As traditional sectors in China are turning to automation to improve efficiency and slash labor costs, the founder of a Chinese robotics unicorn sees greater potential and a wider range of applications of robots in the industrial field.
"Overall speaking, I’m still optimistic about the application and potential of robots in an industrial environment," said Zheng Yong, founder and CEO of Chinese robotics unicorn Geek+, in an interview with China Money Network on the sidelines of the 2019 RISE technology conference in Hong Kong last week.
"Despite we know many new robotics technologies are emerging nowadays, it will still take some time for us to develop and make the most of robots in a stable, efficient, and safe manner. Comparatively speaking, in the industrial environment, robots are handling duties that are relatively simple, repetitive, and less demanding in terms of intelligence degree," said Zheng.
Geek+ is one of the most noteworthy companies in China’s burgeoning robotics sector. The industry is expected to grow at a compound annual growth rate (CAGR) of 26.9% from 2017 to 2022 to reach US$80.5 billion — or 38.3% of the world’s total spend in robotics — by 2022, according to a research conducted by International Data Corporation (IDC). IDC data shows that five industries are leading the growth of the China robotics market, namely discrete manufacturing, process manufacturing, consumer, retail, and healthcare provider.
Meanwhile, the Chinese government has introduced policies to incentivize the development of artificial intelligence (AI), automation, and robotics. The authorities released the Robotics Industry Development Plan in 2016, outlining targets and strategies for growing the robotics industry in the next five years.
As he foresees more commercial value of robots in the industrial field, Zheng also believes that "the emotional value" created by consumer robotic products, such as robot ushers, food delivery robots, and companion robots, should also be valued by the market.
Zheng Yong, the founder and CEO of Geek+, specializes in supply chain management and logistic robotics. Prior to Geek+, Zheng served as the senior manager of China-focused diversified private equity firm New Horizon Capital, ABB and Saint-Gobain. He holds a dual Master Degree in Industrial Engineering of Tsinghua University and RWTH Aachen University.
Read an interview Q&A below. Also subscribe to China Money TV for free on YouTube, or subscribe to our weekly newsletter.
Q: Please give us a brief introduction of Geek+?
A: Geek+ is a start-up founded over four years ago. We focus on the logistic robotics industry, seeking to provide automated warehousing services to clients at home and abroad. Our offerings currently serve [clients] in China and internationally, providing them with logistics automation solutions on the one hand, and helping them realize a wider range of supply chain automation on the other.
Q: What are the pain points in the logistics industry nowadays?
A: We have observed pain points in three major aspects. The first one is the rising labor costs. As we all know, the costs of human labor have been continuously increasing due to the fading demographic dividend, which has resulted in a significant impact on our clients’ financial returns.
Secondly, today’s young people are not willing to work in warehouses so our clients can hardly hire enough employees. During the busiest days when they are running a sales promotion, the lack of human labor will greatly influence their business development.
Thirdly, sales campaigns will always fluctuate the trading volume in the retail space, whatever e-commerce or brick-and-mortar retail. This kind of fluctuation, especially during [Alibaba’s] "Double Eleven" online shopping festival, will require companies to address the impact brought by a huge change in production capacity. This impact will also bring companies a great challenge in the warehousing and logistics management.
Q: The Chinese logistic robotics industry is rapidly growing. What is the current development stage of the industry, and what are the trends you are seeing?
A: We can see the logistic robotics industry in China has experienced a few distinct phases. Between 2015 and 2016, companies were entering into the field and trying to prove the value and effectiveness [of logistic robots] to clients in China. We tried to prove that we could make a product system to tackle their problems.
From 2017 to 2018, I think people have acknowledged that the product system does have its value. But they still had doubts that whether logistic robots are suitable for a specific business offered by a company in a certain industry. That is why between 2017 and 2018, leading logistic robots companies like Geek+ were seeking to deploy applications in various sectors – whatever e-commerce, offline supermarkets and convenience stores, or manufacturers of shoes and clothing, makeup, and medicine. We were expanding our customer base in different sectors to make them understand the value of logistics robotics.
Starting from this year, I think the whole market has given very positive feedback to logistics robotics solutions. This is why we are seeing many large-scale enterprises duplicating such solutions and applying them in more warehouses. I believe that the industry has stepped into a rapid development phase in 2019.
Q: Besides logistics, what do you think are the other robots-enabled fields that we will also see great development potential in the future?
A: Overall speaking, I’m still optimistic about the application and potential of robots in an industrial environment. Despite we know many new robotics technologies are emerging nowadays, it will still take some time for us to develop and make the most of robots in a stable, efficient, and safe manner. Comparatively speaking, in the industrial environment, robots are handling duties that are relatively simple, repetitive, and less demanding in terms of intelligence degree. This can help companies take full advantage of robots and bring better performance ratios, or investment returns. So I am positive with the robot application in the industrial circle.
Q: Except for these fields that you think will create more value with the assistance of robots, what do you think are the industries currently using robots but may not make much difference in the short term?
A: I could name a lot of such industries if I were asked the same question one year ago. In the past when I looked at robotic products such as robot ushers, food delivery robots, and companion robots, I had doubts about their commercial value because they can barely assist or replace human beings in any respects and it is hard to evaluate their investment returns.
However, my answer nowadays has changed. I have seen the value brought by many consumer robots in the past one year. This value is reflected in not only the enhancement of efficiency, or the so-called commercial value, but also the emotional value. For example, a robot usher may not be able to provide any actual help in operating a restaurant, but it can help attract more customers because many people are still curious about the robot concept. Likewise, some companion robots cannot really solve many practical problems but they do bring happy moments to elders and children. I think all of these have value.
