Dangerous overproduction: China floods the market with robots – Is the photovoltaic scenario repeating itself?

China's robot boom: Is the next major collapse looming after the 'solar miracle'?

The rapid expansion of China's robotics industry draws striking parallels to the photovoltaics development of the past decade. With billions in government aid, aggressive capacity expansion, and growing export ambitions, a new chapter of industrial dominance from the Far East is looming. While European companies are still debating strategies, Chinese manufacturers are already making progress – with potentially far-reaching consequences for the global competitive landscape.

As early as 2017, the Chinese Ministry of Industry warned of overcapacity, referring to "low-end production of high-end products" and "overcapacity in low-end products." With over approximately 1,000 robotics companies in China, there are many indications of an overproduction situation similar to that encountered in the solar industry.

Starting point of the technological power shift

Within just a few years, China has transformed from an importer of industrial automation technology to the dominant player in the global robotics industry. This transformation is taking place with a speed and systematic approach reminiscent of the success story of the Chinese photovoltaic industry. In 2024, for the first time, Chinese companies installed more industrial robots in their own country than all their foreign competitors combined—a turning point that is raising eyebrows throughout the industry.

The numbers speak for themselves: With 295,000 newly installed industrial robots in 2024, China will account for 54 percent of the global market. The operational inventory of over two million robots represents an international record. At the same time, the market share of domestic manufacturers is growing continuously – from 28 percent in 2014 to 57 percent in 2024.

This development is not a coincidence, but the result of a systematic industrial policy that defines robotics as a key technology for China's economic future. The €128 billion sovereign wealth fund for robotics, artificial intelligence, and cutting-edge innovations demonstrates the political will to achieve a dominant position in this sector as well. The parallels to the state-supported expansion of the solar industry are unmistakable.

Particularly noteworthy is the focus on humanoid robots, whose mass production is scheduled to begin as early as 2025. With over approximately 1,000 robotics companies and expected annual growth of ten percent until 2028, China is positioning itself as a global market leader in a technology that is only just beginning its commercial use.

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The roots of the Chinese robotics boom

China's rise to robotics superpower didn't begin overnight, but rather followed long-term strategic planning with its roots in the early 2010s. The foundation was laid by the "Made in China 2025" program published in 2015, which defined robotics as one of ten key industries in which Chinese companies should strive for global market leadership by 2025.

Paradoxically, the initial spark for the robotics boom was the automotive industry. Massive investments in vehicle production since 2010 significantly boosted demand for industrial robots. China became both the world's largest car market and the largest production base for vehicles, including electric cars. This dual role as producer and consumer created the critical mass for a standalone robotics industry.

A decisive turning point occurred in 2016, when the electrical and electronics industry replaced the automotive industry as the primary consumer of industrial robots. This shift reflected China's growing importance as a manufacturing center for electronic devices, batteries, semiconductors, and microchips. The geographical concentration of production in China created optimal conditions for local robot manufacturers, who could test and further develop their products directly on site.

The years 2017 to 2019 marked a critical phase. As early as 2017, the Chinese Ministry of Industry warned of overcapacity in the robotics industry, citing risks posed by "low-end production of high-end products." Nevertheless, growth continued, driven by the strategic decision to use robotics as a growth engine for industrial transformation.

The COVID-19 pandemic further accelerated the automation trend. While other countries struggled with production downtime, China increased its investments in robotic manufacturing systems. The National Robotics Strategy, published in December 2021, underscored the political will to systematically strengthen the economy's competitiveness through automation.

In fact, current industry overviews, market studies, and statements from industry associations usually put the number of Chinese robotics companies at well over 1,000, making China the world's largest robotics industry in terms of number of companies and production volume.

China is the world's largest robotics market, with its robotics industry generating revenues of more than 240 billion yuan (approximately $33.4 billion). Not only are hundreds of thousands of new robots produced and installed annually, China also operates a very broad business sector centered around industrial robotics, service robotics, and humanoid robots.

Experts and reports from industry events such as the World Robot Conference or the China Robot Industry Alliance (CRIA) repeatedly point out that China now has more than 1,000 robotics companies. These include large corporations such as Siasun, Estun, Inovance, and Geek+, as well as a multitude of medium-sized and small companies focusing on development, component supply, integration, and software.

Thanks to a national innovation strategy and strong demand from numerous industrial sectors, the number of robotics companies in China continues to grow – both Chinese suppliers and international manufacturers operating factories and development laboratories in China are part of this growth.

