Heilongjiang Province has highlighted the robotics industry as its new driver of economic growth as it seeks to restructure its ailing economy. It's not a bad plan considering the global robotics industry is expected to be worth 3 trillion yuan by 2020. Yet although Heilongjiang has several advantages in robotics technology compared with the rest of China, the province's robot makers face their own challenges to becoming a dominant force in the market. Global Times reporter Liu Tian reports on the situation from Harbin, capital of Northeast China's Heilongjiang Province.

A technician works on a robot on June 7, in Harbin, Heilongjiang Province. Photo: CFP

 

Prior to their interview with the Global Times, executives from two giants in China's robotics industry had just returned from the 2nd China Robotics Summit held in Tianjin from June 9 to June 10.

The executives were from companies based in Northeast China. Three provinces in Northeast China, Heilongjiang, Liaoning and Jilin - once the country's heavy industry heartland - are important bases for China's robotics industry. They are home to a dozen of China's 60 or so listed robotics companies, as well as the country's leading robotics research centers, such as the Harbin-based State Key Laboratory of Robotics and System at Harbin Institute of Technology (HIT).

Heilongjiang in particular has paid close attention to robotics over the past two years, viewing it as a new engine of economic development that can help the struggling province upgrade its industrial sector.

The province's economy slowed to 5.6 percent in 2014, the lowest growth rate of any province in China. The figure was 4.8 percent in the first quarter of 2015, ranking among the bottom five provinces in the country.

"Heilongjiang Province desperately needs to find a new emerging industry because the traditional pillars of its economy - the oil and coal industries - have faded in recent years due to the depletion of resources," said Cai Dezhang, assistant to the general manager at Harbin Institute of Technology Robot Group.

"Besides, Harbin can provide strong supporting technology due to its long experience in robotics research," Cai told the Global Times on June 12.

Promising market

Robotics has become a hot topic this year. In one high-profile example, online shopping giant Alibaba Group Holding announced on June 18 that it and Taiwan-based electronics supplier Foxconn Technology had each bought 20 percent stakes in SoftBank Robotics Holdings Corp (SBRH), a subsidiary of Japan's SoftBank Corp, so they could sell the Japanese company's human-like robot Pepper around the world.

Earlier in May, China's State Council added numerical control tools and robotics to its 10-year national plan, Made in China 2025, which aims to transform China into a global manufacturing power.

Analysts attribute the boom in the industry to China's aging population, rise in labor costs and economic restructuring in recent years. In 2014, China overtook Japan as the world's top buyer of robots, said Lin Nianxiu, deputy director of the National Development and Reform Commission, at a press conference on June 5.

China's demand for industrial robots is expected to rise 25 percent annually over the next few years, the Xinhua News Agency reported on November 3, 2014, citing data from the International Federation of Robotics.

Heilongjiang's advantages

Universities and institutes in Harbin have led about 200 major national-level projects in the robotics industry over the past five years, with the support of more than 600 million yuan ($96.68 million) in research funds from the central government.

In practice, the province set up its first national-level robotics industrial park in December 2014. The industrial park is now home to 52 robotics companies aimed at promoting innovation, accelerating development of the robotics industry and advancing industrial restructuring in the province.

The total sales revenue of enterprises in the park reached 150 million yuan in 2014 and is expected to grow to more than 500 million yuan by the end of 2015, said Jiang Dongmei, vice director of the public relations department for the Working Committee of the Harbin Economics and Technology Development Zone.

"Although Heilongjiang leads the nation in robotics technology, the province is not a major consumer of robotics. The major markets for robotics in China are the Yangtze River Delta and Pearl River Delta regions," said Kong Minxiu, general manager of Harbin Boqiang Robotics Technology Co.

"South China's booming private economy has encouraged numerous private companies there to use high-tech robots to replace human labor, the cost of which has been rising," Kong said on June 12. "In Northeast China, most enterprises are State-owned, so they lack the motivation to do this."

Cai agreed with Kong. "Our company's manufacturing base is in South China as well, due to the region's proximity to our customers, fair rules, efficient local government and favorable policies," Cai said.

Kong also noted that Heilongjiang is more like a talent training ground since most of its robotics technology experts have flowed into South China even as the province creates the country best robotics technology. "HIT currently creates about 80 percent of China's top tech talent," Kong said.

The role of robots

The global robotic market will grow to 3 trillion yuan by 2020, jrj.com, a website providing financial news, estimated in September 2014, citing statistics of the International Federation of Robotics. The situation leaves China's robotics industry, which accounted for one-fifth of global sales in 2013, with a lot of room to grow.

China's robot makers also have an advantage in price, said Lin, the NDRC official. They provide the same quality of products as their foreign competitors at one-seventh of the price. 

"The robot industry has a strategic value in promoting industrial transition rather than immediate output, even if a large robotics company can only create around 1 billion yuan in output, far less than that of traditional manufacturing industries," Cai said.

"The industry may create a substantial output in future," said Wang Zongyi, chairman of Harbin XiRobert Co Ltd.

"The province should make large investments in the industry at this early stage," Wang told the Global Times on June 12. "The long-term vision is crucial."

Tech hurdles

Wang said the lack of core technology is the biggest challenge facing Northeast China's robotics industry. "This is also a big problem for all robots companies across China because most of them are just simply replicating foreign technologies. Others are just assembling or building systems from the spare parts and end products that they purchased from abroad."

Wang noted that Heilongjiang robot makers should carve out their own niches in the industry since the province develops China's most advanced robotics technology.

Government policy is another challenge. "The local governments in South China can provide millions of yuan to support robotics enterprises' research and development at the initial stage, but there are few such policies in Heilongjiang," Kong said. "Besides, some southern local governments also offer free workshops, favorable tax policies, cheap electricity and a sales allowance to local robotics companies. Robot enterprises in Northeast China therefore can't compete with their southern counterparts due to unfairness caused by the different policies in different places."