GBA Brief

Zhuhai’s Gree is another runner in the robot race

In the second of this week’s stories on robotics we look at Gree Electric, and how the World Robot Conference was a reminder that the aircon major wants to become a force in industrial automation. 

Dong Mingzhu, boss of the air-conditioning giant Gree, is determined to make her firm a leader in intelligent equipment. Many of her critics need to be convinced that she can do it. After all, there have already been disappointing detours into smartphones and electric cars. A push into semiconductor chips is yet to find universal approval as well.

Yet the Zhuhai-based air-conditioning giant showed no signs of relenting when it showcased its new range of robotics equipment at the World Robot Conference in Beijing last month. 

Gree wowed visitors with a robot barista that created latte art. Also strutting its stuff was a robot band that plays the piano, guitar, keyboards and drums. 

Promotion like this is often pooh-poohed as gimmicky. But Gree is deadly serious about its robot revolution. If you visit the company’s website, you’ll find a catalogue of automation solutions, with applications in industries as diverse as home appliances, battery and LED production, and warehousing. Thousands of automated systems are already running inside the company’s factories as well: welding, cutting, injecting and assembling. That means that Gree is getting to know how they perform in the field to a critical level of detail. “We have kept adjusting and improving the machines’ stability and precision levels,” says Shen Xiandong, general manager of Gree Intelligent Equipment, the group’s robotics and automation arm. 

The majority of the robotics companies in China focus on system integration, sourcing from third-parties. But Gree has spent heavily on R&D to build its own technology. The company says it is learning how to make critical components like controllers, or the robot’s ‘brain’, and servo motors, which enable precise movements. These areas are dominated by foreign brands such as ABB, Kuka, Fanuc and Yaskawa.

Given the national campaign to upgrade Chinese manufacturing capacity, which the state seems willing to subsidise wherever it can, the market potential is significant. Domestic sales in smart manufacturing (generally defined as a sector that employs computer-integrated equipment, with high levels of adaptability and rapid design changes) are forecast to reach Rmb2.8 trillion by 2023, up from Rmb1.67 trillion last year, according to research house Qianzhan. 

Gree has also been signing up partners from different industries. Zhuhai Eulong Foods, which deploys Gree’s robots on its production line, says they make cookie rolls that are close to hand-made quality. Gree is also working with power equipment leader TBEA on factory digitalization and it won a contract to supply smart warehouse systems to new materials maker Xinjiang Joinworld. Another partnership is with telecom carrier Unicom for 5G-enabled factories. 

Back in its core business Gree still makes two in every five of the air-conditioners sold in China. But it knows that it is over-reliant on a sector that isn’t going to grow as fast as it did in the past. Hence Dong’s focus on diversification, although it’s a tactic where its rival Midea has made more headway since buying German robot maker Kuka three years ago. Kuka delivered a tenth of Midea’s total sales last year. Gree’s robot revenues currently amount to a few billion renminbi, a drop in the bucket of its annual income of about Rmb200 billion.

Dong is demanding more as part of her commitment to triple Gree’s revenues by 2023. The question is whether she will need to make acquisitions to get there. Other players are buying the expertise rather than trying to develop it in-house: Fosun International did so in May with the acquisition of FFT, a system integrator from Germany, while Estun, an intelligent equipment supplier from Zhejiang, has just announced plans to buy Cloos, another German firm that makes welding robots for railways and shipbuilding.

Gree is currently going through the final stages of an ownership overhaul, with its longest standing shareholder selling down most of its stake to private equity. Reportedly, it wasn’t keen on the automation strategy. Time will tell if the newer shareholders take a different view.