TECHNOLOGY AT WORK

February 2015
Citi GPS: Global Perspectives & Solutions
43
Figure 27. Annual supply of industrial robots by region
Figure 28. Annual supply of robots to China
200,000
180,000
Americas Asia Europe
(Units)
120,000
160,000
140,000
120,000
100,000
80,000
60,000
100,000
80,000
60,000
40,000
Forecasts
+25% CAGR
40,000
20,000
20,000
0
0
2012 2013 2014E 2015E 2016E 2017E
2008 2009 2010 2011 2012 2013 2014E2015E2016E2017E
Source: IFR World Robotics 2014 Source: : IFR World Robotics 2014
Figure 29. Total robot density (per 10,000 workers) in 2013 Figure 30. Robot density (per 10,000 workers) in auto industry in 2013
350
1,600
300
1,400
250
1,200
200
1,000
150
800
600
100
400
50
200
0
Japan Germany Sweden US Taiwan France China
0
Japan Germany USA China
Source: IFR, Citi Research
Source: IFR, Citi Research
China Rebalance to Drive Factory Automation Boom
China is showing signs of losing its cost
competiveness as labour costs are growing
Labour costs in China are rising faster than productivity and Citi’s China Economics
team believes the country is showing signs of losing its cost competitiveness.
China’s unit labour cost has been growing since 2000, indicating that average
wages were rising faster than productivity, and the pace has only accelerated since
then. Meanwhile, labour productivity growth has been decelerating in recent years.
In Figure 31, we chart the historical average wage in China vs. the US, along with
their 15-year CAGRs. China wages have been increasing at a 13.7% CAGR since
1995, eroding the cost advantage of offshore manufacturing vs. the US, which has
only seen 3.5% wage inflation. Meanwhile, the working age population in China is
predicted to fall dramatically over the next decades (Figure 32).
© 2015 Citigroup