Domestic Robots in Transition
In 2020, under the impact of the COVID-19 pandemic, the real economy continued to face significant growth pressure, and robot demand became increasingly divergent. The era of explosive growth in incremental markets is gone for good; the industry has entered a new cycle of competing for existing markets while staking out niche incremental segments, and overall growth is likely to remain slow.
Domestic robot makers that once treated price as their "killer card" are gradually losing this "protective umbrella". Over the past few years, domestic robot companies that competed on low prices have increasingly felt this shift: low-price competition is yielding diminishing returns, the marginal effect of price is fading, and strategies that rely purely on price are gradually losing their effectiveness.
"The wave of price cuts on traditional robot bodies has come to an end." said Zhang Xiaolong, general manager of iNexBot. After the transformation year of 2019, the robot industry is now undergoing a shift from the virtual to the real, from quantity to quality, and from generality to specialization.
As Professor Zhao Jie, director of the Robotics Institute at Harbin Institute of Technology, noted: internet thinking has introduced some misleading approaches. Building industrial robots through subsidies, losses and burning cash — blindly worshipping the power of "price" and pursuing low-price strategies — will leave much of the industry unprofitable, "and without profit, where does a company get the funds for R&D? How can it talk about sustainable development?"
Recently, Bolangte, a representative low-price domestic robot maker, posted a notice titled "Notice to Non-Bolangte Tier 1, 2 and 3 Resellers!" stating that all non-Bolangte Tier 1, 2 and 3 resellers must pay 30% more than Bolangte's official bare-machine factory price starting May 1, 2020.
Bolangte is not the only one raising prices — Huanyan Automation, which has renamed itself "Huanging", has done the same. The wave of price hikes among low-price body makers is itself a signal that domestic robots are shifting from quantity to quality.
"Because they have already squeezed costs to the limit — now costs are rising instead of falling," industry insiders noted.
Zhang Xiaolong believes that operating efficiency and scale advantages are the core competitiveness of robot body manufacturers. While expanding sales and cutting costs are common choices for body makers, huge R&D costs are a major obstacle to profitability — the more invested in R&D, the bigger the losses — a chronic ailment of the body-manufacturing industry.
"The robot industry must strengthen collaboration and division of labor — sharing R&D costs across the whole society is the only way forward," he further noted. Redundant low-level R&D of the "everyone smelting steel" variety must be reduced, with resources concentrated among advantaged companies to raise industry operating efficiency. As a result, having every robot body maker develop its own drives, control electronics or even reducers will not be the way forward.
From Quantity to Quality: Tackling the "Hard Nuts" Is the Only Way Out
Ten years ago, China's robot market was still a largely untapped market with enormous potential; foreign brands dominated, and domestic robots struggled to survive in the cracks.
Ten years later, domestic robots have surged to prominence, China has become a major global robot market, foreign brands' dominance is being shaken, and domestic robots now have the strength to compete with foreign brands in the mid- to low-end market.
On one hand, domestic robot companies that champion "localization substitution" as the way forward will ultimately face foreign brands head-on in the high-end arena. Improving the quality of domestic robots and tackling the "hard nuts" is an inevitable choice.
On the other hand, in the low-end general-purpose market, after years of cultivation by domestic robots, the ceiling for channel development has almost been reached.
Zhang Xiaolong estimates that no matter how much robot body companies boast, even industry giants including EFORT and GSK CNC Equipment find 2,000 units a year in annual sales a difficult hurdle in the general-purpose market. "Even for a low-price robot company like Bolangte, actual shipments — excluding channel inventory and injection-molding machine-tending replacements — come to just over 2,000 units a year in traditional fields like welding."
"This is determined by the current capacity of China's robot market — the pool is only so big, no one can wipe out anyone else, and the country's channel support is limited," he explained further. "Because channels are protected and competitive, a brand's penetration in any given region is limited. If one brand becomes too dominant, other brands will cultivate new integrators to counter it. A single region cannot sustain multiple channel partners of one brand at the same time."
Today, the application density of robots determines the ceiling for each brand. And at this sales scale, body makers cannot afford comprehensive investment spanning everything from control to integration technology.
Zhang Xiaolong did the math: the open general-purpose domestic market can only absorb about 20,000 multi-joint robots, of which roughly 7,000–8,000 are welding robots, 4,000–5,000 are handling robots and about 3,000 are stamping robots. Niche segments outside the general-purpose market tend to be exclusive — such as the bending and silicon-wafer production niches developed by ESTUN, or the education sector entered by EFORT — which are, in a sense, closed markets.
