Manufacturing News

German robotics maker upbeat about Chinese buyout bid

The head of robotics for Kuka, a major German supplier of automotive robotics, says Chinese appliance maker Midea's $5.1 billion (34 billion yuan) bid for the company could help Kuka expand in China.

Kuka already sells 25 to 30 percent of its robots in China, Chairman Stefan Lampa says, adding it's essential to have research and development centers there for the local market, as the German company has had for the past year and a half.

It has also been producing the majority of the robots it makes for the Chinese market locally for the past few years, instead of exporting them from Germany.

China, whose government has made manufacturing automation a top priority, is the world's biggest industrial robot market, although growth in robot sales there slowed to 17 percent last year from 56 percent a year earlier.

"China is a super-important market in robotics," Lampa said. "Having an owner that comes from that market most probably will be beneficial for us or for whoever has a Chinese owner."

Kuka CEO Till Reuter has also expressed a positive view of Midea's bid, the largest yet by a Chinese buyer for a German company, but has yet to make an official recommendation to shareholders.

Kuka's supervisory board has given Reuter a free hand to negotiate potential points of contention such as job guarantees and intellectual property, sources told Reuters.

Lampa says Kuka's German brand is a definite advantage in China, where fierce competition among hundreds of domestic suppliers is causing price erosion. "It really helps us. Over the last three years, we've grown market share," he says, while declining to be more specific.

Kuka is expanding into electronics and other sectors but still generates the bulk of its revenue in the automotive sector. The firm's robotics sales last year totaled $1 billion, and Lampa says Chinese growth was especially robust. "The speed of deployment is completely different," he said. "Here we talk about installing 100 robots in a factory in a year, there we talk about 1,000."

Lampa added that robots for the Chinese market have to be simpler than those used in other markets because there is a layer of technical expertise missing in factories.

"All of those people will disappear in China because everyone who can afford it wants their kids to be engineers or get high university degrees," he says, whereas in Germany skilled workers would welcome a complicated robot.

"In China, you have to think different," he says. "We need to utilize the blue-collar workforce to interact with the robot, and that development work has to be done in China."

Lampa says growth in Chinese demand for robots should be sustainable, partly because the alternative is to ship work offshore to manual workers in lower-cost countries such as Vietnam or Bangladesh.

Fears about the impact of robots on employment prompted a draft motion in the European Parliament last month. The draft warns that robots' growing intelligence, pervasiveness and autonomy requires a rethink of everything from taxation to legal liability.

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