China has decided not only to be the world's largest market for industrial robots but also to intensify their production. In 2022, the country installed more than half of all industrial robots deployed globally, according to the International Federation of Robotics. This development is part of a broader strategy to climb up the manufacturing value chain and counter demographic changes as well as rising wages.

Despite increasing local competition from Chinese firms such as Shenzhen Inovance Technology and Estun Automation, European and Japanese companies like Fanuc and ABB maintain an edge in high-quality products. For instance, Fanuc continues to lead the market for CNC systems, which function as the "brains" of machine tools.

The efforts of Chinese manufacturers are already showing results: In the first half of this year, local producers controlled over half of the Chinese market for industrial robots, compared to about 36% for the entire year of 2022. Especially in the area of collaborative robots, which can work alongside humans, Chinese companies have quickly gained market share.

Despite a certain slump in the factory automation market last year, partly due to overinvestment in areas such as batteries and solar panels, recovery trends are emerging. Japanese companies recorded a 14% increase in orders in the last quarter compared to the previous quarter, as reported by Fanuc.

Although the long-term demand for automation and a short-term recovery in capital spending in China benefit international companies with technological leadership like Fanuc, the Chinese market remains a challenge. Fanuc's shares have fallen by around 20% since their peak in 2021, despite China accounting for 23% of its revenue in the last quarter.

Ultimately, the Chinese market is large enough for both local and foreign automation technology providers to thrive, provided the Chinese economy returns to its former strength.