Exclusive interview with Lit Fung, Geek Plus Robotics general manager in Hong Kong
It’s probably safe to say that the vast majority of warehouses in the world operate in the traditional way, manually, with some automated technology, such as forklift trucks and conveyors.
A small but growing proportion are either fully or partially roboticised.
Some might not need it, but in most cases, bringing in the robots and introducing the latest computer technologies would very likely lead to increases in efficiency and production.
This is according to Lit Fung, Hong Kong general manager, Geek Plus Robotics, the startup company which makes warehouse robots.
In an exclusive interview with Robotics and Automation News, Fung provides an insight into the young and energetic company, and makes an educated guess about its market potential.
“I think it’s around 70 per cent of warehouses that are manual,” says Fung. “It’s only about 30 per cent which are semi-auto or full-auto. That’s for all the world.”
This means, of course, that warehouse robots have huge market potential – enough for Geek Plus and all the other similar startups to grow exponentially.
For Geek Plus, at this early stage, gaining market share is the key objective, rather than making a big profit on the sale of each machine.
It’s probably the main reason why Geek Plus has grown so quickly and managed to achieve an impressive unit sales of 3,000 – not just in China, but around the world.
In fact, its overseas business has grown to the point where earlier this year, it opened a new office in Hong Kong specifically to manage business beyond its borders.
And the man in charge of the new office is Fung. “The Hong Kong office is responsible for the overseas market and is responsible for strategy on behalf of our headquarters in Beijing,” explains Fung.
“So we do things like sales and project management with all the project teams in Asia-Pacific and in Europe and in America.
“So, basically for the projects outside China, we handle everything for the business.”
Hong Kong phooey
Geek Plus started on mainland China a few years ago with fewer than 10 employees. Now it employs 30 times that number and has investors worldwide.
In total, the company has raised $61.5 million in funding from sources in Europe, the US, and China, among other places.
Fung provides some background details. “Geek Plus was established in 2014, so it’s only been three years. At the start, it was just a few people [maybe four or five].
“Then we got angel funding, and we got a very big project from T-Mall [an online retail website owned by e-commerce giant Alibaba].
“I remember in 2016, we only had about 70 people. By the end of 2017, we grew to about 250 employees.
“Now, it’s around 300.
“And during this year, we already sold 3,000 robots to around 50 clients.”
He says the Hong Kong office is likely to employ double the number it does now.
“We just started the Hong Kong office in January this year. We now have 10 people, but we are still expanding the office and the number of employees.
“I think within a few months, we will grow to about 20 people.”
It’s got big and it’s got Kiva
Amazon reportedly uses tens of thousands of warehouse robots similar to the ones produced by Geek Plus, but all of them are for the online retailer’s own use in its warehouses – not for sale to outside companies.
Amazon acquired the warehouse robot technology when the retail giant bought Kiva Systems, a robotics developer, back in 2012, for $775 million.
Amazon then took the Kiva warehouse robot off the market, creating a big gap which is being filled by companies like Geek Plus.
Geek Plus is not the only company in the market of course – there are many others. But the Chinese company is probably one of the fastest-growing.
Its 3,000 units are currently running around warehouses owned and operated by companies such as Alibaba, the Chinese company believed to be the largest e-commerce company in the world.
Suning, a Chinese retail giant, is another Geek Plus customer.
But it’s not all China, China, China – Geek Plus also has customers in Japan and other parts of Asia, as well as in Europe and North America.
And given the number of warehouses which don’t have robots, everywhere Geek Plus looks, it probably sees opportunities.
“I think the market needs this kind of robot,” says Fung. “The Amazon Kiva is no longer on the market.
“From our company’s point of view, the reason why I think we have grown fast is that we aimed to gain a greater market share rather than make big profits on each project.
“So that’s why our robot’s price on each project is a very good price so that customers can get the return on their investment.
“If you want to develop a project and make a calculation of the return on investment in robots, you could find that it would take five or six years, or in some cases, seven years, to get the return.
“But for our system, I did some calculations which show that most of the customers – whether they are in Hong Kong, Japan or Singapore – can get a return on investment within two to three years.
“This makes it much easier to convince the customer to implement robotics, and change from the traditional operation to the automated system.”
Learning new tricks in the year of the dog
It’s always tempting to comment on the cultural differences between China and Western countries even when writing an article about business.
It’s probably relevant given that many people might be wondering what techniques and approaches Chinese companies are adopting in order to grow and become successful overseas.
The common criticism is that Chinese companies adopt the “pile ’em high, sell ’em cheap” strategy, but that is what every business everywhere does, especially if it’s a commodity supplier.
One might argue that advanced technology is not yet a commodity and even when a company sells billions of units, prices still remain high.
This is true of many companies such as Apple, but even Apple tries to minimise the unit cost of its iPhones and other devices. The problem or consideration for Apple – and companies like it – is that they spend a lot of money researching new technologies and processes, and that cost works its way into the price of the end product.
Often, Apple’s products contain entirely new components, and perhaps require materials and technologies which have never been commercialised before, as well as production methods that have never been tried before.
This high degree of innovation, of breaking new ground, of pioneering, this pursuit of perfection, or at least aiming for the highest quality possible, is probably what Chinese companies are thought to undervalue.
