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Industry Update: Robotics
Industry in Chongqing
M
According to the China Robot Industry’s 13th Five
Year Plan (released in...
Chongqing’s key pillar industries include
automotive, electronic industries, and equipment
manufacturing (see Table 4). Th...
* Chongqing’s robot industry parks are part of the Chongqing’s government robot plan ”Chongqing Robotics and Intelligent
E...
Challenges for Chongqing’s Robot Industry:
Chongqing will face strong competition, technology
constraints, and human resou...
About Stone Tan: In 2010, Stone
Tan was established in Chongqing to
focus on financing solutions to small
and medium sized ...
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Chongqing Robotic Industry Update - July 2016

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Chongqing is a powerhouse in China's automotive and electronic industries. Foxconn, HP, Changan, and Ford are all located in the Municipality. Chongqing seeks to develop a new strategic industry: Robots. By 2020, the industry may generate 100 billion RMB! This report looks at how this could happen and the challenges the local government faces.

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Chongqing Robotic Industry Update - July 2016

  1. 1. Industry Update: Robotics Industry in Chongqing M According to the China Robot Industry’s 13th Five Year Plan (released in April 2016), China’s domestic industrial robot sales will reach 150,000 units a year by 2020, with service robots becoming a 30 billion RMB industry (see Table 1). In 2015, China’s robot market was estimated between 100 to 150 billion RMB. By 2020, this will grow to between 200 and 300 billion. China currently has low robot levels compared to other countries (see Table 2). For example, China’s auto industry has around 305 machines for every 10,000 people, while Japan has 1,414. Chongqing has recently placed robots and smart manufacturing among its top 10 strategic industries for growth.* In 2015, Chongqing output for this sector was around 10+ billion RMB. By 2020, Chongqing is seeking to create a 100 billion RMB industry consisting of robots, robot parts, automation equipment, software, vocational education and after service products. Chongqing’s robot sector will be a mix of both industrial robots and service and collaborative robots. Industrial Robots: The main consumers of robots are in the automotive and electronics industries, consuming more than 60% of all industrial robots. Robot categories in these areas include industry robots and 3D printers. Robot functions include assembly, coating & bonding, cutting, measuring & testing, welding, polishing & grinding, and palletizing & order picking. Service and Collaborative Robots: Service robots can be divided into individual/home use robots (including education and taking care of elderly) and specialized robots (defense, medical, logistics, and drones) (see Table 3). Collaborative robots are robots that interact with humans in a shared workspace. Table 1: 13th Five-Year Plan (2016-2020) - Robotics July 2016 Table 2: Amount of Robots per 10,000 workers 305 1141 1149 1414 17 89 161 211 China United States Germany Japan Amount of Robots for every 10,000 workers Auto Sector Other Industries *Chongqing’s strategic industries include core electronic components, new energy vehicles and intelligent cars, networks, robotics and intelligent equipment, high-end transportation equipment, environmental protection industry, MDI and new chemical materials, biological medicine, new materials, and shale gas. Robots: A Strategic Growth Industry * Source - "2016--2020 China's robot industry investment * Source - Barclays Equity Research 2016   2015 2020 2025 China Industry Robots (Annual Sales- Units) 66,000 150,000 260,000 China Industry Robots (Units Retained in Market) 180,000 800,000 1,800,000 Market Share of Domestic Robot Companies 33% 50% 70% Percentage of Domestic Robot Parts in Supply Chain Less than 30% 50% 70% Service Robots Market Size (billion RMB) 5+* 30 * Source - Barclays 2016 Forecast 2015-2018 (# of Robots Sold) Home Use Robots 25,900,000 Education Robots 9,000,000 Defense 58,800 Collaborative Robots 49,000 (2020 Forecast) Logistics 14,500 Medical 7,800 Table 3: China Robot Sales Forecast (units)
