In the trillion-level robotics race, who will become the next super unicorn?

As a billion-dollar track, the robotics field has seen a continuous emergence of financing events since 2017, reaching a peak in 2018. Although there has been an overall decline in the following two years, sub-sectors have begun to become the focus of capital attention.

The domestic robot industry has entered its best era

Driven by the demand for industrial automation, China has become the world's largest and fastest-growing robot market, accounting for nearly one-third of the global market, and the industry has huge potential.

On the other hand, in 2019, China's industrial robot exports exceeded imports for the first time, and domestic industrial robot production and sales increased by about 27% and 21% respectively in 2020. Strong growth potential and huge domestic substitution space are bringing the domestic robot industry into its best era.

If collaborative robots are regarded as the "hands" of industrial robots, then mobile robots are the "feet". As the demand for flexible production in industries such as 3C, semiconductors, and automobiles has increased significantly, robots are required to be more flexible and efficient, which has also ushered in explosive growth.

From January to July 2021, the first-tier companies in the mobile robot and collaborative robot sectors, such as Jiazhi, UAI, Lingdong, Jieka, Elite, Yuejiang, and Daju, all received financing of over 100 million yuan; leading institutions such as Shenzhen Capital Group, Lenovo Capital, ZhenFund, and BlueRun Ventures have all increased their investment in the sector.

The subdivided track of industrial robots is ushering in an explosive period

The popularity of these two segments is driven by market demand and the external macro environment. With the rapid development of domestic medical, logistics, 3C, automobile, semiconductor and other industries, the demand for flexible manufacturing by small and medium-sized enterprises has increased significantly, and the market demand for human-machine collaboration and mobile handling robots has increased significantly.

At present, there are more than 70 collaborative robot brands entering the Chinese market, and the "four major robot families" - ABB, FANUC, Yaskawa, and KUKA have successively launched collaborative robot product lines.

In the first half of 2021, more than 11 giant companies including ABB, BMW, Amazon, ByteDance, CATL, and Sentury announced their plans to enter the mobile robot industry.

In the first half of 2021, the scale of financing in the field of collaborative robots exceeded 3 billion yuan. First-tier companies such as Yuejiang Technology, Elite, Dazzle, JEKA, and Luoshi Robotics all received over 100 million yuan in financing; Geek+ and Quickcell, the first-tier companies in the field of warehousing robots, have obtained C rounds of financing or above, and companies in the field of mobile robots such as UAI, Muyi, Jiazhi Technology, Lingdong Technology, and Future Robotics have all received financing of hundreds of millions of yuan. Dozens of capitals such as Softbank Asia, ByteDance, IDG, BlueRun Ventures, and Linear Capital have entered the market.

Mobile robots are also being used in many fields such as pharmaceutical manufacturing, 3C electronics, and automobiles. According to statistics from the China Mobile Robot Industry Alliance, the industry has grown from 1.9 billion yuan in 2016 to 7.68 billion yuan in 2020, with a compound growth rate of 41.8%.

While it is popular, it still cannot avoid many common problems

First, the core components are overly dependent on imports. The domestic industrial chain is still not as perfect as that of foreign countries. More than 70% of the parts of newly installed robots in China are imported, which also leads to derivative problems such as product homogeneity in the industry.

Second, the profit margin is small. This is due to the double squeeze of the four major families occupying the main market and the high cost brought by the reliance on imports of core parts of domestic brands. In 2020, the domestic prices of the four major foreign industrial robot families, Kuka, ABB, Fanuc, and Yaskawa, were more than 40% higher than the same type of domestic industrial robots. Although the market share of domestic manufacturers has gradually increased, the gross profit margin of the robot body business is less than 20%, far lower than Fanuc's 35%.

Which tracks can give birth to billion-dollar unicorns?

Robotics is a trillion-dollar track, but there are many industry sub-tracks. Different scenarios and industries use different processes, which are all non-standard and customized, and vary greatly from each other.

The advantage of this is that it is difficult for companies to form a monopoly advantage. It is very difficult to excel in 2-3 fields, and there will be no monopoly by a "one-size-fits-all" giant. However, the disadvantage is the lack of sufficient business volume to support the valuation.

Only big fish in a big pond can feed a billion-dollar company. The market must be large and the concentration must be high. It is difficult for a billion-dollar giant to emerge in the domestic industrial field.

Comparing with the US market, we found that giants have emerged in the two major directions of medical surgical robots and service robots, which can be regarded as To C enterprises in essence, with a large base of paying users. In the long run, the Chinese market will also follow this rule, and To B may eventually remain a fragmented market.

Faced with the reality of "decentralization", domestic robot companies often choose to "cross-border robbery" to find commonalities between various scenarios and constantly cut into other people's tracks.

The core of enterprises in the future track

There is a general consensus that it is difficult for a company that only focuses on a certain niche to grow into a giant. Only in sufficiently large fields such as 3C, automobiles, and new energy can a unicorn worth tens of billions of dollars be born.

For start-up teams, the top priority is to seize large B lighthouse customers, who have more sustained paying capabilities and can also bring endorsement to their product technology.

There is no shortage of giant players in the industrial robot market. Startup robot companies that lack differentiated product capabilities will have to face competition from these competitors, which is very dangerous.

The key variables that will affect the robot market in the future are the speed of robot capability improvement and product iteration. Only teams that can deeply understand industry needs, create blockbuster products and achieve product closed loops, and then form a sales network covering the industry can go further.

end:

Overall, brand division and low-price competition coexist in the industrial robot market, and too many subdivided tracks have divided the market. For start-ups to become billion-dollar unicorns, it is far from enough to just get the first place in the subdivided track. Only by constantly expanding application scenarios and competing for more overseas market share can they stand out in the melee.