This means that to expand the application fields of domestic robots, new industries capable of adding thousands of units must be found — such as machine tending, spray painting, polishing, die casting and 3C assembly. The dilemma in these fields today is that complex processes constrain large-scale robot deployment, and customers are generally dissatisfied with delivery results, so widespread adoption remains out of reach.
iNexBot, for its part, invests heavily in process R&D, simplifying process complexity and lowering application barriers. Making full use of its guided-operation interfaces, it takes "simple and intelligent" to the extreme, working with numerous body makers and integrators to develop new niche applications.
Looking at the industries themselves — construction machinery, containers, shipbuilding, auto parts and even complete vehicles — these major industries do not yet trust domestic robots, and channel costs are very high. Although domestic robots already meet the technical requirements, they cannot get in. The 3C industry is even more so: demanding requirements and difficult channel entry.
"These 'hard nuts' are what domestic robots need to crack together in the next phase. iNexBot is ready — leveraging the advantages of its open motion-control platform to help domestic robots surpass imported products," said Zhang Xiaolong.
Domestic Robots Moving Upmarket
Despite the "black swan" year of 2020, some encouraging developments were unfolding in the domestic robot sector: EFORT's IPO, for instance, gave a shot in the arm to the depressed domestic robot industry and reignited capital market hopes.
"Domestic robots should stop crowding into the low-end market and build strength to attack the mid-to-high-end market," said Zhang Xiaolong. "Domestic robots are now at the inflection point from quantity to quality. Although growth slowed in 2018 and 2019, we know that after all these years of development, domestic robot quality has undergone a qualitative leap."
In Zhang Xiaolong's view, two years ago service life was still the "Achilles heel" of domestic robots, but that concern no longer exists today. "Time proves everything — 'easy to use' and 'durable' should become the hallmarks of domestic robots."
Indeed, over the past two years, domestic robots have been working tirelessly toward the mid-to-high-end market.
ESTUN, the "long-distance runner" that vowed to "break into the first tier of the global robot industry by 2025", has stepped up its pace: by acquiring Cloos, the "hidden champion" of welding, it has expanded into standardized robotic welding workstation business and entered the larger global market for mid-to-high-end thin-plate arc welding robot workstations.
In September 2019, EFORT leveraged its Italian subsidiary WFC's deep customer base in the automotive industry and its other Italian subsidiary CMA's extensive spray-painting system integration experience to successfully enter the supply chain of a top Italian luxury car brand, achieving sales of nearly RMB 30 million, attacking overseas mid-to-high-end markets with a combination of business segments.
In the control system arena, iNexBot's robot control systems, honed over 5 years, have established a firm foothold in the domestic market and are now advancing toward the high end. iNexBot is in no way inferior to imported robots in core algorithms such as kinematics and dynamics, which is how it has entered the core supply-chain production lines of companies such as Huawei and Apple. In 2020 it has secured a leading position among domestic control systems, with full-year sales expected to exceed 5,000 units.
A positive sign: even amid falling demand and a "cooling" overall market, China's robot localization rate has continued to rise steadily, the market share of the "Big Four" in China has declined year after year, and the overall market has begun to split apart and restructure.
According to GGII data, China's industrial robot localization rate reached 38.63% in 2019, up from 28% in 2018.
On exports, GGII data shows that 22 domestic robot manufacturers exported in 2018, with exports accounting for 9.2% of output; in 2019, 49 domestic manufacturers exported, accounting for 12.4%. More and more domestic manufacturers are going global.
In the forecast "Top 10 Trends in the Robot Industry for 2020", Lu Zhangyuan, director of GGII's Robot Research Institute, said that China's industrial robot market would grow below 5% in full-year sales in 2020, but emerging domestic manufacturers would grow faster than foreign ones, foreign brand market share would decline, and the localization rate would rise further, potentially exceeding 39%.
Who Will Be the First to Join the "10,000-Unit Club"?
When "doldrums" become the new normal, the depth of the crouch determines how high a company can jump next.
As the domestic robot industry enters the critical phase of moving toward the mid-to-high-end, the central challenge is: breakthroughs in core technology — not just in body manufacturing, but also in core components.
As domestic robot body manufacturing matures, supply chains improve and the advantages of industrial division of labor take shape, the barrier to entering robot body manufacturing will be lowered further. With a preliminary industry-wide division of labor in place, efficiency will rise significantly.
In the past, immature component technology held back body makers. Forced into it, body manufacturers had to research and manufacture components themselves — even reducer assembly technology could become a core competency. But against the backdrop of extremely mature component technology, the industry must inevitably move toward collaborative division of labor — an industrial development trend that no one can reverse by willpower.
Today, domestic reducers and servo motors rival imported products in performance, and even the "Big Four" have begun trying domestic reducers and servo motors. Motion control technology has advanced even faster — iNexBot's welding process, for example, already meets most of the market's welding needs, and its "graphical, programming-free" palletizing technology is truly unique, far surpassing imported counterparts in ease of use and functionality.
