Production of agricultural machinery and industrial robotics in China is projected to expand at a strong rate in the coming years with average yearly growth of 18.1% and 18.8%, respectively—making these areas the two fastest-growing segments in the Chinese machinery business. Their robust performance comes in stark contrast to most other areas of the machinery business, which are struggling with a downturn and overcapacity, according to a report entitled "The Machinery Production Yearbook - China - 2013" from IMS Research, now part of IHS.
Since the end of 2011, because of weak export demand and a shortage of investment, China’s machinery production seems to have lost some momentum. Although some signs of recovery began to surface at the end of 2012, the Purchasing Managers’ Index (PMI) released by National Bureau of Statistics of China fell from 50.9 in March to 50.6 in April indicating that China’s economic recovery was not expanding. While the PMI disappointed most machine builders, some companies, such as those that make agricultural machinery or industrial robotics, remain optimistic about the prospects for future growth.
As the key element to enable urbanisation in China, the Chinese government is paying much more attention to mechanising agriculture by introducing more agricultural machinery. According to the 12th Five-Year Plan and the Chinese government’s stated objectives, agricultural mechanisation should rise from 52% in 2012 to 60% in 2015, then to 70% in 2020 and to 82% in 2030.
Benefiting from the Chinese government’s incentive policies and purchase subsidies, the production of agricultural machinery in China was estimated to be worth $57.9 billion (USD) in 2012, 19.1% higher than in 2011. IHS forecasts that production of agricultural machinery will continue to grow quickly from 2013 to 2017 at a compound annual growth rate (CAGR) of 18.1%, faster than the average for all Chinese machinery production.
The production of robotic machinery last year in China was estimated to be worth $589 million, up 22.6% from 2011. One factor driving the expansion of robotic machinery is the growing automobile market. Here, manufacturers are being forced to automate by a need to sidestep rising wages in China and the expanding demand for higher-quality Chinese products in both domestic and export markets.
Also driving the industrial robotics market are factors related to China’s being one of the most rapidly growing consumer markets in the world with an emerging middle class demanding higher-quality consumer goods, better medical care and a more comfortable lifestyle. Other factors encouraging the growth of robotic machinery are the rising labour costs in the country, a decreasing labour supply, the viability of mechanical alternatives and the government’s efforts on industrial upgrades.
IHS forecasts that the industrial robotics production sector in China will grow faster than those of other industries from 2013 to 2017, at a CAGR of 18.8%. Critical components, such as precision gearboxes, servo systems and controllers, rely heavily on international suppliers.