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Core elements of Chinese robotics dominance: The central mechanisms and building blocks

China's robotics offensive is based on several interlocking mechanisms that, when combined, develop extraordinary power. The most important building block is the industrial ecosystem that has developed over the past decades and is now considered unique. In the mechatronics industry, no other country can bring new products to market so quickly and then manufacture them with high quality and at competitive prices.

A key advantage lies in the local supply chain. While European manufacturers often rely on components from different countries, Chinese companies can rely on a dense network of specialized suppliers. This prioritization of the local supply chain has led to a strong ecosystem that has now also become attractive to international manufacturers. Even a significant portion of the hardware for the Tesla Optimus is expected to come from China.

The advantage in skilled labor represents another critical success factor. China has significantly more available skilled workers than Europe, both on the developer and system integrator side. These human resources enable shorter product cycles and drastically lower costs for machine vision, industrial robots, and collaborative robots.

State support manifests itself not only in direct subsidies but also in strategic industrial policy. Beijing creates advantages for its own companies through protected domestic markets and cheap loans from state banks. These companies are not subject to the law of profitability and can build massive production capacities, regardless of short-term profitability.

The crossover strategy for components is particularly noteworthy. Chinese robot manufacturers benefit from the mature supply chain in the electric vehicle sector and use components from the automotive industry for their robots. These synergy effects reduce development costs and accelerate the market launch of new products.

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The current market position: meaning and application in today's context

China is not only the world's largest robotics market today, but has also achieved technological leadership in several segments. Chinese manufacturers already hold a 90 percent market share in collaborative robots and a 95 percent market share in mobile robots. This dominance in future segments is particularly significant, as it sets the course for the next generation of automation technology.

Robot density—a key indicator of the level of automation—illustrates China's rapid catching-up process. With 470 robots per 10,000 employees, China has overtaken Germany (429 robots per 10,000 employees) and ranks third worldwide. Just five years ago, robot density in Germany was more than ten times higher than in China.

Application know-how now often flows in the opposite direction—from China to Europe. This trend is particularly evident in the electronics industry, where almost two-thirds of all industrial robots worldwide are installed in China alone. Chinese manufacturers supplied 54 percent of all units for this vast domestic market, thus covering approximately 33 percent of global demand in the electronics industry.

The export strategy is beginning to change. While less than five percent of Chinese robots have been exported so far, companies like Inovance and Geekplus are increasingly pushing into international markets. Inovance, the second-largest domestic robot manufacturer, is expanding into Europe, while Geekplus already generates 70 percent of its revenue outside of China.

Chinese manufacturers are showing growing ambition, especially in the premium segment. Traditionally, European and Japanese suppliers dominated this market segment, but even here, customers are increasingly turning to Chinese alternatives. The strategy is to achieve 80 percent of the quality of foreign competitors while selling at 20 percent of the price.

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Practical examples of market conquest: concrete use cases and illustrations

Geekplus's success story is a prime example of how Chinese robotics companies are conquering global markets. The company, which specializes in warehouse robotics, only went public in Hong Kong in the summer of 2024, but already generates 70 percent of its revenue outside of China. Its customers include international corporations such as Unilever, Walmart, and Adidas. The company's Roboshuttle series offers all-in-one picking solutions that coordinate three different robot types around a central workstation. This solution optimally utilizes vertical warehouse space and eliminates the need for multiple zones.

Geekplus also demonstrates its strategic preparation for potential trade restrictions. The company generates around a quarter of its revenue in the US, but produces at 30 percent lower prices than competitors. Geekplus also plans to relocate parts of its assembly to Japan to circumvent potential trade barriers. This flexibility in its production strategy demonstrates the ability of Chinese companies to learn from previous trade conflicts.

The second example is Inovance, considered a "little Huawei" because it was founded in 2003 by former Huawei engineers. The company has grown into the second-largest domestic manufacturer of industrial robots in China and is now systematically expanding into Europe. With its German headquarters in Pleidelsheim near Heilbronn, Inovance is building a local presence and leveraging its extensive industry expertise from China. The company has experience selling robots to major smartphone and laptop manufacturers and can benefit from the economies of scale of the Chinese market.

Inovance's expansion strategy reflects the typical approach of Chinese companies: first, establishing a local sales and service structure, followed by a gradual increase in local value creation. In Europe, Inovance initially offers robots with payloads of up to 20 kilograms, while in China, models with payloads of up to 300 kilograms are available. This staggered market launch allows for the company to gain experience and gradually expand its product portfolio.

