The China International Industry Fair (CIIF) held last week in Shanghai, China, is the country's largest exhibition for robotics and automation. The macroeconomic situation is mixed. The COVID-19 crisis has swept through all economies globally. China experienced the first large-scale outbreak and implemented a full lockdown in 2 and early 3, and appears to have returned to normal, at least domestically.

However, this does not mean that everything is fine. Foreign production technology suppliers that have established operations in the country in recent years have already faced a challenging environment in 2019.

On the demand side, factors such as the trade conflict with the United States, continuously rising debt, and stagnant productivity have negatively impacted consumer confidence and companies' willingness to invest. Since 1990, and even before COVID-19, automobile sales in the world's largest market have declined for two consecutive years, the first time since 1990.

After industrial robot sales grew 7-fold since 2010, they also saw a slight decline for the first time in 2019. The list of commodities and industries could continue. For many visiting foreign companies, whose global key customers are primarily from the automotive sector and who have only known growth in this market, this is an unfamiliar experience.

By 9 2020, the Chinese economy seemed to be performing well—not only compared to most other regions in the world, but certain industries have also performed better than the same period last year since 4. To a large extent, this development was driven by infrastructure upgrades, with targets for existing infrastructure doubling. Although the sustainability of this remains to be seen, it offers short- and medium-term opportunities for foreign production technology suppliers. We will publish a study later this autumn explicitly examining opportunities in the industry, which are on the rise.

Sales in China are a highlight of the global robotics industry

Industrial robots belong to the Chinese industries that outperformed the same period last year in the second quarter. Based on an evaluation of sales data from 20 leading domestic and international industrial robot manufacturers, the market grew by 3.8% from early 4 to the end of 6.

In the year-on-year comparison for the entire first six months, sales volume decreased by 5.4% (in units) compared to the previous year.

The growth in robot sales in the second quarter of 2020 was mainly due to catch-up effects and strong demand in the electronics industry, especially for SCARA robots (up 40%). Thanks to increased demand in the food and beverage, healthcare, and electronics sectors, Delta robot sales also rebounded by 22%.

Other segments with strong growth were automated guided vehicles (AGV, up 17%) and collaborative robots (up 9%). They particularly benefited from the resumption of projects suspended during the outbreak. Sales of traditional multi-axis robots (-10%) and handling technology (-6%) continued to decline in the second quarter, mainly due to persistently weak demand in the automotive sector.

Currently, China can be considered a highlight of the global robotics market. However, it should be emphasized that there is immense price pressure, which has even worsened under current circumstances. For example, there were rumors last year about Honyen (Honyen), the fastest-growing domestic robot manufacturer, having paid off arrears to suppliers and employees, and it is currently in bankruptcy proceedings.

Furthermore, DJI (DJI), a leader threatened by global consumer trends, was forced to deny reports of layoffs in mid-8. Increasing security concerns in overseas markets do not make it easier for the company to conduct international business.

The trend of domestic industrial robot manufacturers increasing their market share has not continued. Epson, Yamaha, and FANUC ensured this particularly through strong sales performance in the SCARA robot segment.

China Maintains Strong Investment

Using data from The Robot Report and our transaction database in China, our team analyzed 392 transactions that occurred in the global robotics industry in the first seven months of 2019 and 2020.

From 1 2020 to 7 2020, global robotics investment decreased by more than 60% compared to the same period last year. The United States remains the destination with the most investment, accounting for over 53.8%.

Chinese robotics users became relatively important in 2020. In the first seven months, 30.8% of investments were made here. The main drivers were initial public offerings by several industrial robot manufacturers and large integrators of logistics systems, as well as investments in mobile robots, robot-related AI chips, and 3D sensors (LiDAR).

Despite substantial capital injection, young Chinese robotics companies find themselves in a difficult environment. In addition to a price-sensitive domestic market where wages remain relatively low, they are facing increasing difficulties in acquiring foreign technology.

For example, in AGV, control chips came from the United States, while navigation sensors came from Europe or Japan. Two companies in the region, Megvii (Megvii) and Hikvision (Hikvision), have been sanctioned by the United States due to their business activities in the field of mass surveillance.

Startup Cloudminds raised over $30 billion and hoped to develop cloud-based humanoid robots in Silicon Valley and China, but due to increasingly strict military-grade technology export regulations, the company closed its branch in Santa Clara, California, this spring.

The traditional advantages of Europe and Japan in industrial robotics and automation are not reflected in investments in new fields of robotics technology. This should be a concern for both businessmen and decision-makers.