November 22, 2016

China doubles down on robotics purchases

Country sees supply chain automation as answer to rising labor costs.

By DC Velocity Staff

China's purchases of multipurpose industrial robots will more than double by 2018 as the country's government enacts policies to automate its supply chain in reaction to fast-rising labor costs, a study shows.

The proportion of adults in the Chinese workforce is shrinking, even as their wages have grown to the equivalent of 64 percent of U.S. manufacturing wages in 2015, up from just 30 percent in 2000, according to the study by commercial real estate services and investment firm CBRE Group, Inc. Those changes have made China less competitive in low-cost manufacturing industries than countries such as Vietnam, Bangladesh, and India, CBRE says.

In response, the Chinese government has set a goal of reaching a robot-to-worker ratio of 100 to 10,000 by 2020 in comparison to its current 36-to-10,000 ratio, according to CBRE's report. In comparison, the U.S. ratio stands at 164, Japan's at 315, and South Korea's at 478.

That political support, along with the declining cost of industrial automation technology, positions China to become a leading global adopter of industrial automation. CBRE's report cites the International Federation of Robotics' projection that China's purchases of multipurpose industrial robots - which amounted to 67,000 in 2015, or a quarter of global sales - will more than double to 150,000 by 2018.

"This is bound to have major implications for the physical supply chain, potentially spurring a new era of modern site selection and design for investors and users in Asia," Louisa Luo, CBRE's executive director, advisory and transaction services, industrial and logistics, China, said in a release. "Not only will Chinese industrial facilities undergo substantial modernization, but this evolution of Chinese manufacturing stands to alleviate pressure on trading partners to reroute supply chains due to cost concerns."

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