Problematic developments and risks: A critical discussion

The rapid expansion of China's robotics industry harbors structural risks reminiscent of developments in the photovoltaics sector. As early as 2017, the Chinese Ministry of Industry warned of overcapacity, referring to "low-end production of high-end products" and "overcapacity in low-end products." With over approximately 1,000 robotics companies in China, there are many indications of an overproduction situation similar to that seen in the solar industry.

The parallels to photovoltaics are striking. As with solar panels, China is building massive production capacities that far exceed domestic demand. The solution lies in exports, which is leading to cut-throat competition in international markets. Chinese robots are already 20 to 30 percent cheaper than European competitors, a price advantage made possible by government subsidies and economies of scale.

European companies are increasingly coming under pressure. The German industry association VDMA Robotics and Automation has halved its growth forecast due to increased competition from Chinese competitors. Traditional European robot manufacturers are losing market share, while Chinese companies are systematically expanding their presence in Europe. Companies such as Dobot, Elite Robots, and Jaka Robotics have already established local service and sales structures in Germany.

Technology transfer is particularly problematic. Leading foreign companies such as KUKA, ABB, and Fanuc have opened state-of-the-art production facilities in China. This knowledge transfer enables Chinese manufacturers to quickly catch up and develop their own products. German startups are already sourcing robot arms and components such as joints with integrated force sensors from China, which increases technological dependence.

The danger of "involution"—ruinous competition for market share at the expense of profitability—is real. China's Ministry of Industry has already initiated measures against "disorderly competition" and aggressive pricing practices. Similar warnings were issued in the solar industry before the global overproduction crisis began.

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Future scenarios and market development: Expected trends and potential upheavals

The coming years will be crucial for whether the photovoltaic scenario will be repeated in robotics. Several trends indicate that China will further expand its dominance. The year 2025 is considered "Year Zero" for humanoid robots, with Chinese companies already entering mass production while international competitors are still in the development phase.

Government support will continue and intensify. The €128 billion robotics fund is set to run for 20 years, demonstrating a long-term perspective. By 2027, China aims to develop humanoid robots that can "think, learn, and innovate." The market volume for humanoid robots in China is expected to grow to €44 billion by 2031.

Three scenarios are conceivable for global development. In the most optimistic case, stable competition between Chinese and international suppliers would emerge, serving different market segments. Chinese manufacturers would primarily operate in the cost-sensitive mass market, while European and Japanese companies would occupy premium segments.

The more likely scenario envisions a gradual displacement of international suppliers, similar to the development in the solar industry. Chinese companies will use their cost advantages to initially gain a foothold in standard applications and then gradually move into higher-end segments. The expansion into Europe and other markets, which is already underway, will accelerate.

In the worst-case scenario, an overproduction crisis would lead to a global price collapse, forcing many companies to go out of business. Consolidation would primarily benefit Chinese manufacturers, which have greater financial reserves and government support. Europe could lose its technological sovereignty in another key area.

The likelihood of the second or third scenario increases due to China's stated export strategy. The government has defined robot exports as a strategic goal and intends to use them as a growth driver. This policy objective, combined with domestic overcapacity, will increase export pressure.

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Strategic implications and assessment

China's robotics offensive represents one of the greatest industrial policy challenges for Europe in decades. The parallels with photovoltaic development are not coincidental, but the result of a systematic strategy that transfers proven models to new technology areas. China is using state support, economies of scale, and aggressive pricing policies to achieve market leadership in strategically important industries.

The speed of development is impressive. Within a decade, China has increased its market share in industrial robots from under 30 to over 50 percent. In future segments such as collaborative and mobile robots, Chinese manufacturers already dominate with market shares of 90 to 95 percent. This dominance in key technologies will impact downstream industries and fundamentally challenge Europe's competitiveness.

European companies have three strategic options. First, they can attempt to occupy niche markets through innovation and specialization, where technological superiority is more important than price. Second, they can enter into strategic partnerships with Chinese companies to gain access to their cost structures. Third, they can partially relocate their production to China to benefit from economies of scale there.

None of these options is without risks. Niche markets can quickly erode due to technological advances. Partnerships carry the risk of technology transfer and medium-term dependency. Relocation of production exacerbates Europe's industrial erosion and makes companies geopolitically vulnerable.

The challenge is structural in nature and requires a coordinated European response. Individual companies or countries cannot successfully counter Chinese system competition. Joint research programs, coordinated industrial policies, and possibly protectionist measures are necessary to preserve European core competencies.

Time is running out. While Europe is still developing strategic concepts, Chinese companies are already creating market facts. The robotics industry could become the next example of how systematic industrial policy trumps short-term market mechanisms. Europe must act quickly to avoid falling behind in this future market as well.

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