East Asia represents serious opportunities for western automation and robotics technology providers, and this is not just because of COVID. Asia was already fully embracing robotics and industrial automation before the pandemic. And, in a post-COVID world, the adoption of these technologies as well as industries that integrate them - like manufacturing, logistics, and ecommerce - continue their meteoric rise.
China is, unsurprisingly, the world’s biggest user of industrial robots and automation technologies. After all, the country is the world’s largest producer of automobiles and consumer electronics, and the largest global ecommerce and logistics market. In fact, China today has more industrial robots than the next four countries (Japan, USA, Korea and Germany) put together!
But, if you are thinking about opportunities for your automation or robotics technology in Asia, then China’s insatiable appetite is not the only factor to consider. South Korea has the highest density of industrial robots per 10,000 workers at 855 and Japan ranks second (364), while China is ninth (187). For reference, the US is fifth at 228. So, if you are looking to find a core mass of companies using your technology, Korea or Japan might be your first stop.
In this article, I will outline three primary answers to ‘why Asia?’ when you are looking at where to sell or license your automation technology.
1. Asia’s socio-economic challenges require robots
The core East Asian markets of China, Japan and South Korea are enthusiastically embracing robotics and automation, albeit for different reasons.
Japan and Korea both suffer from labor shortages due to a decline in population growth (Japan’s population is actually shrinking). They struggle to fill positions for unskilled factory workers, especially at SMEs. Korea’s minimum wage has doubled since 2007 to 8,720 KRW ($8) per hour and Japan’s has increased by nearly one third during that time.
Despite policies to make it easier to bring in foreign workers from places like the Philippines, Vietnam, Brazil and China, both countries see automation and robotics technologies as a long-term solution. In fact, technologies that save R&D resources - like those from our material optimization client Citrine Informatics - are highly sought after.
For this reason, Korea and Japan have enacted favorable policies towards the robotics industry. Seoul announced a long-term strategy last October aimed at improving the national competitiveness of the sector through funding and deregulation.
And, in Japan, one core piece of new Japanese Prime Minister Suga’s digital transformation policy is greater use of robotics technologies.
In China, on the other hand, the rising cost of labor is a major catalyst for increased robotics use. Minimum wages have grown steadily across the nation in recent decades, reaching 2,480 RMB ($375) per month in Shanghai - nearly double that of regional rival Vietnam. The country is scrambling to stay competitive and sees robotics as a means to achieve this for low-end, labor-intensive manufacturing.
Furthermore, China is now being recognized as a global innovator, which I address below.
2. The industrial robot OEMs are in Asia
East Asia not only has a critical mass of factories integrating robotics and automation technologies, it is also home to the leading industrial robotics OEMs. In fact, 60% of the world’s industrial robots are made by Japanese corporations like Fanuc, Yaskawa, Kawasaki, Mitsubishi and Denso.
China, while not a serious developer of robots, has invested in several global robotics OEMs, most notably with Midea’s acquisition of Kuka in 2016 for $5 billion. And, earlier this month, Hyundai Motors purchased a controlling stake in Boston Dynamics in a deal that valued the latter at $1.1 billion.
Any company licensing embedded technologies for industrial robots - from connectivity and analytics to tooling arms and vision systems - should look seriously at East Asia given the critical mass of both robotic OEMs and the end customers who drive the specifications.
3. The applications are there, too
East Asia has also embraced robotics and automation technologies across a diverse range of applications.
In Korea, for example, Doosan is developing an unmanned forklift, and AGV (automated guided vehicles) companies from China like Geek+ are supplying fulfilment centres in Korea’s burgeoning ecommerce sector.
LG Electronics is developing robots that can handle deliveries as a last-mile solution (initially deployed at convenience stores) and Korean food delivery giant Baemin has developed its own robot to handle deliveries in apartment complexes.
There is also an uptick in the use of automation technologies for inspection (drones, shipyards, packaging, product QC, etc.), manufacturing (both low value like textiles and high value like semiconductors), and even as a replacement for human workers in restaurants and medical facilities.
China now recognizes its new role in the global manufacturing world – not as a low-cost manufacturing hub but as a global innovator, R&D center and supplier of high-quality, hi-tech goods. BMW and Tesla are believers, and both are exporting made-in-China vehicles (the iX3 and Model 3, respectively) to Europe, which aligns nicely with Beijing’s goal of China becoming the world’s EV factory.
China is also embracing robotics in ecommerce and logistics, and the country’s second largest ecommerce platform, JD, has fully automated logistics and sorting centers as well as delivery vans.
We are working with several western companies to enable the autonomous delivery revolution in China – including Stradvision (perception algorithms), DriveU (AV teleoperation) and Teraki (edge processing for AV sensors).
Meanwhile, Japan is using drones for all sorts of inspection applications, and we are conducting a paid PoC for a client with a top-three Japanese construction company for drone-based inspections in tunnels. There are also automated construction and site surveillance technologies used by companies like Obayashi, Takenaka, and Komatsu. For example, Komatsu launched Landlog in 2017, a connectivity and automation platform for the construction industry.
Ecommerce giant Rakuten is looking at autonomous methods for the ‘final 100 meters’ of delivery – with autonomous trucks that drive up to housing estates with drones that fly out of the back and up to the apartments. And ZMP is developing a similar solution in conjunction with Japanese petroleum conglomerate ENEOS.
In Japan, all this is supported by a cultural acceptance of personal interactions with robots – hence the popularity of the idea of ‘co-bots’ to monitor elderly patients.
Business as usual
So East Asia is firmly back to ‘business as usual’ and hungry for technology.
The region represents compelling opportunities for western robotics and automation companies willing to invest in building a market there. And, with the uncertainty hanging over the west, it will perhaps prove the most fruitful and easiest region for securing customers in 2021.
To discuss the expansion opportunities for your business in Asia, contact: