Chinese investor Midea has made a takeover offer of 4.57 billion euros, (USD$5.17 billion) to automation heavyweight KUKA.
Reuters reports that Midea is seeking to increase its stake in KUKA from 13.5 percent, to beyond thirty percent.
Till Reuter, chief executive officer of KUKA, was quoted as saying, “KUKA will remain German. The management will remain independent and the board will continue to pursue its strategy. We do not see this as being hostile in any way.”
Midea’s move on Kuka is right in line with the new Made in China 2025 (MiC2025) national policy which China’s national government recently laid out.
Jeffrey Hibbard, CEO of motion and vision control software platform provider KINGSTAR, summed it up nicely in his analysis of the event and the new policy:
“Clearly, the Chinese see robotics as a strategic way to counteract slowing economic growth rates, rising wage costs and growing competition from other emerging markets. Replacing people with machines and robots will help push China up the manufacturing value chain.”
In essence, China hopes to recast their manufacturing industry from being the worlds biggest, low cost manufacturer, to a world-class manufacturing power based on quality and innovation.
Foxconn Terminates 60,000 Jobs In Favour of Robotic Automation
Meanwhile, Chinese manufacturers are adapting to the MiC2025 policy and the changing economic landscape by adopting robotics solutions as quickly as possible.
One instance of this strategy is Foxconn Technology Group, an Apple products manufacturer that has reportedly replaced 60,000 factory workers with robots.
According to the South China Morning Post, the Foxconn factory has reduced its employee count from 110,000 to 50,000 through the adoption of industrial robots. More companies are expected to follow suit as wages and living conditions continue to improve in China, applying economic pressure on local manufacturers.
“We are applying robotics engineering and other innovative manufacturing technologies to replace repetitive tasks previously done by employees,” Foxconn said in a statement to the BBC. “And through training, also enable our employees to focus on higher value-added elements in the manufacturing process.”
While the company intends to maintain a significant human workforce in China, further automation should nevertheless be expected to proceed in line with the goals outlined in the national government’s MiC2025 plan.
“The MiC2025 plan identifies the goal of raising domestic content of core components and materials to 40 percent by 2020 and 70 percent by 2025,” Hibbard said. “To ensure this happens, Chinese bankers report that tax breaks and cheap credit will flow to companies that buy and invest in technology that aligns with the goals the state wants to achieve.”
Foxconn and Midea both appear to fit into this outline nicely.
Is China looking to expand its global influence, not by exerting military pressure, but by monopolizing the automation industry? Will China manufacture their way into becoming the dominant global superpower? I’ll let the conspiracy theorists handle these questions.