But the fact is that there are very few companies and countries which fit into the same category as Apple at a large scale.
Small companies innovate and invent new things all the time, and the emergence of startups in China may go towards changing contemporary perceptions.
However, all this is to ignore a couple of obvious realities: one is that there are many innovative companies in China, such as startups in artificial intelligence raising tens of millions of dollars in funding and doing good business; and also, the criticism is not necessarily that they don’t innovate – it’s the sneaky suspicion that they’re all backed by the ruling Communist Party of China, directly, with grants, tax breaks and other forms of financial and political support.
That may be true for some companies, and the reality is, all governments in all countries everywhere try to help their local business in some way or other, but anyway, Geek Plus originated entirely in the private sector and its funds are from private-sector investors.
It’s not a robot – it’s a Communist Chinese propaganda machine
Propaganda takes many forms, depending on how you define the word. In ancient times, large buildings were the main method for propagating whatever message its makers wanted to convey.
Usually, those buildings were religious structures, and it could be argued that they have helped maintain the presence of religion for thousands of years.
Skyscrapers fulfil a similar function in today’s money-driven, capitalist, free-market societies.
And while Germany probably never considered the propaganda value of cars, not many people in the world would fail to mention the country’s famous car marques in any list of best cars.
Germany’s also a leading country when it comes to robots. And the other country most strongly associated with robots is, of course, Japan.
China, now the world’s largest buyer of industrial robots, is attempting to augment its historic cultural heritage and modern manufacturing tradition with a new interest in developing and producing advanced technologies by itself – specifically, robotics, automation, and artificial intelligence. It’s what the Communist Chinese government wants.
Western countries like Germany are often portrayed as having benefited from having a “Protestant” work ethic, wherein the development of one’s skill and productive capabilities is totally focused on creating the perfect product – almost like a religious quest.
China and eastern countries apply a similar level of dedication to their religions and spiritual pursuits.
If it can infuse its work ethic with the same spiritual mind, perhaps the criticism of China about quality, plagiarism and cheap goods will eventually go away.
But then, some people are never happy. As the ancient Chinese philosopher Confucius said, “Haterz gon hate.”
Or something like that.
A lot of the above is completely irrelevant to much of the business world today because most people just want to make money.
Add to that the realisation that robotics and automation technologies are increasingly entering new sectors – from manufacturing to logistics and automotive and many others – and one starts thinking that this could eventually become one of the largest markets in history.
Fung says that, for Geek Plus, the growth potential is limitless. “I think, in terms of the world market, we believe that the potential is very, very big – to infinity, because there is no limit to how much automation people will continue to need in the future.
“In terms of our own warehouse robot and the technology we bring to the customer, we believe that, in this year, we can sell around 10,000 robots in the market.”
Fung says the company’s strategy is evolving as it learns more about its customers and the various business sectors in which they operate.
Even geographically, initial ideas are being updated.
“Towards the ends of last year, we decided to make the Asia-Pacific market our first priority.
“That’s why we already have some distributors and service centres in Asia – like in Singapore, in Malaysia, Thailand, Indonesia… this kind of countries.
“But luckily, we’ve got a lot of interest from around the world, so we have changed our marketing strategy.
“That’s why we have started expanding our market to Europe, and also America.”
Fung reveals that Geek Plus didn’t even have a marketing department until recently.
“We didn’t do much marketing previously and all the sales came from email enquiries coming to us. We didn’t approach customers.
“We get at least one enquiry per day. We evaluate them to see what each customer requires.
“It might be a very big customer which enables us to enter new markets, such as retail, automotive, logistics and so on.
“So we think about the strategy relating to each customer.”
A journey of a thousand miles begins with a single robot
Fung adds that the customisation of the order can sometimes involve lower prices for bulk purchases and even hiring – meaning, not having to pay the purchase price for the robots and, instead, paying on a monthly basis.
The monthly fees are calculated according to how much the customer will use the system. It sounds complex and it’s not something all companies offer.
But Fung says the company is looking to innovate to gain market share. “Our vision is to make changes in the logistics sector.”
He says salaries are expected to rise across Asia, and logistics companies in Europe and North America may face difficulties recruiting staff.
Both these factors are likely to make investing in warehouse robots more attractive.
The machines themselves, as well as the software, are developed in-house by Geek Plus.
“The robot we design and assemble by ourselves in our factory in Beijing. We handle everything for the assembly and the design.
“The small components – motors, gears, and so on – we need to source those from manufacturers.
“So we order the small components and do the assembly in our factory.
“Of course, the core system control, and some core components will be made by ourselves. And we have a large software development team.
“The research and development team, in total, is over 100 people.
“All the software, all the control, it’s handled by our own development team.”
As well as supplying the robot units, Geek Plus also provides what it calls the “Geek Management System”, software through which the robots can be managed, which apparently runs on devices of many types including smartphones. The company also supplies charging stations for the robots.
Geek Plus has come a long way since it started just three years ago, and if it continues to grow and increase its staff at the same rate, it will have 9,000 employees in another three years, and who knows how many robots running around in the countless warehouses of the world.
As Confucius said, “If you build robot, customer will come.”
Or something like that.