  2. 2. Chongqing’s key pillar industries include automotive, electronic industries, and equipment manufacturing (see Table 4). These three industries combined will create a large demand for industrial robots (robot purchases growing at 20% per year). Over the next 5 years, experts believe Chongqing will purchase 45,000 industrial robots. CRIA (China Robot Industry Association) suggests that currently more than 60 per cent of robots made by domestic companies were low-end models, performing simple jobs like polishing, welding, and loading/moving heavy freight. As a result, domestic companies only control 15% of China’s industrial robot market (See Table 5). Chongqing’s robot industry has more than 100 companies and produced 1000+ industrial robots in 2015. While some domestic robot companies produce robot bodies, the majority focus on assembly, systems and processing (See Table 6). To hit its 2020 goal of generating 100 billion RMB in the robot industry, Chongqing must attract companies with superior technology. A number of robot industry parks have been established in Chongqing to attract robot companies and investment (See Chart 8). Currently, Liangjiang and Yongchuan are the front leaders, with Jiangjin, Dazu, and Bishan also aiming to foster their own robot industries. Key companies that already are in Chongqing include Kawasaki and EMG Precision Machinery. Like Chongqing, many cities have implemented similar goals to hit a 100 billion RMB in output from the robot industry (Dongguan, Nanjing), with some seeking 200 billion RMB (Luoyang, Henan). In addition, there are more than 40 robot industry parks throughout China that are offering tax incentives and low cost land. According to reports, in the past two years, a total of 77 local governments have pushed policies to encourage robotics. Key Industries* 2015 (billion RMB) 2020E (billion RMB) Automobiles 460 800 Electronics** 407 800 to 1000 Equipment Sales 339 432.6*** Growing Chongqing’s Robot Sector Table 4: Chongqing Pillar Industries   2015 2020E Robot Body Market 38 95 Robot Systems Market 76 189 Robot Parts Market 6 15 After Services Market 0.4 1 Service Robot Market 5 30 Other (Education) 0.1 1 Total 125.5 331 Table 5: Robot Market for China and Chongqing (billion RMB)   2014 2015 Global Industrial Robots 229,261 240,000 China Industrial Robots 57,315 66,000 Robots made by Domestic Companies 16,000 22,257 Robots made by Chongqing Companies 800* 1000* • Chongqing’s Motorcycle Industry market is less than these industries (estimated at 30+ billion RMB and declining). • Electronics includes notebook computers, desktop computers, monitors, tablet PCs, and mobile phones from name-brands such as HP, Acer, Founder, and Asus. • *5% Annual Growth Estimate. Growth in equipment will be affected by the city’s automation rate. Chongqing’s automation rate for key industries will increase from 65% this year to 75% in 2018. • Source: news.xinhuanet.com/politics/2016-06/17/ c_129070709.htm • Foreign Robot makers control more than 85% of the market (Fanuc, Yaskawa, ABB, Kawasaki, Kuka, Denso, Epson) • Source - www.gz.xinhuanet.com/2016-01/19/c_1117824333.htm • Source: http://www.visiondragon.com/Show_News.asp?id=174 Table 6: Robot Market Forecast for China (billion RMB)
  3. 3. * Chongqing’s robot industry parks are part of the Chongqing’s government robot plan ”Chongqing Robotics and Intelligent Equipment Industry Cluster Development Plan (2015 - 2020)” * Bishan has announced larger targets but has not announced any major robot companies investing in its district in the past year.   # of Robot Related Companies City/District 2015 GDP (billion RMB) Key Robot Players Located in Park 2020 Production Goals 2020 Market Size Goals (billion RMB Chongqing Municipality 150+ 1,571.90 Develop a robot industry (R&D, Testing, and manufacturing) with world class standards 100+ Chongqing Liangjiang Robot Industrial Park 30 202.0 Shenzhen Schroder, Beijing Uptech Robot, Shenzhen Xrobot, HIT Industrial Robot Kawasaki Robot 10,000 units of industrial robots, 1 million service robots, 1,000 special robot 30+ Yongchuan Robot Industry Ecosystem 105 57.0 Guangzhou Shukong, EMAG Machine Tools, LK Group, Chongqing Hua Shu Industrial and Service Robots base for Chongqing 20+ Bishan Industry Park 10+ 38.2 Suzhou Alfa Robot, Chongqing Re Gu Robot Focus on specialty robots, robotic arms, robot parts. 5+** Chongqing Shuangfu New Area (Jiangjin) 10+ 60.6 Chongqing Sheping, Chongqing Yuan Pu, Chongqing Shan Lian, Chongqing Hua Shan, Chongqing Yu Cai, Heping Automation Robots for Electronics Industry NA Dazu robot Industrial Park 10+ 34.9 Ha Gong Robot, Shenzhen Luo Bo Tai Er Robot, Guo Yang Robots to modernize Dazu economy 5+ Banan Chongqing Economic Zone 10+ 56.8 Banan Xin Qi Machinery, Chongqing Jin Tai Aviation Drones Automotation NA Table 7: Chongqing Robot Parks - Analysis Local governments are giving robot companies and manufacturers attractive subsidies (See Table 8 for Chongqing). Guangdong, for example, has a plan to give more than 2000 manufacturers subsidies to buy robots (600 in 2015, 650 in 2016 and 700 in 2017). These subsidies are estimated to be around 10 to 20 percent of a company's robotics purchases. Dongguan City, which is trying to build its own robot industry, set aside 200 million yuan to help companies buy robots, capping the amount each firm can get at 5 million yuan (in addition to promoting financial leasing as a way to help SMEs purchase robots). The aim of these subsidies is to develop robot companies to a certain size (above 500 million RMB in revenues) that they can support their own research and development departments. If companies scale, they can also attract investment either from investors or from listing on a public market.* The end goal is for a local company to acquire competitive domestic and international component manufacturers so they no longer need to import components from foreign countries, whose steep tariffs increase the cost of robots (See Table 9). • Some manufacturers will falsely report sales to gain subsidies. In 2015, Shenzhen-listed Wuhan Huazhong Numerical Control HNC, falsely stated it sold robots to Gree Yubei (Part of Liangjiang) * R&D Research - (Max 10 Million RMB Yearly) * Equipment for R&D - (3 Million RMB Yearly) * Sales Subsidies - (Max 5 Million RMB) Yongchuan * Subsidies on long term and working capital loans (including guarantees) (500,000 RMB) * Grants to encourage enterprises to purchase Yongchuan built robots and CNC machine tools (500,000 RMB) * Grants for improving supply chain (200,000 RMB) * Grants of up to to encourage large scale industries over 500 million in revenues (200,000 RMB) Table 8: Subsidiaries for each company established in Chongqing districts: http://robot.ofweek.com/2016-06/ ART-8321202-8120-30000562.html
  4. 4. Challenges for Chongqing’s Robot Industry: Chongqing will face strong competition, technology constraints, and human resource challenges. Foreign Robots: As mentioned above, the majority of industrial robots consumed today in Chongqing are foreign robots. This is due to local companies lacking key technology, including key robot parts such as the speed reducer (See Table 9). Due to this technology gap, Chongqing’s top companies such as Ford, Changan, HP, Foxconn and Suzuki mainly purchase foreign robots for their production lines. Given this competition, domestic robot companies are forced to first focus on basic applications such as handling and palletizing for medium sized manufacturing companies. Chongqing robot companies likely will focus on medium sized companies in the die-casting industry, which uses CNC machines. Domestic Competition from Seacoast Areas: 50% of China’s listed robot companies are based in Shanghai, Guangdong, and Zhejiang (See Table 10). Another study examined more than 100 robotic companies and found the majority were also in the seacoast. Nearly half of these companies were focusing in the service robot industry (see https:// www.therobotreport.com/map) Technology and Capital: