot makers in the nation's electrical and electronics industry, for instance, rose almost 120 percent last year year-on-year, much faster in comparison to the 59 percent growth rate posted by all international robot suppliers in the segment.
Overseas acquisitions and cooperation helped narrow the gap between domestic robot makers and their foreign peers, said analysts.
On October 9, Guangdong Tianji Robot Co, a joint venture between Shenzhen-based Everwein Precision and Japan's leading robot maker Yaskawa, unveiled the world's fastest industrial six-axis robot, dubbed as "TR8," according to a report by the China Securities Journal.
Everwein, which has a 65 percent controlling stake in Tianji, was quoted by the report as saying that it plans to produce 3,000 units of TR8s next year and 5,000 units in 2019.
Six-axis robots have greater flexibility than those with fewer axes and can perform complex tasks like welding, assembling and disassembling.
Another Chinese industrial robot maker Siasun Robot and Automation Co claimed in a post on its website in September that it is almost at the same level as foreign peers in terms of robot's controlling and precision abilities. And it took about nine years for it to achieve what foreigners achieved in 50 years.
Two-thirds of robots produced by Siasun have been adopted by foreign companies, according to a report published by Xinhua News Agency in April.
Chinese companies have successfully challenged foreign monopoly in producing controllers, decelerators and servo motors - the core components of industrial robots - and can now manufacture robots completely on their own, Li said.
"Made-in-China controllers and decelerators can now partially meet international standards, but are still not the world's first class yet," he noted. "And as a latecomer, China needs some time to test the stability and reliability of its homegrown robots."
Besides seeking assets and technologies abroad, Chinese robot makers should also work hard and pursue self-innovation, analysts suggest.
It might not be easy to acquire large-scale high-tech overseas assets in the robotics industry as they could be under strict scrutiny by foreign authorities, said Koo, citing Midea's takeover of Kuka.
"So far, most of the acquisitions in the robotics sector seem to be related to system integration, the downstream segment of the industry," she noted.
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