China’s Robotics Industry: Current Outlook and Market Scope for Foreign Investors

China is rapidly emerging as a global power in robotics as the government aspires for the industry to compete with the world’s most innovative economies.

China has already been the world’s largest market for the application of industrial robots for nearly a decade and is a growing power in the production of industrial robots.

For the Chinese government, this is just a starting point. According to government plans, China will become an innovative robotics hub by 2025 and a world-leading robotics hub by 2035.

If successful, China’s adoption of robotics will transform the nature of its manufacturing sector. To do so, however, China’s robotics industry requires collaboration with foreign sources of technology and expertise.

China’s growing robotics industry

According to a report from the Chinese Institute of Electronics (CIE), China’s robotics industry was worth RMB 83.9 billion (US$12.12 billion) in 2021. Of this, industrial robots were worth RMB 44.6 billion (US$6.44 billion), while service robots were worth RMB 39.3 billion (US$5.68 billion).

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The development of China’s robotics industry is the result of years of growth. From 2016 to 2020, China’s robotics industry had an annual average growth rate of 15 percent. In 2020, the operating income of China’s robotics industry surpassed the RMB 100 billion (US$14.32 billion) threshold for the first time, per data from the Ministry of Industry and Information Technology (MIIT).

Globally, the robotics industry is recovering from a slight downturn caused by the COVID-19 pandemic. The International Federation of Robotics projected that in 2021, global industrial robot installations would grow by 13 percent to reach 435,000 units – the highest growth rate since 2018.

Going forward, the robotics industry is set to grow at a rapid pace as technology improves and is increasingly adopted by businesses. According to Zion Market Research, the industrial robotics industry was worth US$41.7 billion in 2021 and would reach US$81.4 billion in 2028 at a compound annual growth rate (CAGR) of 11.8 percent from 2022 to 2028.

How China compares to other robotics powers

China has rapidly adopted robotics due to a confluence of factors. Because of China’s strengths and efficiencies in manufacturing, China is able to produce robots at a lower cost than most other countries. Moreover, the government is actively supporting the industry to promote China’s rise as a high-tech power and to address projected labor shortages due to its rapidly ageing population.

In 2021, China produced 366,000 robots, an increase of 67.9 percent compared to the previous year, per Wang Hong, an official at the MIIT. In the first half of 2022, however, China produced 202,000 units, a year-on-year decrease of over 11 percent.

In 2020, China’s usage density of industrial robots reached 246 units per 10,000 workers. This figure was nearly double the global average of 126 and ninth in the world overall. It was close behind the US, at 255, but significantly behind South Korea, at 932. That year, China installed 140,500 robots, accounting for about 44 percent of the world’s total.

Additionally, China leads the world in robotics patents, accounting for 35 percent of the world’s total between 2005 and 2019. By comparison, the US accounted for about 13 percent of total robotics patents.

Despite China’s momentum in developing its robotics sector, it is reliant on foreign countries for high-end robotics components, such as those from Japan and Germany. In 2019, 71 percent of new robots in China were sourced from overseas, including from Japan, South Korea, Europe, and the US.

China is therefore efficient in manufacturing and robotic applications but relies on foreign sources for innovation and high-end components.

China’s robotics ambition

The Chinese government has released ambitious plans to upgrade its robotics industry, including through a Five-Year Plan for the industry. On December 28, 2021, the MIIT, alongside a number of other departments, jointly released the latest Five-Year Plan for the industry, delineating a host of short-term and long-term objectives. The Five-Year Plan seeks to both strengthen China’s role as a manufacturer of robots and increase the application of such robots.

By 2025, the plan states that China should become a global source of innovation in robotics and make breakthroughs in core robotics technology and high-end robotics products. By 2035, China’s robotics should be among the world’s best, and robots should be integrated in the economic development, daily lives, and social governance of China.

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In terms of more specific objectives, the plan aims for China’s robotics industry to grow by 20 percent per year from 2021 to 2025, outpacing the global average. Further, it aims for China to double its manufacturing robot density by 2025. Additionally, China plans to build a least 500 model smart manufacturing factories and create at least 150 smart manufacturing solution providers.

Another key part of the Five-Year Plan is to develop China’s capacity in the design and manufacturing of the three main components of sophisticated robotics: speed reducers, servomotors, and control panels. These are some of the areas where China is highly reliant on foreign production yet are core to many types of robots.

How China uses robots

Chinese economic planners envision robots being used in a variety of roles, whether it is supplementing human labor in manufacturing processes or supporting medical services in hospitals and eldercare facilities.

Wang, the MIIT official, has stated that industrial robots have already been adopted in 143 industries and 52 major industry categories in China. According to Wang, robots have been an essential component in the growth of emerging industries like new energy vehicles (NEVs) and photovoltaic cells.

The growth of lithium battery and NEV construction in China has been a key driver of the rise of industrial robot use in the country. In 2021, demand for industrial robots in the lithium battery industry rose by 131 percent, warehouse logistics by 103 percent, and photovoltaic industries by 51 percent.

An industry report projects that by 2025, demand for industrial robots in the lithium battery industry will exceed 67,000 units and record a CAGR of 35 percent from 2021 to 2025. Further, demand for mobile robots in the industry will surpass 25,000 units and record a CAGR of 38 percent from 2021 to 2025.

Beyond these industries, the Chinese government plans on increasing the use of robots in many others. For example, on August 23, 2022, the MIIT, the Ministry of Agricultural and Rural Affairs, the National Health Commission, and the National Mine Safety Administration jointly released a circular on the application of robots in agriculture, construction, healthcare, and mining. The circular reflects the government’s plans to expand the use of robots across the economy, including in service sectors.

Robots in China: More room for growth

China’s strengths and limitations in robotics are clear. Due to the scale and diversity of its manufacturing sector, it can affordably produce robots and integrate them into various facets of the economy. However, China’s robotics industry is limited in its innovation, talent, and high-end industrial base.

The scope of the Chinese government’s ambitions for robotics opens significant avenues for foreign investors, whether it is bridging gaps in technology to setting up robotics companies or selling to companies seeking to implement robotic applications. As with other high-tech industries in China, entering the robotics industry requires careful intellectual property and other strategic market entry considerations to ensure long-term success.

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