TOKYO -- China is quickly emerging as a global robot factory as manufacturers at home and abroad rush to adopt automation to lift production efficiency and keep soaring labor costs at bay.
Robotic maker Kuka of Germany, acquired by Chinese appliance maker Midea Group this year, plans to quadruple its Chinese output capacity by the end of 2019, Kuka's robotics CEO, Stefan Lampa, told The Nikkei in an interview Thursday.
Kuka currently has a plant in Shanghai, and will open a second one in the city in January to double its annual capacity to 25,000 units a year. By the end of 2019, a third plant will open in Guangdong Province to raise capacity to 50,000 a year. Lampa did not disclose the investment sum, but the spending is estimated at around $90 million.
The plan is to have the Shanghai facilities capture demand from automotive industry, and the Guangdong site to serve the electric machinery and electronics industries, Lampa said. When the new facilities open, Kuka plans to export to other parts of Asia, as well.
Kuka also plans to keep adding to its German production site, which currently has an annual capacity of 40,000 units, with the goal of raising total capacity to at least 100,000 units as early as 2020.
In exchange for accepting Midea's acquisition offer, Kuka extracted a promise of business independence through 2023, including keeping its management team, among other steps.
Lampa noted the difficulty of cultivating the vast Chinese market from scratch, saying Kuka will tap Midea's broad domestic network to increase product sales and services. He downplayed the prospect of Midea meddling even after 2023, noting that the Chinese parent focuses on consumer appliances, while Kuka provides industrial equipment.
Meanwhile, the two are discussing collaboration in artificial intelligence, Lampa said. The International Federation of Robotics projects that global sales of industrial robots will increase 77% from 2016 levels in 2020. China is expected to see a particularly sharp increase of 140% over the same period. The country faces severe labor shortages in manufacturing due to the aging population caused by the one-child policy, among other factors. And a government-backed initiative to strengthen manufacturing in China is also accelerating the market expansion.
Japanese players on bandwagon
Japanese manufacturers are eager to ride the robotics boom as well. Yaskawa Electric will increase Chinese production and go full speed in its joint venture with Midea. The Japanese company will roll out elderly care and rehabilitation robots developed with Midea, and step up marketing of factory automation systems. "We hope to continue collaborating with partners," Yaskawa President Hiroshi Ogasawara said.
ABB of Switzerland will more than double its global capacity of industrial robots in a year or two, by expanding plants in Europe, China and elsewhere, according to Per Vegard Nerseth, managing director of ABB Robotics.
Chinese manufacturers are eager to learn technologies from foreign players. But Yasuhiko Hashimoto, general manager of robot division at Kawasaki Heavy, says the gap in expertise will not shrink in a few years.
China has many small and midsize manufacturers. Intense competition will eventually leave only a few companies to survive, said Nerseth of ABB.