Since domestic robot companies have to buy or license robot part technology like the speed reducer, most of their business is in systems integration, which is estimated to be a 10% gross margin business. With most robot companies earning less than 100 million RMB a year in China and Chongqing, financing R&D or purchasing technology to move up the value chain will be a challenge. Chongqing Industry Parks are trying to focus on providing financing to these companies, including the use of financial leasing as a financing tool. Listed companies have more access to financial markets, allowing them to spend more on research and development of industrial robot components and offering after-market maintenance for products that break down. Human Resources: A lack of talent will be one of Chongqing’s biggest challenges. By 2020, Chongqing will need 100,000 robot professionals (from today’s 5,000). Most industry parks have began plans to create training and research facilities, including Yongchuan and Liangjiang robot parks (see Table 11). Table 9: Cost of a 165 kg Six-Axis Articulated Robot RMB - Foreign versus Domestic Company Foreign Domestic Total Cost 16.86 29.9 Body 4.70 6.53 Speed Reducer 2.08 9.18 Drive and Controller 0.50 1.30 Servomotor 4.45 7.99 Other Electronics 2.61 2.61 Misc. Parts 2.52 2.30 * Chongqing’s one listed robot related company is Chongqing Dima, which is focusing in medical related robots. * This does not include subsidiaries of listed companies (Chongqing HS Robot is a subsidiary of listed Wuhan Huazhong Numerical Control [SHE:300161]. * Robot core components including the electronic control system, servo motor and reducer. * Source - Guolian Securities - April 6, 2016 • Source - https://robotenomics.com/2016/01/ • Source: http://cqrbepaper.cqnews.net/cqrb/html/2015-05/14/ content_1836287.htm Table 10: Listed Robot Companies Analysis 21% 14% 14% 29% Headquarters for China Listed Robot Companies (Total 42) Guangdong Shanghai Zhejiang Shandong Jiangsu Tianjin Other Chongqing University of Posts and Telecommunications Nanan National Robotics Testing and Assessment Center (Chongqing) Jiulongpo Chongqing Liangjiang Robot Training and Application center Liangjiang CAS Chongqing Liangjiang Robot Incubation Center Liangjiang Chongqing Institute of Industrial Automation Instrumentation Jiulongpo Chongqing Institute of Technology Yongchuan Chongqing Gu Gao Science Research Institute Yongchuan Yongchuan Robot Public Service Center and Public Training Center Yongchuan Jiangjin Robotics and Intelligent Terminal Industrial Park Project Jiangjin Table 11: Robot Research and Education Projects
  5. 5. About Stone Tan: In 2010, Stone Tan was established in Chongqing to focus on financing solutions to small and medium sized businesses in Chongqing. The company is currently focused on the financial leasing business throughout China, with presence in Chongqing, Hong Kong, Shanghai, and Anhui province. Hong Kong Office: Stone Tan (Hong Kong) Suite 1A, 11th Floor Tower 1, China Hong Kong City 33 Canton Road TsimShaTsui Kowloon Hong Kong Tel: +852 27355188 Operation Headquarters: Stone Tan Chongqing Room 1004, 10/F, Fortune Tower A No. 2 Fortune Road , Yubei District Chongqing, China 401121 +86 23 88197891 Scan our WeChat Code to get future industry analysis and news about Stone Tan. 重庆谈⽯融资租赁有限公司,是由“谈⽯中国⾦ 融投资有限公司”与“重庆渝富资产经营管理集 团有限公司”共同出资组建。 Stone Tan Financial Leasing Co. was jointly invested by both Stone Tan Financial Investment Company and Chongqing Yufu Assets Management (Group) Co. Ltd. 主营业务 Key Business Types 直接融资租赁,售后回租,委托租赁,管理咨 询,财务顾问 Direct Leasing, Sales Leaseback, Entrusted Loans, Management Consulting, Financial Advising
  • ZhengHe3

    Sep. 12, 2017

Chongqing is a powerhouse in China's automotive and electronic industries. Foxconn, HP, Changan, and Ford are all located in the Municipality. Chongqing seeks to develop a new strategic industry: Robots. By 2020, the industry may generate 100 billion RMB! This report looks at how this could happen and the challenges the local government faces.

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