China's automation opportunity

Automation is transforming China's manufacturing sector, propelling the economy, and creating huge long-term investment opportunities.

07 dez 2018

When Foxconn, the world's largest electronics manufacturer, cut 60,000 staff in China during 2016, people thought it was going through hard times. Instead, the company was investing in its future by replacing workers with automated production lines.

Geoffrey Wong, UBS-AM Head of Emerging Markets and Asia-Pacific Equities, says this is a gathering trend because "with China's aging demographics, the number of young workers is getting fewer and fewer. China is responding with a heavy emphasis on automation."

China is taking the lead in automation

And China is taking the lead in automation, installing 110,000 of 380,000 robot systems built globally in 2017, taking China's total to 451,000, or c.20% globally (1).

As Geoffrey points out "China installs more robots than any other country […] each year, and this proportion is only growing"

"If you go to a factory in China today and compare it to twenty years ago, it's totally different: the factories look very similar to ones in Germany, Japan, Korea, with fewer workers and many more robots. This is the future of manufacturing in China."

And potential growth for automation in China is huge. Robot penetration in China is low, with 97 robots per 10,000 workers, compared with 658 in Singapore and 710 in South Korea, according to the International Federation of Robotics (1).

What does this mean for investors?

Three thoughts for investors

  • This is the opportunity to uncover value in companies that aggressively automate and boost efficiency.
  • Innovative robotics companies can sell into China's manufacturing base, which is the world's largest (2) and still relatively underpenetrated.
  • Automation raises productivity and China's long-term economic growth potential. If, as is likely, China continues on its automation path, it will boost GDP by 20% between 2018 and 2037 (3).

So, there are many ways that China's automation process creates opportunities for investors and selecting the right ones is crucial.


Important legal information

To proceed, please confirm that you are a professional / qualified / institutional client and investor.

Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report or other content was compiled. UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions contained in the content of this webpage have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith but no responsibility is accepted for any errors or omissions. All such information and opinions are subject to change without notice but any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Source for all data/charts, if not stated otherwise: UBS Asset Management.
Any market or investment views expressed are not intended to be investment research. Materials have not been prepared to address requirements designed to promote the independence of investment research and are not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this webpage does not constitute a distribution, nor should it be considered a recommendation to purchase or sell any particular security or fund. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. A number of the comments in the content of this webpage are considered forward-looking statements. Actual future results, however, may vary materially. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss. 
© UBS 2020 The key symbol and UBS are among the registered and unregistered trademarks of UBS.