GBA Brief

Machine learning: Foshan focuses on the factories of the future

Cities like Shenzhen and Guangzhou are trying to race ahead in robot deployments. Nearby Foshan – home to more than seven million people – is accelerating its bid to become the GBA’s automation hub as well.

The GBA’s push into next-generation manufacturing is going to mean winners and losers in the robot wars. Foshan’s edge is that it is already a leader in the manufacturing of electronics and household appliances – two sectors that are looking to automate more of their production lines. It also excels in making machinery and equipment, giving it the platform to stake more of a claim in robotics. And with the fourth largest economy in the region (after Shenzhen, Hong Kong and Guangzhou) it has the resources to give it a go.

In a meeting of Party officials earlier this year, leaders from the Shunde district of Foshan laid down a framework for developing robotics into an Rmb100 billion business, with a target to “build a first-class robotics education, R&D, manufacturing and application hub.”

But local businesses are leading more of the charge, including some unexpected candidates. At its first-half results press conference in August, even local property giant Country Garden said it was making gains, with several models of construction robot already deployed on its building sites. Frustrated by a slew of accidents and quality issues, the property developer’s founder Yang Guoqiang decided to turn crisis into opportunity by automating more of the construction process, with robots designed and developed in-house. Not much more than a year ago, its Bright Dream Robotics unit set up shop in an industrial zone in Foshan. It has already recruited at least 2,600 of its anticipated workforce of 10,000, and Yang’s pledge is to invest a further Rmb80 billion over five years.

The announcement came as a surprise to the property sector, but some of the plan makes good sense. The workforce is aging and younger people don’t want to toil in the real estate trade in the same numbers as the past. In the way that Yang sees it, developing robots to replace human labour isn’t an indulgent whim, but more of a commercial necessity. The idea is that robotics technology will deliver improvements in safety, standardization and quality, and cost efficiency that will make Country Garden more compeititive for years to come. 

It isn’t the only company from Foshan in the hunt for a robot revolution. Midea, another Fortune 500 company from the city, ventured into the sector earlier and more aggressively. The appliance giant bought a controlling stake in German robot firm Kuka in 2016, hoping to be a key player in the global market, particularly in industrial automation. There have been a few challenges in bedding down the acquisition but the underlying logic of the partnership is still compelling. The Chinese want to be the major supplier of the world’s industrial robots, not just the main customer for them, and Kuka’s new factory in Foshan will address some of that mismatch, churning out at least 75,000 robots a year by 2024.  

In addition to Kuka, Foshan counts four other leading global robotics firms as investors. Japan’s Yaskawa Electric has formed joint ventures with Midea, Sweden’s ABB is teaming up with Vanward, and Fanuc – another Japanese firm – has joined hands with Galanz. In sum, the three major appliance makers in Foshan have all found foreign partners to help them automate their production lines and diversify into the robotics business. 

Meanwhile, Kawasaki has also established a research centre in Foshan and is planning to invest in a robotics industrial park with Foshan Longshen Robotics. The basic idea is to dovetail with Foshan’s industrial upgrade as its manufacturing sector moves towards advanced automation and the digitalization of factories over the longer run.

In fact there are already about 100 companies in Foshan’s robot cluster, combining major local names, foreign firms and start-ups in the sector. That has led to concerns the industry is already getting too crowded, especially in the GBA. The number of comparable companies in Shenzhen had reportedly grown to almost 650 by the end of last year. Guangzhou is going gangbusters as well, leveraging demand from customers in sectors such as the auto industry. Another 400 robotics and smart manufacturing related companies have set up in Dongguan’s Songshan Lake science and technology park. Zhuhai’s best-known brand Gree is investing heavily in the same business and on top of that there are national champions like STEP Electric from Shanghai, and Siasun Robot & Automation from Shenyang. 

Some of the companies claiming to be robotics players are stretching the definition to breaking point. Others won’t be able to establish genuine advantages in technology, quality and scale. Already, some are surviving only thanks to government subsidies, industry watchers have warned. 

But the best of the group will have a chance to compete in a sector seen as so strategic by the central government. Robotics is also quite specialized across different industries: what automakers need is quite different from the electronics firms, for instance. That allows for a little breathing space for the more successful firms, although to survive and thrive, they will need to find their own niche.

Jaten, another Foshan firm, is concentrating on automation for warehouses and depots, with driverless forklifts and delivery robots with nicknames like Bumble Bee. LXD Robotics is helping to automate jobs that are hazardous to human health, such as industrial polishing, painting and welding. Country Garden’s focus on construction automation and robots for real estate management is another example (although the property giant is talking about developing other lines, even for farming, which may not make quite as much sense).