Amid the coronavirus outbreak, the race to implement robots in China.

• As the coronavirus spreads across China, companies are quickly implementing robots and automation technology.
• The International Federation of Robotics reports that China is now the global leader in industrial robotics, with the fastest-growing market worldwide.
• Nearly half of the 109 companies surveyed in the American Chamber of Commerce Shanghai and its metro area stated that a lack of staff is their biggest challenge in the upcoming weeks, while two-thirds of them noted that they do not have enough staff to run a full production line.

CTC Global's senior vice president, Marvin Sepe, has been working tirelessly to get the company's Chinese factory back online after a month of lost production due to the coronavirus outbreak.

In order to reopen the company's plant in Huaian, China, he must submit health documents for his 62 employees, detailing their recent travels, quarantine and isolation periods. Only two workers have not passed the government-mandated health check. Additionally, he must ensure that the hi-tech plant, which produces conductor wires for the electric power grid, is disinfected.

Employees will have their temperatures checked twice a day and be provided with masks and gloves when work resumes on March 2. Production will be gradually increased as employees return to work, and output will be closely monitored. All staff have been paid their full salaries during the production shutdown, which coincided with the two-week Chinese New Year holiday starting Jan. 25.

Despite being over 400 miles away from Wuhan, CTC Global's plant in China is not immune to the highly contagious virus. However, the company has been able to handle the challenges better than many labor-intensive companies that are struggling to restart operations due to quarantines, isolated periods, road blockages, and checkpoints.

CTC Global's Chinese plant is already highly automated, with low labor content, said Sepe. The company's plant is designed to be machine-dominated, with a diversified geographical production that includes a joint venture in China and a plant in Indonesia. This makes CTC Global less vulnerable to the virus.

Getting back to work

The return of 100 million factory workers to China's automotive, consumer electronics, and smartphone makers will result in a long-term focus on robotics and automation. Robotics can reduce labor costs, increase productivity, and prevent future plant shutdowns.

Over 87,000 individuals worldwide have been infected with COVID-19, with China accounting for 91% of cases. The global death toll has surpassed 3,000, according to the latest statistics from the World Health Organization.

According to Rosemary Coates, executive director of the Reshoring Institute in Silicon Valley, the coronavirus has served as a wake-up call for supply chain and risk managers in both China and the U.S. She emphasizes that manufacturers, such as agricultural and construction equipment makers, are forming crisis teams to address product shortages.

"Putting robots and automation to work in Chinese factories may be a way to keep production going," Coates said.

In recent years, China has been leading the world's robotics revolution, with its market for industrial robotics growing at a rapid pace. In 2019, the country's market for industrial robotics surged by 21% to $5.4 billion, making it the largest market in the world. Additionally, global sales of industrial robotics hit $16.5 billion in the same year, according to the International Federation of Robotics in Frankfurt.

China’s robot revolution

The Made in China 2025 master plan aims to upgrade the nation's manufacturing technologies, with over 800 robot makers, including major players SIASUN and DJI Innovations, contributing to this development.

By 2021, China is expected to increase its market share of industrial robot shipments to 45%, up from 39% in 2019, predicts the robotics research group. Historically, China has had a lower robotic workforce, with 97 industrial robots per 10,000 manufacturing workers, compared to the U.S.'s 198 and South Korea's 280, according to the robotics group.

The virus outbreak has intensified the demand for increased automation and robotics in China, according to Emil Hauch Jensen, vice president of sales at Mobile Industrial Robots in Shanghai. The company is receiving numerous requests for its autonomous robots, which can handle heavy loads and pallets in warehouses and factories, and are being utilized by major corporations such as Ford, Airbus, Flex, Honeywell, and DHL.

Jensen highlights the cost benefits of using one robot that can work a 24-hour shift, which can replace three workers and cost between $43,000 and $72,000. With salaries in China increasing by up to 20% annually in recent years, China business consultant Bill Edwards, CEO of Edwards Global Services in Irvine, California, predicts an inevitable shift towards robotics. "Wages in China are no longer cheap," he stated.

Getting production back on stream

Nearly half of the 109 US companies operating in China are facing challenges due to the virus, according to a survey by the American Chamber of Commerce Shanghai. Two-thirds of these companies lack sufficient staff to run a full production line, while one-third are concerned about logistics issues. Nearly all companies expect their supply chains to be impacted within the next month.

Those industries with significant assembly processes, such as automobile manufacturers and electronic component manufacturers, are the most affected.

Tesla's new multi-billion-dollar plant in Shanghai resumed operation on February 10 after a two-week shutdown. While the assembly line at the Chinese operation is less automated than at its main plant in Fremont, this is partly due to lower labor costs in China. In order to prevent further disruptions, Tesla is currently strategizing to completely localize its China supply chain by the end of this year. However, the company did not respond to an inquiry about any plans to increase automation.

By 2020, the supplier aims to automate 30% of its one million factory jobs in China, which could prove beneficial. Foxconn cut 60,000 factory jobs from its 1.2 million China workforce in 2016, but further reductions have been slow to develop. The company recognizes that industrial robots lack the cognitive ability of humans. In the current crisis, plans to reboot the use of robots may be under review, but Foxconn has not yet signaled such a move.

Apple stated that it will not achieve its quarterly revenue goals due to its iPhone manufacturing facilities being situated near the Hubei province outbreak center and the longer-than-anticipated restoration of operations.

The automotive industry in China, particularly in Wuhan, is facing significant challenges due to the COVID-19 pandemic. As the world's largest car market with sales of 28 million autos in 2019, multinational manufacturers such as Honda, Nissan, Peugeot, and Renault are severely impacted. With employees staying home and supply chains disrupted, many plants have struggled to get back into production.

The factory in Shanghai, operated by Cadillac, has been automated since its opening in 2016. It boasts 386 robots and two fully automated production lines that perform welding and painting.

A national call to action

The controversy surrounding robots replacing blue-collar jobs is a significant factor that could hinder the use of robotics in China's operations. The fear of widespread unemployment and social unrest due to this issue will become more prominent with an economic slowdown in China.

Robots are being used for various essential services, including disinfecting hospitals and streets, delivering food, drugs, and supplies, as travel and transportation bans are in effect in China and stores, restaurants, and schools are closed.

In Wuhan, the Chinese e-commerce giant is utilizing a fleet of autonomous robotic vehicles to deliver essential goods to residents who are stuck at home and shopping online. The company's automated warehouses have experienced a significant increase in daily orders, from 600,000 in one week during the crisis period.

In response to numerous requests from manufacturers, retailers, and offices, Youibot, a Chinese robot manufacturer, developed a sterilization robot in just 14 days. Youibot has already delivered three robots to a major manufacturer in Suzhou and is currently deploying 35 robots in Shenzhen by early March.

David Sullivan, managing director of business consultancy Alliance Development Group in Silicon Valley, stated that several other robotics start-ups have been called into service. He specifically mentioned Shenzhen-based startup Pudu Technology, which aims to reduce cross infection by home delivery of drugs and meals.

The Chinese tech giants have also been called upon to act. Cainiao, the logistics affiliate of one of these companies, has been using 700 robots to streamline and speed up order fulfillment. Recently, it has launched a channel to deliver medical aid donations to areas in China affected by the highly contagious virus, including Wuhan and neighboring cities in Hubei province.

Tencent's WeChat app now assigns health ratings to individuals via QR code, which Chinese citizens must scan at subway stations, malls, and office buildings to determine their risk of carrying the virus and potential entry denial.

In this environment, new levels of testing and reimagining of China's tech innovation are taking place.

CTC Global's senior vice president is now Marvin Sepe, based in Irvine, California.