Analysis: Crunch time for China's robot startups as pandemic brings pain and opportunities

YASKAWA Electric

15/06/2020 24:00

By David Kirton
    SHENZHEN, China, June 15 (Reuters) - With glowing blue eyes
and trusting feline features, a new robot cat by Chinese startup
Elephant Robotics seems happily oblivious to the worries of CEO
Joey Song as he shows it off at the company's lab in Shenzhen.
    Elephant Robotics' main business is the automation of
factory assembly lines but revenue has plunged by a third this
year due to the coronavirus, leading the company to cut staff by
a fifth.
    "It's tough," said Song. "Before, we had more than 30
people."
    Due to the downturn, the firm is putting more energy into
the robot cat project funded on Kickstarter in December.
Readying its first large batch of 1,000 cats for sale, it hopes
that as more consumers work from home, interest in pet robots
will grow.
    "If the industrial robots can't sell right now, we just
focus on other robots to lower the risks," Song said.
    Interest in robots has surged worldwide as the pandemic
forces hospitals, manufacturing and services companies as well
as governments to look afresh and with new urgency at ways to
minimise human contact.
    But in China, months ahead of many countries in reopening
its economy and the world's biggest market for industrial
robots, new business seems largely limited to robots for
warehouses and disinfecting. Most clients are now too spooked by
the uncertain business climate to invest in expensive factory
gear, industry executives say.
    "Automation should be a way to fight virus consequences but
on the other side if you want to invest, you need to know the
market forecasts," said Vincent Bury, managing director at
equipment maker CNIM China. "Nobody has a crystal ball now."
    China's industrial robot sales tumbled by a fifth in the
first quarter from a year earlier, according to Shanghai-based
consultancy Stieler Enterprise. It predicts second-quarter sales
will likely decline 15%.
    While the pain is being felt widely, major players in China
such as Switzerland's ABB  ABBN.S , Japan's Yaskawa Electric
Corp  6506.T  and Germany's Kuka AG  KU2G.DE  are expected to
weather the storm. 
    But for domestic robotic startups that have hitched their
prospects to a broad shift within Chinese manufacturing to more
automated factory lines, the rest of this year could be make or
break. Access to fresh funding is tight as venture capitalists
wait to see which firms will survive the immediate downturn.
    "We'd love to wait for another one or two months (before
investing) to see how they've recovered, whether it's going to
get back to normal," said the vice president of an investment
firm with several interests in China's robotics industry.
    He declined to be identified to protect business
relationships.
    
    FINGERS CROSSED
    For startups that either specialise in or have managed to
pivot to cleaning or warehouse-related robots, prospects have
become brighter after more than a month of lockdown disrupted
China's supply chains and made fulfilling orders tricky.
    "We're struggling, luckily struggling," said Lawrence Han,
chief technology officer at Triooo, a maker of industrial
cleaning robots backed by Taiwan's Foxconn  2317.TW  and based
in the high-tech hub of Shenzhen. "I think our product was
delayed by almost three months." 
    Triooo is working to clear a backlog of orders and hopes to
eventually sell in Western markets where its robots, used in
places like hospitals and airports, are more cost effective due
to higher labour costs there.
    Beijing-based Geek+, a maker of robots that transport and
stack goods in warehouses, opened its San Diego office in
February just as supply chains in China ground to a halt. After
three months of uncertainty, it suddenly saw demand soar as the
spread of the virus spurred consumers to shift most of their
shopping online, said Mark Messina, chief operating officer of
Geek+ Americas.
    At Youibot, which specialises in robots for power stations
and furnaces, the outbreak prompted the company to develop a
robot that can patrol public spaces, scanning body temperatures
and emitting a virus-killing ultraviolet light when people are
not around. 
    The Shenzhen-based startup has found buyers in Italy,
Singapore and Turkey, while the American Institute of Minimally
Invasive Surgery is also trialling a batch. 
    "This product's biggest value to us is that it gives us
experience deploying robots overseas and provides us with
different ways for our business to develop," said Youibot CEO
Cody Zhang.
   

 (Reporting by David Kirton; Editing by Brenda Goh and Edwina
Gibbs)
 ((David.Kirton@thomsonreuters.com;))