US_Secretary_of_Commerce_Wilbur_Ross

US trade boss warns of oversupply of bad robots because of Chinese government subsidies

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China’s appetite for industrial robots is big and growing. Already the largest buyer of the machines, domestic companies are being encouraged by the Chinese government to build more robots locally, not just import them from overseas. 

Such high-powered encouragement has led to the establishment of numerous robot manufacturers in the country, some of which take advantage of government subsidies.

This has prompted criticism from US commerce secretary Wilbur Ross (main picture), who grumbled about a range of issues, but singled out China’s burgeoning robotics industry, which he apparently believes is built mainly on government subsidies. 

In comments to the press, reported by the Financial Times, Ross bemoaned big subsidies compounding an existing problem of overcapacity.

China, it seems, has too much of everything – too many manufacturers, too many materials, too many workers, and all of that is leading to too many products being made and being sold at such low prices it’s a wonder how anyone makes any money.

 

On the face of it, this may not be a problem, as it’s supposed to be a free market.

But if subsidies lead to the creation of companies which produce sub-standard robots which are not up to the job – or maybe even can’t do the job at all – this would not only be a problem for customers who buy the equipment, it could be devastating to the robot makers who are making perfectly adequate robots.

The bad companies propped up by subsidies could drive the good robot makers out of business.

That is not to say that any of the Chinese companies are bad, or produce bad robots – we don’t know, we’re just being hypothetical. There are international organisations which regulate the quality and safety standards of robots.

In most countries, fair trade policies discourage such a scenario from emerging, but the Chinese government has infused its typical patriotic fervour into robot manufacturing and – with becoming a leading maker of robots being the ultimate goal – a few bad robots may not distract anyone.

Some may argue that any bad robot makers may eventually be found out and their products will not be bought, and customers will turn to the robot makers which produce the good machines.

But the subsidies may continue to create problems even in that eventuality.

Ross met with Chinese Premier Li Keqiang to discuss such issues and FT says he lamented China’s “substantial subsidies for industrial automation”, adding that it was “an emerging threat to the US economy”.

After his meetings, Ross said: “Overcapacity is a big problem already.

“For example in robotics, there apparently are something like 400 robotics companies in China right now and people in the industry tell me their estimate is that maybe 360 of those are in it to get the subsidies and tax breaks and are not really that serious about products.”

Ross has previously suggested that the Chi-Com government’s “Made in China 2025” project an “attack” on “American genius”, according to the FT.


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