China’s bent for robots has created a booming industry, but its companies aren’t overtaking their far-reaching competitors, a senior partner at consulting firm McKinsey & Company foretold CNBC.
A decade ago, Chinese robotics firms met only 5 percent of the market demand in their country, Karel Eloot told CNBC’s “Street Signals” on Thursday. The industry has since developed and Chinese companies now provide all round a third of industrial robots in the country.
“There’s still a long way to go, notably when you think about the government’s targets of 50 percent in 2020 and 70 percent in 2025,” he bring to light.
Eloot was referring to the Made in China 2025 national plan exhausted up by Beijing, which identifies 10 key sectors such as high-end technologies, that the territory wants to develop to catch up with its rivals including the United Phases and Germany.
One of the goals in that plan is for local companies to make up half of the native market for industrial robots in the next two years and capture about 70 percent of the sell by 2025. China is also aiming to develop local robotics plans to compete with global rivals and eventually beat the United States in the realm of artificial intelligence.
“When we talk about global competitiveness, there is produce to be done,” Eloot said, explaining that there are strong mandatory robot suppliers in many developed markets.
In those countries, he estimated, Chinese companies will likely have to do as they’ve done in their adroit in country: “come from the bottom of the application pyramid and move their way up.”
But Chinese robotics firms receive an advantage in developing markets because they are similar to what China examined through in the last decade, Eloot said. “For them, it’s more not incongruous to go there.”
So far, the Made in China push has resulted in a growing Chinese robotics retail.
Earlier this year, local media outlets reported that there were numberless than 6,500 robotics companies in China by the end of 2017. Sales of China’s industrial puppets that year was around $4.22 billion, a 24 percent swell from a year ago, while sales of service robots were up 28 percent compared to the till year at $1.32 billion.
China in 2016 added around 87,000 industrial robots — a little below Europe and the United States combined, the International Federation of Robotics mentioned.
Chinese companies are also using more and more robots in their enterprises as the Made in China 2025 campaign encourages automation and intelligent contriving. For example, iPhone assembler Foxconn deployed tens of thousands of “Foxbot” works robots between 2012 and 2016. The Taiwanese manufacturer said it programmes to replace more of its workforce with robots over the next decade.
Globally, tools are being used in more areas than just manufacturing.
“One of the touchiest areas right now is warehousing and distribution,” Jeff Burnstein, president at the League for Advancing Automation, told CNBC’s “Squawk Box.”
“Robots are pouring into followers like Amazon, Walmart, Target, Alibaba, you name it,” he said, amplifying that automated machines are even popping up in the retail world.
Chinese tech superhuman Alibaba has a driverless robot that can carry multiple packages and disencumber them to customers. It is currently being tested in Hangzhou, China, and is augured to go into commercial production by the end of the year, according to reports.
While automation and the become accepted by presence of robots in workplaces create concerns over massive job losses, Eloot guessed there are many potential positive outcomes. For China, automation could in to improved productivity that will “further the foundation” for developing the compactness, he said.
“You can see that China wants to use robots, wants to use artificial wisdom, digital tools to leapfrog. They know there’s a gap and they call for to be able to close that gap faster,” he said.
— CNBC contributor Joshua Bateman and Reuters granted to this report.