China’s Robotic Edge

On a trip to Beijing in 2005, I was shown a manufacturing facility making PCs that even then had moved mostly to robotic automation. It was awe-inspiring. I had been in PC manufacturings facility before this, and so much of what was done had minimal automation involved in their programs.

After viewing this PC operation with its impressive robots, it became clear that China had a real edge on robotic manufacturing automation and that it could become a more powerful force in manufacturing.

At that time, most of this type of manufacturing was done in Taiwan and other regions of Southeast Asia with minor automation. China was only ramping up their broader tech manufacturing capabilities in 2005, and I could see that they jumped right into automated robotics to accelerate their efforts.

I thought about that first trip to an automated Chinese factory recently as I read Kai-Fu Lee’s editorial in the Economist on how “Covid Spurs China’s Great Robotic Leap Forward.”

This article is a must-read for anyone interested in AI and Robotics and China’s future as a world-class manufacturing center.

This short exert lays out his perspective:

“China is uniquely positioned to lead the world in the automation economy. Though the country has a large workforce, the cost of labor has increased ten-fold in the last 20 years and is now more than twice as high as Vietnam’s. As the workshop of the world, it has an incentive to automate its manufacturing sector, which enjoys a lead on high-quality products. China is now the world’s largest market for industrial robotics and the fastest-growing, surging by 21% to $5.4bn in 2018. This represents a third of global sales. As a result, Chinese companies are developing a leg-up on the world in terms of how to work with metallic colleagues.

This has spilled over to domains beyond manufacturing. When the pandemic was spreading rapidly in Wuhan in February and the massive Huoshenshan Hospital was built in ten days, a fleet of robots was scurrying inside for disinfecting and delivering medical supplies. These machines are used across China in schools, hospitals, and commercial buildings. Keenon, a robotics company in Shanghai, has developed an autonomous vehicle to disinfect areas, using a combination of LIDAR, machine vision and sensors.

I’ve seen these trends develop as a technology investor in China—and had a front-row seat during the lockdown. Zhuiyi Technology, a company in our portfolio, develops software for call-center automation. During the pandemic, the credit-card department of a large Chinese bank used the system to call its customers, managing 350,000 calls a day, or the equivalent of 1,200 human customer-service representatives. These conversational bots not only reduce cost, but also improve customer satisfaction and boost revenue. The company has since expanded its range to include AI telemarketers, AI analysts, AI trainers, AI assistants and so on.”

I got to know Kai-Fu Lee while he was at Apple working on AI-based speech recognition in the early 1990s. He went on to Microsoft to work on a similar project and eventually ran all of Microsoft’s China business before becoming a VC. He is also known as one of the smartest minds we have on Artificial Intelligence.

As portrayed by Me Lee, this leg up on AI-based Robotics in China is an important one to follow. However, it begs how much of this advanced AI Robotics is China willing to share with the rest of the world, or even license it to other companies. Would the US, UK, or other countries want to deploy it given the fear of using any Chinese technology that could spy on us since the US and UK have banned Huawei 5G technology?

Of course, the US has much going on in AI and Robotics, but I suspect we are behind China, as Mr. Lee’s piece seems to suggest. But that means we could be on the verge of something a friend of mine calls the “splinter net” era wherein there are a western camp and Chinese camp for equipment, apps, and services. The US trying to ban Tik Tok is an excellent example of this in services. Unless something changes, a world of parallel supply-chains is coming.

At the moment, that is better news for China then it is for the US. Those robots spraying disinfectants in that Wuhan hospital does not exist in the US as of now. That they were even able to deploy these robots so fast in this hospital that speaks to the advanced robotics China already has ready to use immediately if needed.

China already has an edge in manufacturing. The US could move much of their production to countries like Vietnam, Malaysia, India, and Mexico; there will be a push to bring much of that manufacturing capability to the US over time, should we end up with a split supply chain.

However, if the goal is to bring manufacturing jobs back to the US, China’s robotic push hints that the US would also mostly deploy their version of AI-based manufacturing robotics to stay competitive. That would translate to fewer manufacturing jobs for humans and more for robots.

Given China’s political goals to dominate the world in so many areas, and robotic manufacturing is one of the big ones they are pursuing, it does seem that we may soon see this dual supply chain emerging fast. If the US is smart, they start accelerating their own AI robotic research and planning for the day when China will no longer be supplying many products we can use in the west.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

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