China is building a robotic empire, one tech hub at a time.
And the tech hub that sits proudly at the top of the official honor roll is none other than Zhangjiang.
Zhangjiang, a strip of land spanning some 25 square kilometers in the east of Shanghai, is home to the iconic mega-factory of industrial robot giant ABB and scores of glittering startups.
Basically, this sprawling area, which some occasionally compare to Silicon Valley, is a grouping of industrial clusters, ranging from semiconductor to pharmaceutical, from artificial intelligence to autonomous driving and robotics.
According to official statistics, Pudong New Area, the district that governs Zhangjiang, has around 100 robotic companies. Four out of 10 are in Zhangjiang.
Zhangjiang has established itself as a mecca for robotic startups and entrepreneurs, with the Zhangjiang Robot Valley being the most recognizable testament to this status.
The valley, covering 3.9 square kilometers, operates as a quasi-industrial park that has attracted dozens of robotic companies to move in.
70 billion yuan by 2025
Officials project the valley will boast an industry worth of 70 billion yuan (US$10.18 billion), nurture 150 core robotic businesses and produce 10 listed robotics companies by the end of the 14th Five-Year Plan (2021-2025), the state-run China Daily reported in 2021, citing an official blueprint.
And it appears that China’s pro-tech bureaucrats mean business. They are in an overdrive to help Zhangjiang attain its goal.
For instance, at a high-profile industry conference on robotics, held on March 17, I watched in the audience as high-ranking officials, startup representatives, scientists and researchers pushed down on a button during a countdown ceremony, marking the birth of a robotic federation.
The federation, which comprises an undisclosed number of businesses, is the latest in a series of attempts to turbocharge the robotic aspirations of Zhangjiang-based entrepreneurs.
According to official statements, this federation will further spur the agglomeration of industrial, research, academic and application resources.
Ultimately, the dynamics resulting from their synergies will catapult the robotic valley into a cutting-edge industrial ecosystem.
Benefits of clustering
Officials from Zhangjiang do have something to boast about. On their watch, the robotic hub has come a long way since it came about three years ago.
It is now home to behemoths like ABB and MicroPort (微创医疗, HK: 0853), but also gathers leading startups under the same roof, such as Fourier Intelligence (傅利叶智能), Anwha Automation (昂华自动化), Siyi Intelligence (司羿智能), Gaussian Robotics (高仙机器人), Elite Robot (艾利特机器人), to name but a few.
These players have risen from humble origins to become global innovation powerhouses in their respective fields, often in the span of a few years.
Fourier Intelligence, for one, has grown into a Series D market leader in rehabilitation robotics since its inception in 2015. It counts global venture funds like SoftBank and Aramco among its backers, and deploys its products to over 40 countries and regions across the globe.
Many factors underpin Zhangjiang’s success. At the heart of it is the role informed policies play in allocating and integrating resources where they work best.
For instance, by combining the strengths of high-tech medical equipment and AI, two areas of expertise for Zhangjiang, the robotic hub has achieved breakthroughs in surgical and rehab robotics.
To illustrate, a host of players have been riding the waves, including MicroPort, TMiRob (钛米机器人), Fourier Intelligence and Intuitive Fosun (直观复星), a joint venture between Intuitive Surgical and Fosun Group.
Add to that the medical and healthcare industries already operating in Zhangjiang, most notably a handful of production facilities, the robotic hub not just benefits from clustering, but also from what is popularly known as a closed business loop.
Driven by the expansion of alpha males like ABB and MicroPort, a pack of budding robotic firms, working in segments from industry to healthcare, from consumption to public service, have also grown exponentially.
They contributed to a boom across the industrial chain, spurring iterations in servo motor, controller, algorithms and smart interface.
Currently, of Pudong’s 100 plus robotic businesses, major ones record an annual revenue of about 10 billion yuan.
Although no exact figure breakdown is provided, it’s safe to assume, based on annual financial reports released by heavyweights like ABB and MicroPort, that they took the lion’s share of the revenue, with a tiny fraction going to numerous smaller startups.
This signals a clear “long-tail” pattern, with the bulk of businesses still lagging far behind in terms of market size and commercialization.
In other words, they have a long way to go to move up the ladder.
Policy incentives are another thing that Zhangjiang officials have got right in their quest to fuel the growth of robotics.
When it comes to incentives, talent recruitment is an inevitable topic. To enlarge the talent pool necessary to power Zhangjiang’s shift, the Pudong government issued miscellaneous policies, encouraging academicians to set up shop in the district or even offering aggressive stipends and rewards to topnotch tech talent.
Under a talent-hunting program called “Pearl Plan,” Pudong pledges to hand out a cash prize of up to 5 million yuan a year to eligible candidates as well as help them relocate to and settle down in the area.
Officials tout a suite of measures they have taken to bolster the Zhangjiang robotic hub; one is to create a “traffic entry point,” a term originally bandied about by Internet entrepreneurs.
According to Wang Tao, who is in charge of running the robotic hub, officials plan to go about building up the hub in four steps, starting with using entrenched firms as an example to entice others.
Then, the hub will need an exhibition hall — it already does — to showcase technologies from various firms, followed by efforts to promote them via industry summits and also set aside funds to finance quality startups.
“A guidance fund has already taken shape, pending approval,” Wang told reporters in 2022.
Big dream, big gap
Whatever plans bureaucrats are coming up with to provide a catalyst for the sector, robotics does appear to have wind in its sails.
Nonetheless, not all is rosy.
Zhangjiang’s robotic hub has its own share of doubt, with skeptics questioning its firms’ ability to generate a combined revenue of 70 billion yuan by 2025, up from a mere 10 billion yuan currently.
Where will the 6o billion yuan come from? And what is the basis for forecasting an industry output of 70 billion yuan in the first place?
There seems to be some hard explaining to do on the part of Zhangjiang officials.
At any rate, Zhangjiang’s robotic hub is coming to fruition. In a few years, more and more firms in the upstream and downstream sections of the robotic industry are expected to come into the fold, lured by a steady stream of favorable policies and the merit of clustering.
Let’s see how this great robotic leap forward will unfold.