The domestic robot industry has been booming in recent years as a growing number of companies have flooded into the sector to take advantage of government subsidies. The boom has raised concerns that companies have been getting into the business just to get the subsidies. Experts agreed that this happens, but that doesn't mean the subsidies are the problem. It is standard practice for governments to offer subsidies to support industries they want to develop, experts said. That being said, regulations still need to be tightened. Under the current situation, China's robot subsidy programs vary widely from place to place, yet the industry remains in dire need of capital.
China's robot sector has never been this crowded.
How many robot companies are there in the country? The answer depends on how one defines a "robot company."
With the boom in the domestic industry, the number of domestic robot enterprises surpassed 800 by April, according to the latest data from the China Robot Industry Alliance (CRIA). About 200 of them produce robot bodies, and the majority focus on assembly and processing.
In reality, however, the number of robot-related firms in China is far greater. As of April 20, the number of companies that included the word "robot" in their names was close to 3,400, the domestic news portal eeo.com.cn said on April 30.
And that figure excludes firms that are closely related to the sector, but have words such as "intelligent equipment" and "drone" in their names.
Despite all the players, robot sales in China stood at 70,000 units last year, accounting for a mere 2.1 billion yuan ($323 million) in revenue, the report said, noting that it was rare to find a company with "robot" in its name that actually sold robots.
Still, an increasing number of enterprises from other industries are eyeing the sector, trying to worm their way into this booming industry by changing their names and operations to be more robot-related, media reports said.
Companies with the means have also been investing in or buying robot companies.
Amid the rising concerns about what's driving so many companies to enter the industry, experts said that ample opportunities and government support are the major factors.
What seems more attractive to domestic robot companies are the subsidies that local governments are offering to support them, experts noted.
For example, Beijing-based Lüneng Jiaye New Energy Co in Haidian district reportedly received 400,000 yuan from the local government in 2015 to develop dust removal robots for a large photovoltaic station in the country, the eeo.com.cn report said.
The government of Shenzhen, South China's Guangdong Province, plans to provide 500 million yuan in subsidies each year until 2020 to companies developing robots, wearable devices and intelligent equipment, He Zaihua, an industry analyst with CIC Industry Research Center, told the Global Times on Wednesday.
On April 18, Guangdong Province allocated 360 million yuan in funds for developing the robot sector in the province, according to the eeo.com.cn report.
Regarding the subsidies, some say that many firms are not really producing robots. Instead, they are making use of robot-related projects to bring in government money, according to some media reports. In the end, the situation could end up creating bubbles in the domestic robot industry.
"About five years ago, a so-called robot technology firm in East China's Anhui Province was granted a piece of land to set up an industrial park for its robot projects, but it has yet to make any visible progress," said an industry insider who refused to be identified.
"The firm even copied its name from another robot company," he told the Global Times on Wednesday.
Companies do flood to the sector to lure money from governments, experts said, noting that it is normal and right for governments to offer subsidies, but regulations should be tightened.
Most domestic robot companies currently lack core technology, and only a handful of them are undertaking high-end robot production, He said.
"Local governments seldom examine robot products on the spot and departments that offer subsidies know little about relevant robot technology and application standards. Thus, governments are expected to strengthen the inspection and acceptance of robot products in the future," He noted.
China's robot industry has great growth potential, but lacks capital for research and development (R&D) in its current phase, so now is the time for government support, said Wei Dong, secretary general of the China Chongqing Robot Industry Alliance.
"It is quite normal for governments to offer subsidies to support robot companies as they do in markets such as the US and Japan," Wei told the Global Times on Tuesday.
In fact, government subsidies in China are kind of limited, he noted.
"Due to different local policies, our company has not yet received any specialized subsidies for robot projects, but we are applying for them," said Liu Xuenan, general manager of Beijing Canny Canrobo Technology Co.
Founded in 2009, Canny Canrobo focuses on businesses related to service-based robots.
"The service-based robot sector is just starting up and is in great need of subsidies," Liu told the Global Times on Wednesday, noting that perhaps industrial robot companies have received more support.
Subsidies vary from province to province, and companies are more likely to get subsides if their R&D plans match the direction that the local government wants to take the industry, experts said.
"We received local government subsidies in the form of office rent three years ago," said Kong Minxiu, general manager of Harbin Boqiang Robotics Technology Co.
Kong's company is based in Northeast China's Heilongjiang Province and mainly produces industrial robots.
"Government subsidies are quite limited - this is also agreed by many of our counterparts in Heilongjiang," Kong told the Global Times on Tuesday.
The differences in subsidies provided by the northern provinces and southern provinces are quite large, he noted, hoping that the subsidies for formal robot enterprises should be standardized in a more equal way.
"Governments consider many factors when they create subsidies, such as technical content, whether the firm can conduct large-scale production and whether products have sound market prospects," Wei said.
China's robot industrial development plan for 2016-20, the first five-year plan for this sector, was released by authorities on April 26.
The plan aims to advance the application of industrial and service-based robots, with the goal of producing 100,000 units a year and annual sales volume of service-based robots of more than 30 billion yuan by 2020.
The domestic robot sector has great growth potential, but still needs three to five years to rise to a more developed stage, Wei said.
In 2013, China became the world's largest market for industrial robots, according to data released Wednesday by market research firm International Data Corporation IDC.
The country's shipments of industrial robots accounted for more than 25 percent of the world's total in 2014. The country is likely to overtake Germany and Japan to play a larger role in the process of developing new types of robots in the future, domestic news portal wallstreetcn.com said on Wednesday.
With rising labor costs and an increasingly aging population, China will be in great need of industrial and service-based robots in the coming years, and robots will be fully involved in people's daily lives, said He, the CIC analyst.