Rising labor costs and an upcoming demographic crisis are driving up demand for 'automated workers' in China, as companies strive to retain their competitive edge. He Wei reports from Shanghai.
Sun Zhiqiang says the timing of China's robot spree is perfect for his business. As managing director of Risong Group, an automation company in Guangzhou, Guangdong province that provides robotic systems, Sun's company has cashed in on the robotics boom during the past two years. Although he declined to provide details, Sun revealed that the company is making almost 20 times the revenue it did when the business started 15 years ago.
Established by Sun, an engineer by training, Risong was a pioneer in the introduction of robotics systems in China. However, in the early days the company hemorrhaged money, because the concept of robot workers failed to catch on.
"Back then, no one was really into robots," Sun recalled. "I was given the cold shoulder every time I tried to promote the products. The response was always: 'We have inexhaustible human labor.' So why bother to use robots?"
But a change in demographics has helped to open the window of opportunity. China's working-age population is set to shrink and labor costs are likely to spiral upward as a result. That has given a fresh impetus to the development of robots.
A 2011 census conducted by the National Bureau of Statistics projected that the working-age population will begin to decline in 2013, and the decrease will gather pace after 2020, signaling the end of what has been called "the demographic bonus".
Recent research conducted by the consultancy Ernst & Young LLP suggests that the average annual labor cost per worker rose to more than 40,000 yuan ($6,400) in 2011, from less than 25,000 yuan five years ago.
Given the context, it's easy to calculate the tradeoffs of getting a robot. "In fact, industrial robots are already cheaper than workers in China's eastern regions," said Wang Tianmiao, who heads the expert panel of robot technology under the State High-Tech Development Plan.
Wang said a typical industrial robot costs around 300,000 yuan and has annual maintenance costs of 20,000 yuan. The total layout of 500,000 yuan over 10 years is considerably less than that for a 6,000-yuan-a-month technician, and robots can work three times more efficiently.
However, the revenue from service robots is meager compared with that of industrial robots. In 2011, the industrial robot market was worth $8.5 billion, while service robots accounted for just $636 million.
The automation boom has flourished since 2010, when Chinese companies rushed to embrace industrial robots for manufacturing and equipment operation, Sun recalled. The new market buoyancy saw new orders piling up and provided a decent return for Risong. As evidence of the trend, in 2011 Foxconn Technology Group, whose factories on the Chinese mainland assemble iPads for Apple Inc, vowed to install as many as 1 million robots over the next three years.
Robots are efficient: They can work 24 hours a day, offer more output in repetitive work, are much more accurate and keep manufacturers away from reliance on human labor, said Zhu Shiqiang, a professor in the Department of Mechanical Engineering at Zhejiang University in Hangzhou.
Globally, 2011 saw robot sales soar 38 percent year-on-year to 166,028 units, by far the highest level recorded for a single year, according to the IFR.
China accounted for a large part of that robust growth, with 22,600 units sold, a rise of 51 percent compared with 2010. The number of industrial robots sold in China annually quadrupled between 2006 and 2011.
China now ranks as the globe's sixth-largest market in terms of robot installation, and the IFR predicts that the country will overtake Japan as the top consumer of industrial robots by 2014, with demand reaching 32,000 units. (China Daily)