May 5, 2017 2:00 pm JST
Interview

'Huge robot demand' can energize China restructuring

Japanese maker Yaskawa Electric sees 'exponential' growth in LEDs, autos, smartphones

Industrial robots assemble robots at a Yaskawa Electric plant. (company photo)

TOKYO -- It is no secret that China urgently needs to stabilize growth by restructuring its economy. The key lies in improving industrial technology and efficiency.

Hiroshi Ogasawara, president of Yaskawa Electric, a Japanese maker of industrial robots and servomotors, presented his views on the Chinese market in a recent interview with The Nikkei.

Q: How is your business in China?

A: Despite some ups and downs, sales have been growing by 10-15% annually in recent years. That is far faster than in other markets like the U.S. or Europe. By contrast, sales have been falling in Japan. In yen terms, Japan is still the biggest market. But China overtook the U.S. to become the second by sales in the year to March.

Factory automation will accelerate further in China. 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.

Q: How do you think the Chinese economy is doing?

A: As long as the government remains stable, China will probably maintain 5-6% growth. If an economy of such a scale continues to grow at 5-6%, resulting demand will be huge. Just like Japan in the past, China's manufacturing will quickly become more sophisticated.

Q: In what areas do you see potential growth in demand?

A: Markets for automobiles, smartphones and LED lights are growing exponentially. Demand for robots is especially high in the auto industry because of a shortage of labor as a result of China's one-child policy. Automation is slow except for welding and painting processes, leaving room for further growth in demand [for automation]. Parts suppliers are mostly not automated either.

Light-emitting diodes are spreading at a significant speed, too. Companies are increasingly switching to electricity because of environmental issues. Larger electricity consumption increases the need for energy efficiency and thus an increase in demand for LEDs.

As for smartphones, the next iPhone model is set to be released and orders from relevant factories have been rising since around the spring of 2016.

If factory equipment gets updated just like smartphones, there will be demand. Production of semiconductors will finally become full-scale. As China's economic structure continues to change, orders will also grow.

Q: Are there any risks to the Chinese economy?

A: One characteristic of the Chinese market is that when certain machinery in a certain sector becomes a hit, everyone, from big corporations to minnows, starts producing it all at once. Then tightening of financial regulations begins. Noncompetitive companies become financially constrained and get weeded out. That must be due to the government's will and has nothing to do with economy. That usually does not occur in other markets. It is important to carefully analyze which companies will survive.

Q: Have you noticed any influence from the new U.S. administration?

A: Nothing. It does not even appear that [President Donald Trump] is putting pressure on the Chinese market. If a country somewhere wants something, China will continue to make it. It is that simple. If factory construction begins in the U.S., the need for automation will become extremely high because wages are high there. That will be a plus [for us]. Still, the highest growth in sales this year will likely be achieved in China.

 

Interviewed by Nikkei senior staff writer Tadanori Yoshida

YASKAWA Electric Corp.

Japan

Market(Ticker): TKS(6506)
Sector:
Industry:
Electronic Technology
Electronic Equipment/Instruments
Market cap(USD): 5,269.15M
Shares: 266.69M

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