China, Robot

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The strong development trend of smart technologies is not exclusive to developed countries. china is where artificial intelligence ascended with the rocket. The extreme popularity of robot-related stock was a good proof.

On January 13， when the bear came to the entire stock market of China， the robot-related stocks still had an amazing performance. Most of them had at least a 5% increase in the price. And the similar scenario could be repeated every day in January.

For this， analysts said that the Lewis Turning Point had turned up in China. The most direct result was that dramatic improvement in automation thanks to the disappearance of population dividends. The demand for machines， especially smart machines， will rocket up in the next few years. For this， the year of 2014 is believed to be a turning point for the massive use of industrial robots.

With this， it is not strange why investors are favoring the robot-related stocks that much. Some analysts even daresay that the bull in that sector might run for the next ten years.

The said Lewis Turning Point is the point where the labor pool shifted from surplus to shortage. It is caused by the constant transfer of the excess labor force in rural areas into cities along with the industrialization and urbanization until the pool is run out.

Presently， the population dividends in China are reportedly disappearing. According to the statistical data from the State Bureau of Statistics， there were 937.27 million people aged between 15 and 59 in China， accounting for 69.2% of the total population. The number was 3.45 million smaller than a year before.

As reported by Huatai Securities， it was already a consensus in the academic circle that the Lewis Turning Point had emerged in China and the increase in labor cost will last for a long while. All these factors could drive the outburst of the demand for robots. The industrial data showed that the number of in- stalled industrial robots in China started to take off as of 2010. In that year and the following year， there were 14，980 units and 22，577 units installed， with the annual growth rates of 171% and 50.7% each year， higher than the 30% annual growth rate in the “11th Five Year Plan”，.

International Federation of Robots（IFB） showed that the global sales of robots could increase by 9% annually from 2005 to 2014 while the growth rate in China could be 25%. Therefore， IFR forecast that the robot industry is going to be hot this year， in which a lot of manual work could be taken by robot. China is also likely to become the second largest robot market in the world.

China International Capital Corporation Limited （CICC） thus believes that the demand and supply of the robots are to prosper together. China now owns the largest manufacturing base in the world and the potentially largest automate device market. The Chinese companies are reducing the gap between them and foreign companies. Therefore， it is expected that world-class robot suppliers can emerge in China in the next 5-10 years.

The Fast Development of Robots

The automation technology represented by robots is now a subject every major country in the world is committing to. Industrial robots are put into use more and more frequently and widely.

The same case could also be seen in China as well. A typical example is the recruitment conferences of Foxconn， the largest contract manufacturer in the world. Previously， Foxconn would build a stage and deploy a lot of people， trying to recruit a workforce as large as possible to meet the increasing manufacturing orders from Apple and so on. But last year’s recruitment conference was different， the unusual scene with few people had stirrted the guess that the massive use of robots has pushed the company to a new stage.

“The industrial robots are marching into their golden age，” said an analyst in the machinery industry. “It is an amazing product brought by the fast increase in labor cost and the upgrade of industrial structure. The replacement of manual labor force by the robots has become the catalyst for the development of the industry and is able to accelerate the arrival of the economic turning point of the industry.

Presently， the industrial robots are just in the starting phase with unlimited development potential and a great market outlook.

The Chinese government will not let slip this opportunity. It had issued The Program of the 12th Five-Year Plan for the Smart Equipment Manufacturing Industry， in which the government expressed the desire of making breakthroughs in the technologies of smart equipment， represented by sen- sors， automate control system， industrial robots servo and execution unit， and strive for the world-class level in these industries by 2015.

If the goal can be realized， China will be able to bring great improvement to large-scale set devices and production line assembly system in the future. A complete smart equipment manufacturing system is expected to be established by 2020， bringing the revenue of 3 trillion yuan from equipment sales. Therefore， as more investment and subsidies have come into position， the industrial robots are already to take off.

An analyst from Ping’an Securities pointed out that China’s industrial robots saw the 30% annual compound growth rate in the past five years. But presently， the number of industrial robots in China could only account for 10% of that in Japan and 25% in Germany. On one hand， this tells Chinese investors and practitioners in the robot industry to work harder to narrow the gap； on the other hand， this means China still has a great potential in that sector.

“China is now just like Japan in the 1980s： the increase in labor cost drove the crazy development of robot industry，” said the analyst. “It is very likely that the industry is going to keep its 30% annual compound growth rate for at least three years.

The government’s interference and encouragement seem important. In January， China’s Ministry of Industry and Information Technology published The Guiding Advices for Boosting the Development of Industrial Robots， requiring forming a complete industrial robot system in China by 2020， fostering 3-5 leading enterprises with global competitiveness， and assembling 8-10 supporting industrial groups.

Seeing the automation as a golden mine， the Chinese government has made up its mind to turn the robot industry into a new economic pillar for this country.

The Ten Golden Years

Before the robot industry could benefit the country， it bestowed bless- ings onto the stock market first. As of November 2013， the concept about robot was like a stimulant in the stock market as the stock price in this sector accumulatively increased by 20% by the end of January.

Analysts attributed the bull market in the robot sector to the government’s encouragement and favorable policies. Another incentive came from Google， the U.S. Internet giant which spared no efforts in acquiring robot companies in the recent period.

Google was frequently reported to acquire robot companies from last year. The current list of software-focused robot companies it has recruited includes Japan-based Schaft， U.S.-based BostonmDynamics and so on. Of them， BostonDynamics has developed a series of robots， like robotic dogs， robotic leopard named Cheetah， robotic cat named WildCat and bipedal robot named Atlas. All of them have drawn the attention of the market.

Therefore， the robot industry has presented a good outlook of mergers and acquisitions （M&A）. A report from CITIC Construction Institution said that from the experiences in South Korea and Japan， as well the existing cases in China， the high-end robot industry is going to closely tied to the automobile， telecom， metal products， chemical industry and home appliances. That means the possible bidders are more than Google and Internet companies.

CITIC Construction believed that the robot industry in China will see its market value rise to US$8 billion by 2020. The industrial chain would be improved to drive the development of the medium- and high-end robots.

“The previous fast development of manufacturing in China is largely dependent on the cheap labor force. In these years， the decreasing labor pool and the higher labor cost forced many investors and enterprises to turn to robots，” said an analyst. In order to further improve the productivity， product quality and competitiveness， enterprises have an increasing demand for the industrial robots.

Galaxy Securities believed that the robot boom will be more than the industrial robot. The robots for special use， such as monitoring and housecleaning， will rise as well. In 2014， the robot and wearable technology will be the new engine to drive the technological development and economic growth.