Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

China's rising wages feed robotics boom

    Just Watched

    The rise of German machines in China

The rise of German machines in China 02:47

Story highlights

  • China's rising wages are squeezing the profits of many manufacturers
  • They are also feeding a boom in the robotics industry
  • One company seeking to tap this demand is German-based KUKA Robotics
  • KUKA plans to produce more efficient models to drive down costs for manufacturers

Rising wages in China may be squeezing the profits of many manufacturers -- but they are also feeding a boom in the robotics industry.

Wages in China's cities rose 12.4% last year, while in rural areas they were boosted by 21.9%, according to figures from China's National Bureau of Statistics.

While that may be good for workers, manufacturers are softening the blow to their balance sheets by turning to robotics -- which are cheaper, faster and deliver high quality.

China is the fastest growing market in robotics, and by 2014 it will top the global market, according to the International Federation of Robotics.

One company seeking to tap this demand is German-based KUKA Robotics, which is setting up a regional hub in the country.

"With the increase in the wages we can see a big automation wave coming," said Till Reuter, chief executive of KUKA Robotics.

    "China is the market that is still growing, and growing at a fast pace compared to Europe and the U.S., " he said. "China will be the biggest robotic market, so it is important to be here."

    The auto industry, for example, is becoming increasingly reliant on robotics. China is the world's largest auto market and European car manufacturers are setting up facilities in the region, all of which will be reliant on robotics.

    BMW opened a new plant in Shenyang last month and Volkswagen plans to double its capacity to four million cars by 2018, by investing in three new plants in Yizheng, Foshan and Ningbo and upgrading existing ones in Changchun, Nanjing and Chengdu.

    China's robotics industry still lags that in other countries. In Japan, for example, there are 306 robots working per 10,000 people while in China there are currently only 15.

    KUKA plans to capture the potential by producing more efficient models that will continue to drive down costs for manufacturers.

    "Our advantage is innovation," said Reuter, "we need to keep it alive and work towards the next generation. It gives us an advantage in China, but also in the rest of the world."

    As China's robotics industry catches up with others, the country's manufacturers are also looking at other ways to bring in income.

    Investment in branding and marketing is one way to boost profits, according to Alistair Thornton, a senior analyst at IHS Global Insight.

    "Manufacturers will think --- hold on, if we put money into branding and charge more for products, we can retain our margin," said Thornton.

        Marketplace Europe

      • spc marketplace europe latvia valdis dombrovskis_00021207.jpg

        CNN's Nina Dos Santos visits Latvia to speak to the country's outgoing Prime Minister and the prospects for the eurozone's 18th member.
      • spc marketplace europe malta immigration africa_00002118.jpg

        Malta is the gateway to Europe and on the frontline of the immigration flows. Isa Soares reports from a detention center on the Mediterranean island.
      • spc marketplace europe malta immigration vox pops_00001419.jpg

        CNN's Isa Soares speaks with people on the streets of Valletta who say their country can't cope with more migrants from Africa and the Middle East.
      • spc marketplace europe malta george vella_00032005.jpg

        Malta cannot afford to continue supporting migrants from war-torn countries in its over-crowded detention camps, the country's foreign minister has told CNN.
      • spc marketplace europe 2013 what went wrong_00020426.jpg

        Slow recoveries, bailouts, and youth unemployment. Richard Quest speaks to Europe's top CEOs about the issues of 2013.
      • spc marketplace europe 2013 defining moments bob parker intv_00010826.jpg

        CNN's Richard Quest speaks to economist Bob Parker about defining moments of 2013 and about what to expect in 2014.
      • spc marketplace europe estonia energy_00000923.jpg

        The Baltic nation of Estonia is developing its oil shale energy reserves in a bid to become energy self-sufficient.
      • spc marketplace europe nani beccalli falco_00041005.jpg

        Europe must stop being nationalistic if it wants to help a lost generation of workers, the regional boss of U.S. conglomerate General Electric says.
      • spc marketplace europe greece petros christodoulou_00002025.jpg

        Greece is on the way to economic recovery as investor faith returns to the recession-ridden eurozone nation, an executive at Greece's largest bank has told CNN.
      • spc marketplace europe euro jim cloos_00012617.jpg

        One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.
      • spc marketplace europe maastricht eu_00002401.jpg

        Nina Dos Santos visits the Dutch city where the European treaty carrying the city's name came into force 20 years ago.
      • spc marketplace europe spain working hours_00010525.jpg

        As Spain continues its drive to slash budgets and cut spending, one of the nation's favorite pastimes is under threat as ministers look for ways to boost productivity.