Zhang Xiaolong predicts that a robot OEM industry will inevitably emerge — companies that only manufacture products without selling to end customers, while integrators and channel partners in various regions and industries white-label production from OEM manufacturers. OEM manufacturers will be able to quickly cross the 10,000-unit threshold and push robot manufacturing costs to the extreme.
The emergence of independent OEMs marks the industry's maturity. In this process, specialized body manufacturers will be forced into higher-tier robot markets, carving out finer niches through differentiated competition, while generic products will all be OEM-produced.
Once body products become homogenized, process customization for niche markets becomes an effective means of differentiated competition. To help body makers sharpen their competitiveness, iNexBot's robot motion-control platform provides product-level standard functions and processes while also supporting secondary development by numerous integrators and channel partners to implement more complex processes — achieving differentiation while also protecting their own intellectual property.
Looking at current domestic robot sales, the number of companies surpassing 1,000 units is growing rapidly. Already in the "1,000-Unit Club" are ESTUN, EFORT, Huashu Robotics, Peitian Robotics, Canonop, Qianjiang Robot, Delta, Zhongweixing, Changhong, Turing Robot, GSK CNC Equipment, Bolangte, Erbidi and others (excluding collaborative robot companies and self-produced self-sold companies). These companies will inevitably consolidate and differentiate, even as new body manufacturers continue to emerge.
For example, MOKA Robotics, which has shown strong momentum since the start of this year, is considered the next company to break 1,000 units and enter the domestic "1,000-Unit Club". Who will be the first to join the "10,000-Unit Club"? It's worth watching!
As MOKA's partner, iNexBot is also fully prepared. Zhang Xiaolong is confident: "From a market perspective, we are already one of the leading domestic robot control system companies by shipment volume. This year we will strive to overtake KEBA, work with more domestic body manufacturers and jointly capture market share from imported robots."
What is certain is that as industrial robots penetrate more regions and scenarios, industry concentration will rise rapidly. Before the next round of cyclical transformation arrives, the endgame is already clear: the companies that survive will be those with technical accumulation, market operations capability and sustainable business models — while growth models built on burning investor money or government subsidies will come to an end.
The Robot Components Industry Is Settling Into Its Final Shape
Who will have the last laugh — body makers or integrators? That remains to be seen. But in components, servo motors, reducers and controllers will each be left with only a few major players. In a market with insufficient incremental growth and fierce competition over existing demand, the concentration of advantaged component makers is rising rapidly.
"People in the components industry can abandon the idea of defeating competitors and the route of price cuts — it's time to quietly focus on R&D and build products," said Zhang Xiaolong.
Zhang Xiaolong believes that robot control systems are critical to robot applications and require enormous R&D investment. Control technology development has also entered a new phase: traditional palletizing and welding technologies are already very mature, and domestic control systems have mastered the fundamentals for single-station workcells. But as domestic industrial robots move toward large-scale line applications in the future, the control system should be more than a motion executor — it should be an intelligent control center and data platform linking everything together. Against this backdrop, in 2020, iNexBot will continue to deepen its control technology in the following three directions.
First, further refine human-robot collaboration technology. Currently, iNexBot's domestic collaborative robot system supports collision detection, zero-force mode and drag teaching, and this control system works not only on low-voltage collaborative servo robots but also on conventional industrial robots.
Second, R&D into fully closed-loop robot systems. Using 2D/3D vision and laser technology, robots are integrated with external feedback, with built-in vision-based seam finding and error-correction algorithms that lower the barrier to vision applications — for example, line-scan-laser-based welding seam finding, seam tracking and automatic programming, and 3D depth-camera-based automatic workpiece positioning. iNexBot control systems already include built-in vision algorithms. This technology makes it possible for robots to enter more niche fields.
Third, integration with the Industrial Internet. iNexBot has already opened up all its communication protocols, exposing all robot control mechanisms and data via web services, so customers can use WebAPP (HTML5) technology for secondary development and Industrial Internet data visualization and analysis.
Fourth, iNexBot has long championed openness. Built on the NexDroid motion-control platform, it actively serves customers and cultivates their secondary-development capabilities, working together with component peers, body makers and integrators to build the robot industry ecosystem and raise industry efficiency.
Finally, amid the pandemic, crisis brings opportunity.
When the industry slumps, outdated capacity is the first to be eliminated — and those operations were never the primary target customers of intelligent products like robots anyway. In a development trend where "the strong get stronger", reducing the impact of human labor in production will become the fundamental path to cost reduction and efficiency gains for enterprises.
Advances in control systems, AI and other technologies will help domestic robots solve problems that were previously unsolvable and take robots into more application scenarios. When that time comes, domestic robot companies that get more opportunities to be tempered in real-world applications may well overtake the leaders.
Source: Gaogong Robot
