Real Estate , Industrials , Financials Author：Sirui Zhou Oct 13, 2019 09:30 PM (GMT+8)

Adding artificial intelligence, robots have huge potentials. Despite a promising demand, product quality and differentiation are still the concern.

A robot with human feature. Image credit: Unsplash.

Although robotics and artificial intelligence are two almost entirely separate fields, robots nowadays are largely dependent on Artificial Intelligence. AI provides sufficient feedback to the moving programmable machines by tackling perception, understanding, analyzing and optimizing. In this way, robots are not only able to handle pre-defined situations, but also to respond to human gestures, make judgments and modify actions accordingly.

Other technologies lie behind high-level robotics, such as computer vision, speech recognition – and, most noticeably for robots, SLAM (Simultaneous Localization and Mapping), the process of creating a map to navigate while tracking the robot within the generated map. Deep learning algorithms augment the ability for machines to analyze images and develop better SLAM. 

The most common SLAM systems are visual SLAM (V-SLAM) and LiDAR (Light Detection and Ranging) SLAM.

The global robot market, consisting of industrial, special and service robots, is in stable growth. Service robots in particular are proliferating. In 2018, the global robot market reached USD 29.82 billion, and the average growth rate was 15.1% between 2013-2018. Within the market overall, industrial robots were worth USD 16.82 billion, service robots were USD 9.25 billion and special robots were USD 3.75 billion, accounting for 56%, 31%, and 13% respectively.

Service robots are comprised of enterprise service robots, public service robots as well as consumer service robots. Chinese service robot market was CNY 1.98 billion (USD 280 million) in 2013, and reached CNY 18.03 billion (USD 2.54 billion) in 2018, with CAGR of 55.6%.

For enterprise-facing robots, the demands are driven by China's aging population and disappearing demographic dividends. Certain functions are automated by robots, as shown through applications in banking, medical services, retail and transportation sectors.

The awareness of consumer-facing robots is rising, indicated by the increasing adoption of household cleaning robots and education robots. 

From a macroeconomic perspective, Chinese household income and expenditure are growing gradually with GDP growth. According to the National Bureau of Statistics, the per capita consumption expenditure of Chinese households increased from CNY 13,222 (USD 1865.35) in 2013 to CNY 19,853 (USD 2800.85) in 2018, with a CAGR of 8.5%. 

Shares of education, culture and entertainment spending are growing rapidly. Data from the National Bureau of Statistics indicates the per capita expenditure on education, culture and entertainment increased from CNY 1,398 (USD 197.23) in 2013 to CNY 2,226 (USD 314.04) in 2018, with a CAGR of 9.8%.

While showing great potential, the consumer market is yet to be developed. First, although the idea has been popular for a while, people tend not to buy these products on their own accord. It is essential for AI companies to come up with innovative application scenarios to boost consumer demand.

In this case, AI startups in this area tend to embrace business clients, such as real estate developers, rental services and community services companies, senior care centers and so on, where intelligent devices can provide better customer services to help with customer acquisition. 

Besides, the quality of these products is uneven. It is expected that leading companies should set an industry benchmark by providing high-quality products and services at a reasonable price.

For consumer-facing products, clearer industrial standards and regulations are critically needed in terms of safe design and use. For example, since a person usually spends more than half a day in a smart home, robot manufacturers need to ensure high product quality to earn consumer's trust. Without comprehensive standards, this business is impractical.