Chinese robot wars set to erupt

Rising labor costs and an upcoming demographic crisis are driving up demand for 'automated workers' in China, as companies strive to retain their competitive edge. He Wei reports from Shanghai.

Sun Zhiqiang says the timing of China's robot spree is perfect for his business. As managing director of Risong Group, an automation company in Guangzhou, Guangdong province that provides robotic systems, Sun's company has cashed in on the robotics boom during the past two years. Although he declined to provide details, Sun revealed that the company is making almost 20 times the revenue it did when the business started 15 years ago.

A new ball game: A robot shows it is a dab hand at table tennis at an exhibition in Shanghai. But it won't have long to master the art of the backhand as a looming demographic crisis is driving up demand for "automated workers" in China. [Photo by GAO ERQIANG / CHINA DAILY]

Established by Sun, an engineer by training, Risong was a pioneer in the introduction of robotics systems in China. However, in the early days the company hemorrhaged money, because the concept of robot workers failed to catch on.

"Back then, no one was really into robots," Sun recalled. "I was given the cold shoulder every time I tried to promote the products. The response was always: 'We have inexhaustible human labor.' So why bother to use robots?"

But a change in demographics has helped to open the window of opportunity. China's working-age population is set to shrink and labor costs are likely to spiral upward as a result. That has given a fresh impetus to the development of robots.

A 2011 census conducted by the National Bureau of Statistics projected that the working-age population will begin to decline in 2013, and the decrease will gather pace after 2020, signaling the end of what has been called "the demographic bonus".

Recent research conducted by the consultancy Ernst & Young LLP suggests that the average annual labor cost per worker rose to more than 40,000 yuan ($6,400) in 2011, from less than 25,000 yuan five years ago.

Given the context, it's easy to calculate the tradeoffs of getting a robot. "In fact, industrial robots are already cheaper than workers in China's eastern regions," said Wang Tianmiao, who heads the expert panel of robot technology under the State High-Tech Development Plan.

Wang said a typical industrial robot costs around 300,000 yuan and has annual maintenance costs of 20,000 yuan. The total layout of 500,000 yuan over 10 years is considerably less than that for a 6,000-yuan-a-month technician, and robots can work three times more efficiently.