South Korea leads the globe in fast rising industrial robot numbers

20 July 2018 Consultancy.asia

South Korea has the highest density of industrial robots according to data from the International Federation of Robotics, with the dawn of Industry 4.0 marking a significant global rise in robot numbers which is expected to further accelerate.

Since the beginning of the decade, the number of new robots installed worldwide per year has more than tripled from 116,000 to 350,000 due to increasing industrial automation and the advent of artificial intelligence technologies. And the agency which has collated these figures, the International Federation of Robotics (IFR), expects this nearly 350 percent growth rate to jump again in the coming two years.

According to IFR estimates, there was a shade above 2 million industrial robots in use across the globe in 2017. By 2020, the IFR projects there will be more than 3 million, with over 520,000 new robots being added per year and a growth rate that shows no signs of slowing in the following decade. Altogether, the 2020 projection represents a doubling of global industrial robot stock in under seven years, and almost three times the operational number since just 2008.Number of industrial robots installed globally by yearIn density terms, the absolute number translates to a rise in the global average of 66 to 74 robot units per 10,000 employees between 2015 and 2016. And, according to the IFR, South Korea, which has led the category since 2010, has by far away the highest density of any nation; at 631 units per 10,000 workers or nearly nine times the global average, well ahead of the next densest geography of Singapore with 488 per 10,000. South Korea, too, has roughly ten times the population of Singapore with some 50 million residents.

Joining South Korea and Singapore at the top of the density tables, is Japan in fourth (following Germany) with a density figure of 303. And while Japanese manufacturing accounts for more than half of the global robotics supply (in an industry worth $2.2 billion, with China and South Korea chipping in ~$200 million a piece of the global worth), Japan’s national density figure has actually declined in the last recorded period.Industrial robot density per countryAsia, also, despite its robotics giants at the top, has a regional average density figure below the global average, with 66 units per 10,000 employees compared the 99 unit average in Europe. The continent, however, is on the automation march, with the fastest growth rate globally for industrial robot instillations at 9 percent – compared to 5 percent in Europe. Not unexpectedly, the Chinese economic juggernaut is fuelling much of this growth, with its robot density figure rocketing from 25 units in 2013 to 68 just three years later. The government is targeting 150 by 2020, as well as a four-fold boost in robotics manufacturing.

Along with the projected 15 percent global average annual growth in industrial robots by 2020, the IFR is forecasting a potential 25 percent surge in professional services robots. The President of the IFR, Junji Tsuda, said; “We see a number of trends that will fuel a broader adoption of robots across new geographies, industries and applications… Developments in AI mean we can expect robots to perform increasingly effectively as human assistants, not only understanding and answering questions as they do today, but also acting on voice commands and gestures.”

Global trade shifts as developing market dynamics take hold

17 April 2019 Consultancy.asia

Global trade intensity is on the decline, according to an analysis from McKinsey, with shifts in trade goods and supply hinting at increased maturity in emerging economies.

As global trade becomes increasingly fraught, wider market changes may be missed. According to a McKinsey & Company study, global trade intensity is declining as developing economies, particularly China, increasingly consume domestically produced products. As more demand shifts to developing economies, this trend is expected to continue. Meanwhile, ‘intangibles’ are taking up an increasingly large share of global trade, shifting the trade dynamics away from manufactured goods.

Global trade has seen a massive increase in demand for goods and services produced in far flung parts of the world. Globalisation saw decades of expansion to global trade, with various countries becoming breadbaskets or producers of specific goods. Yet, now the form of trade is changing, with intangibles increasingly becoming part of the trade value chain. The share of services trade is increasing at a rate more than double that of goods.Global value chains becoming more knowledge-intensiveThe past decades have seen increased shift to intangibles in global value chains, with spending on brands, software, and intellectual property (IP) growing as a share of revenue. The shift is part of a wider shift to a knowledge economy. Pharma and medical devices companies as well as machinery and equipment companies, for instance, have the highest share of intangibles, at 66.3% and 29.3% of their capitalised spending in 2016.

This is largely reflective of their patents and other IP. Meanwhile, labour intensive goods such as food and beverages, rubber and plastics and paper and printing, have considerably lower levels of intangibles as part of their value chains, at 2.3%, 3.1% and 3.9% respectively. Agriculture and mining see capitalisation of around 5%. IT has the highest level in the knowledge intensive sector at 13.7%, while professional services stands at 3.5%.Developed economies output to developing economies boomedThe study also notes that recent decades have seen a boom in demand for high production value goods exports to developing economies. As such, the share of advanced economies exports to advanced economies has decreased, from 77% in 1995 to 59% in 2017, while, in total, advanced economies’ exports to developing countries grew from $1 trillion in 1995 to $4.2 trillion in 2017.

Here, the most in demand segment from advanced economies is machinery and equipment, with a net increase of $450 billion between 2000 and 2017, while computers and electronics saw an increase of $364 billion in the same period – with more than half of the $573 billion in total accounted for by demand from China. Chemicals and auto also increased significantly, by a respective $351 billion and $262 billion.Developing countries increase share of global consumptionDemand from emerging economies is also set to grow significantly, as large-scale demographic shifts begin to take shape. The world’s share of consumption has shifted away from advanced economies at scale since 1995, falling from then 81% to 62% in 2017. This is expected to fall further, to 49% of the world’s total by 2030. China in particular is set to pick up pace, representing 16% of all consumption by 2030, with the rest of developing Asia to make up 10%.

The impact on supply and value chains will be significant, according to McKinsey. The shift in consumption could see emerging markets consume two thirds of manufactured goods by 2025, with the firm citing significant shifts in cars, building products, and machinery. One of the consequences of the shift is that more and more of what is made in China is sold in China. This has already had a net effect on the country’s trade intensity, which has fallen as domestic demand picked up.

“Although trade tensions dominate the headlines, deeper changes in the nature of globalisation have gone largely unnoticed,” states the report. “China and other developing countries are consuming more of what they produce and exporting a smaller share. Second, emerging economies are building more comprehensive domestic supply chains, reducing their reliance on imported intermediate inputs. Lower global trade intensity is a sign that these countries are reaching the next stage of economic development.”