Chinese Robots Seize Overseas Market Share

According to General Manager Zhuang Jianhua, Ecovacs has started expanding into overseas markets, with revenue in Japan and emerging markets in Asia rapidly increasing. The company's revenue from January to September 2022 reached CNY 10.1 billion (about USD 1.46 billion), a 23% increase from the same period last year. Although the company's full-year revenue for 2022 has not yet been released, its revenue for the first nine months has already surpassed iRobot's full-year revenue for 2022 (approximately USD 1.18 billion).

Ecovacs is gradually catching up to iRobot in the global market as well. According to Statista and iRobot, iRobot's global market share decreased from 64% in 2016 to 46% in 2020. In contrast, Ecovacs' market share increased from 7% in 2014 to 17% in 2020. With Ecovacs' revenue surpassing iRobot in 2022 and its market share rapidly catching up, it is highly likely that Ecovacs will continue to overtake iRobot in the future.

The total market value of Ecovacs has reached about CNY 44 billion, which is approximately five times that of iRobot. Ecovacs, or more broadly Chinese robotics companies, are using China's advanced technology, robust supply chain, and affordable pricing as its competitive advantages to seize market share.

Despite significant investments made by China in the field of robotics in the past decade, there was still a prevailing consensus that China's robot industry lags behind that of the United States. This perception is likely due to historical context, where industrial robotics has been dominated by Western countries, particularly the United States and Europe, since its inception in the 1960s. Additionally, media coverage of robotics tends to focus on the technological achievements of the United States and other Western countries, leading to less coverage of China's advancements. Furthermore, the United States has long been a leader in innovation and intellectual property, while China's reputation for intellectual property theft and lack of innovation may further reinforce the perception of China lagging behind. Finally, global rankings and market share statistics also contribute to the impression that the United States is more advanced in robotics than China.

However, with the rise of domestic giants like Ecovacs, we see that China's advanced technology, robust supply chain, and affordable pricing are challenging to overthrow the consensus.

Advanced Technology

China has made significant investments in research and development, leading to rapid advancements in technology. For example, Chinese tech giant Huawei (Chinese: 华为) has been a leader in the development of 5G networks, which are expected to be critical to the growth of the robotics industry. Additionally, Chinese companies such as DJI (Chinese: 大疆) and RoboSense (Chinese: 速腾聚创) have made significant advancements in the development of autonomous drones and LiDAR (Light Detection and Ranging) technology respectively. These technologies are increasingly important for the development of robotics and are expected to have significant applications in fields such as manufacturing, logistics, and agriculture. Siasun's (Chinese: 新松) welding robots use advanced sensors and software to achieve a high degree of precision, which has led to partnerships with major automotive companies like BMW and General Motors. Meanwhile, Ecovacs’ robot vacuums use mapping and scheduling technology to clean homes more efficiently than many of its competitors. UBTech Robotics (Chinese: 优必选) produces a range of humanoid robots that can interact with humans in natural language, recognize faces, and perform complex tasks, which are used in industries like education, healthcare, and hospitality. UBTech's focus on developing advanced humanoid robots with natural language processing and other AI capabilities puts it in direct competition with established Western robotics companies like SoftBank Robotics and Hanson Robotics.

Robust Supply Chain

 China has a large and well-developed manufacturing ecosystem, with a network of suppliers, subcontractors, and component manufacturers that can support the production of complex robotic systems at scale. This enables Chinese robot companies to manufacture products more quickly and at a lower cost than their competitors in the West.

 Ecovacs has been able to reduce its costs through the use of automated production lines and a vertically integrated supply chain. The company sources many of its parts and components from local suppliers, which helps to reduce transportation costs and improve production efficiency. Another similar example is Inovance Technology (Chinese: 汇川技术), which has also developed a vertically integrated supply chain for the production of its robotic products. The company has its own production facilities for the manufacture of key components, such as motors and control systems, and works closely with local suppliers to ensure high-quality materials and components.

A strong supply chain also helps Chinese robot companies generate a faster time to market than their foreign competitors. For example, UBTech, founded in 2012, launched its Alpha 2 robot in 2015 and Alpha 1S robot in 2016, while Softbank's Pepper robot, which was launched around the same time as the Alpha 2, had been in development for over a decade.

Affordable Pricing

China's lower labor costs, combined with its efficient manufacturing infrastructure, enable the production of robotics products at a lower cost than in Western countries. This pricing advantage can give China an edge in the global market, especially in developing countries where cost is a significant factor.

For instance, Keenon Robotics (Chinese: 擎朗), who has sold over 35,000 units of smart delivery robots, nearly 30% of which in overseas markets such as Japan, South Korea, Europe, the Americas, and Southeast Asia, priced their robots between USD 10,000 to USD 30,000 per unit, making them more affordable than competing automatons from Europe, U.S. and Japan.

Ecovacs’ success over iRobot was largely due to pricing as well. Ecovacs offers a wide lineup from the entry-level model priced in the CNY 1,000 range to a vacuum-and-mop hybrid that costs CNY 6,999. In comparison, iRobot's two-in-one top-notch model, the Roomba Combo j7+, has a price tag of USD 1,099.99 in the US. Similarly, Dobot's (越疆科技) M1 robot is priced significantly lower than many of the industrial robots produced by Western companies like ABB and KUKA, while still offering advanced features like 3D printing and laser engraving.

Overall, these factors suggest that China's advanced technology, robust supply chain, and affordable pricing are indeed weapons to capture market share. While there may still be a perception that China lags behind in the field of robotics, the reality is that China has made significant progress in this area and is poised to capture a significant share of the global market.