Automated labor

China overtook Japan last year to become the world’s largest market for industrial robots， accounting for 37，000 of 180，000 units sold worldwide， according to a new report from the International Federation of Robotics. IFR president Arturo Baroncelli tells China Economic Review why this is happening， where he thinks the industry is headed and argues that automation doesn’t necessarily lead to higher unemployment.

Where do you see the future direction of the robotics industry in terms of sectors and applications？

Historically there is one sector which is most important for robotics： Automotive. Many of these robots have been sold in the booming automotive market of China. But not only. Robots start to be used in another sector， one that we call general industry. Industry divides automotives and general industry， because automotives more or less is part of the market， and the rest is all the other sectors. Last year worldwide out of nearly 180，000 units sold， 70，000 were in automotives. The rest were electronics， rubber， plastics and so forth. China is today now the biggest robot consumer in the world and will also be tomorrow.

Do you see the biggest applications of industrial robots in China continuing to be in the automotive sector， or will new sectors and applications be more prominent in the future？

Both. Both will continue because as far as I know we have to consider the investment in new automotives plants. And they are continuing. But at the same time the application in all other segments， well， China has a huge internal market that will continue to grow. There is also another important sector considering the development of robotics in China. In the world we have a very important figure which is robot density. What is the robot density？ It is the number of robots per 10，000 employees. This average worldwide is 58， in countries like Korea， Japan， Sweden， Italy， Denmark where robotics started many， many years ago. So if we consider the value of China， its value today is around 20. What does it mean？ It means there is a big room for improvement.

So do you think the robot density will increase to match that of Japan and western countries in the future？

I think the industrial robots will continue all over the world besides China， and I tell you why. Because robotics has a natural tendency to diffuse into more segments. So segments which were not populated by robots yesterday， today can be populated by robots. Why？ Because people， specialists， engineers， entrepreneurs， they understand that using robots in a specific new field will have better products and higher efficiency. So this special tendency of industrial robots to be applied in new application fields will constitute a boost for the forthcoming years.

How do you think automation will affect China’s manufacturing industry？

My opinion is that in many fields is there is no choice. No choice to go for automation because using robots is not an advantage but it’s your only choice. Let’s consider for example the automotive industry. In automotives the tool， not a tool， the tool for making cars is the robot. There is no alternative. So it’s not even a question of choice. It would be like printing your magazine by hand instead of using other modern devices. So I think that automation will be the necessary choice. My professional experience， I’m in the business since 1995， is that when you introduce automation in robotics， it commands， it requires， it will dictate a sort of improvement of the whole process. So automation is synonymous of higher quality and efficiency.

Do you think that more reshoring will occur or do you think China’s manufacturing industry will become stronger with the use of robots？

Robots can be used both in China and other countries. So in many cases， it depends， case by case. Where some companies have come to China or other countries only considering the labor costs， okay that was a choice. But other countries have decided to automate， using robots in their own countries. In this case， since labor cost is not the basic reason to go east， they’ve been able to keep the production at home in their own countries. But there is also another fact. Many other countries using robots are using robots both in their own countries and also in China. Why？ Because producing with robots in China is an advantage： Internal efficiency and cost and overall quality so I can think that many solutions can be considered， and in many cases， many international companies have both Crobots in their home countries， Italy， Germany， United States， and in China because of the high demand of the Chinese nation.

Foreign providers currently control 90% of the Chinese market and two-thirds of global robotics supply is dominated by four firms. What is holding Chinese robotics companies back and how can they break into this market？

We have to see. The robotics market is like every other market， there are many players. I have seen both foreign companies and the Chinese suppliers， many， so it will be a question of competitiveness， a question of quality of products. Just like every other field， like cars， ice cream， telephones. If the Chinese suppliers will be able to have competitive and good products， this will be okay for them. For the Chinese suppliers it’s a relatively new market so they will have to do better than the foreign companies. On the other hand I see that China has very good universities， very good engineers and managers， so it will be like every other market， a question of competitiveness.

What will be the effect of increasing automation in the Chinese job market？

With automation it means that first of all you have higher production， standardization of the production process， and this is very important because this is the basis of improving the quality， so you have these two things： Higher productivity and a better complete process. Because automation works very well where all the components that must be handled， assembled， welded， produced by the automative line are of good quality. If they are not of good quality， the automation has some troubles. So if you use automation you are forced to improve the quality of your company. And I think that in every other part of the world， and in China it is the same story， if you are forced to automate you will have higher productivity and higher quality.

But do you think it will affect the job market at all？

If you look at the figures showing who are the biggest robot users of the world， it is China. The second is United States. In the last four years， we have seen a continuous increase in the use of robots in the United States. But what’s happened to employment in the United States？ It increased as well. So we had an increase of robots and better employment rate. This was United States. Then， who is one of the biggest robot users of the world？ Germany. Germany has a very good economy， unemployment rate very low， because they use a lot of robots. Japan as well. Republic of Korea as well. These five countries―China， Japan， Republic of Korea， United States and Germany―are the biggest robot users of the world. And they have in absolute terms， employment rate in check， very good， or they have decreased unemployment.