A Brief Introduction about AGV industry in China

Automated Guided Vehicle (AGV), controlled by computer, is a type of industrial with functions as mobile, automatic navigation, multi-sensor control, network interaction, etc. The most important use of AGV in actual production is to carry. It can be said that as long as there is a place for handling, there is a possibility of application of AGV.

1. AGV industry in China has entered a golden period of development

After more than 20 years of rapid development, AGV industry in China, straddling the two major industries of logistics and , has grown from scratch to strength and has achieved world-renowned achievements. With the disappearance of demographic dividend and the transformation of domestic traditional industry in China, various are widely implemented and have provided a huge market space for AGV. In China, domestic AGV has become a pearl in the field of robots and has made great progress in autonomous kernel technology and core product competitiveness.

AGV Sales and Growth Rates in China, 2013-2025E 300,000 180%

252340 160% 250,000 140%

200,000 120% 174028 100% 150,000 124305 80%

100,000 86927 60% 62091 40% 43420 50,000 29600 33400 21890 20% 11300 2380 3200 4280 0 0% 2013 2014 2015 2016 2017 2018 2019 2020E2021E2022E2023E2024E2025E

Sales Volume (units) YoY Growth

Source: Global and China Automated Guided Vehicle (AGV) Industry Report, 2019-2025, Research In China

From 2013 to 2019, the average annual compound growth rate of China's AGV market exceeded 30%. Based on the forecast of Research In China, the AGV market in China will sustain a CAGR of roughly 40% between 2019 and 2025.

Since 2016, warehousing AGV has been included in the overall statistics of AGV, so the growth rate has significantly increased. The volume of China’s AGV market was 21,890 units in 2017 (a year-on-year increase of 93.72%) and has grown to 29,600 units in 2018, with a relatively high momentum of 35.22%, and reached 4.25 billion yuan sales revenue (a year-on-year increase of 49.12%). In 2019, the AGV market has increased to 33,400 units (a year-on-year increase of about 12.8%), and reached a market size of 6.175billion yuan(an increase of 45.2%). Furthermore, 18 companies had revenues of more than 100 million yuan by then.

1.1 Declining demographic dividends have created a high demand for AGV

According to the National Bureau of Statistics, birth rate in China is falling continuously and has dropped into a historical low point during the past two decades, and a further downward trend has appeared in the past two years.

Industries originally enjoyed the demographic dividend brought by the high birth rate in China, such as 3C Electronics, Logistics, and Automobile Manufacturing, will all face the impact of the demographic dividend decline caused by the long-term downturn of birth rate.

As a result, AGV, which can be a major alternative to human resources, now has a strongly increasing demand and such market demand mainly comes from SMEs that are in need of handling labor costs reduction.

1.2 The rise of emerging industries has further driven the demand for AGV.

With the development of e-commerce, work intensity in logistics industry has been greatly tightened, which driven higher demand on handling efficiency.

Taking 2014 as an example, AGVs and other equipment were not popular. During big selling events such as Double Eleven, daily handling weight of courier porters can exceed 1 ton, and working hours can reach to ten hours per day. On average, 6-7 days would be taken for customers to wait for purchases after placing an order online, which is nearly twice as much as on an inactive day.

To better optimize consumer's consumption experience, major e-commerce companies have introduced various machines and equipment, and strive to promote intelligent and automated logistics. Therefore, AGV, with its unique advantages in , flexibility, and security, has become the best choice.

2. Regional distribution and industry application of AGV companies

2.1 Regional distribution

According to China AGV Industry Alliance and New Strategic Robot Industry Research Institute, Pearl River Delta and Yangtze River Delta remain to be the gathering places of AGV companies. In 2018, the proportion of AGV companies in Yangtze River Delta and Pearl River Delta were both about 30%; followed by Central China, accounting for about 15%.

The data shows that AGV's regional market concentration has gradually increased, almost close to a monopoly. On the whole, Guangdong, Jiangsu, Shanghai, and Zhejiang may be the key development areas of China's AGV industry in the future.

Regional distribution of China AGV companies in 2018

Northeast Others 5% 5% Southwest 5%

Yangtze River Central Delta China 30% 15%

Pearl River Circum-Bohai-Sea Delta 10% 30%

Source: Prospective Industrial Research Institute

2.2 Industry application

As for AGV application distribution in 2018-2019, in terms of quantity, express/e-commerce is still the largest application field, followed by automotive, 3C and other fields. Among them, the demand from automobile industry has dropped significantly year-on-year, and from other industries such as 3C, home appliances, food and beverage, tobacco, and other industries has increased steadily.

In these industries, there are already five AGV companies with more than 10,000 units in the market: Siasun, CSG Huaxiao, HIK Robot, Geek+ and Libiao Robot.

Source: Gao Gong Industry Research Institute (GGII), June 2020

3. New applications and opportunities of China AGV industry in 2020

Although industrial manufacturing and warehousing logistics are still the main application of AGV, taking the coronavirus situation as an opportunity, service robots are likely to usher in rapid growth. At the same time, as AGV technology continues to develop, special applications will also grow rapidly.

Statistics show that the scale of China's service robot market in 2019 is 15.38 billion yuan, a year-on-year increase of 36.1%. From 2013 to 2019, the average annual compound growth rate also exceeds 30%.

Commercial service robots are mainly used in distribution, inspection, security, and disinfection in hospitals, restaurants, hotels, banks, shopping malls, etc. Currently, market demand in restaurants, hotels, and hospitals is growing rapidly and coronavirus has also created a rigid demand for service robots.

In short, commercial service robots are still in the early stage of application and are the most promising subdivisions. They have a broad application space, and the market growth rate is expected to exceed 50% in 2020.

4. Conclusion

Recent years, a series of unfavourable factors such as overcapacity, economic downward pressure, the Sino-US trade war, and coronavirus have affected the AGV company’s market expectations, but the rapid growth of China’s AGV market demand will not slow down, and the industry’s development space can be unlimited.