Survey on the Survival of the Industrial Robotics Industry

Since the introduction of the "Made in China 2025" initiative, the robotics market has entered a state of "frenzy." Local governments are ramping up robotics projects, constructing numerous robotics industrial parks, and large amounts of capital are flooding in. With "high subsidies" and "price wars," robotics companies are springing up like mushrooms after a rain, even drawing cross-sector interest from real estate and internet companies. Reviewing the robotics industry, from the 2016 wave of mergers and acquisitions to the 2017 investment boom, and into the 2018 investment afterglow, the financing scale has grown nearly 30 times. The capital influx has brought a breath of fresh air to the industry while also disrupting its ecosystem. Meanwhile, a trend of "low-end development in high-end industries" has emerged, along with concerns about over-investment. The robotics industry is showing signs of blind expansion and low-level redundant construction.

The Current State of China's Domestic Robotics Industry Under Capital Assistance

Capital is a double-edged sword. While it has accelerated the rapid expansion of the robotics industry, it has also brought chaos. Investors are focused on policy subsidies and capital dividends, seeking "quick in, quick out" returns, ideally with investments that can go public within three years. This contradicts the slow growth and long-term technical accumulation typical of the industrial robotics sector. Before the capital influx, the industry grew through exploration and orderly market competition, allowing genuinely skilled and strong companies to grow and develop.

However, after receiving financing, robotics companies with real strength face pressure due to unrealistic high expectations and overvaluation from investors unfamiliar with the industry. When growth does not meet expectations, these companies struggle to execute their strategies and tactics properly, resulting in a lack of profitability and reliance on consecutive rounds of higher financing to ease investor pressure. The 2018 collapse of Tangbao Robotics, the first Chinese robot product to receive "China Robotics Certification," and the bankruptcy of Rethink Robotics, the pioneer of collaborative robots, were both influenced by capital. Tangbao's founder, Wang Minggao, was in severe debt and has since left for the United States. Rethink Robotics, despite raising $150 million through multiple rounds of financing, faced low sales and exited the stage due to financial issues.

Is the "Low-Cost" Strategy for Robots Viable?

Last year's price war among robotics companies significantly reduced the profitability of domestic enterprises, leading to reduced research and development (R&D) investment. The reduction in R&D impacts product performance and sales, creating a vicious cycle. This is a key challenge for many domestic robotics companies.

A low-cost strategy is clearly detrimental to industry development. Companies adopting this approach struggle to meet investor return expectations, losing money in the process. As capital "cools," these companies will face a stern test.

The "low-cost strategy" in the domestic industrial robotics market has also impacted imported robots, leading to a trend of "reduced volume, decreased price." International giants shifting focus toward the Chinese market are already preparing to lower prices, with Kawasaki being the most notable. These companies have the capital to engage in price wars, utilizing large volumes to capture the Chinese market.

Industrial Robotics Industry Faces Overcapacity

Data shows that although demand for automation is still increasing, the Chinese robotics market is exhibiting clear signs of overcapacity. According to the National Bureau of Statistics, the production of industrial robots decreased by 3.3% year-on-year in October 2018, marking the fifth consecutive monthly decline since June 2018.

How Can Domestic Robotics Companies Break Through?

Foreign giants have matured, controlling most of the market and technology, offering low risk with high returns. In contrast, domestic robotics companies are transitioning from high-risk, low-return startups to high-risk, high-return growth phases. With internal overcapacity and market stagnation, coupled with direct competition from major foreign brands, the question of how domestic industrial robotics companies can break through is worth exploring.

Although the overall industry financing ratio decreased by nearly 50% in 2018, the total amount of financing was the same as 2016 and 2017 combined. Financing is increasingly concentrated in a few dominant companies, with individual financing scales increasing, particularly in emerging subfields like machine vision, collaborative robots, and AGVs. The industrial robotics industry is already capital-intensive, with a substantial need for capital. In this context, outstanding companies must actively learn about capital, understand it, and skillfully leverage it.