To cool down China’s overheated robotics industry, go back to the basics – TechCrunch

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I’ve been turbulent After a few years, China’s manufacturing industry is now on a recovery trend. Once an industry characterized by a low-end manufacturing industry and a concentrated workforce, it has transformed into a technology-backed, high-end manufacturing hub.

Automation and robotics have the potential to modernize China’s manufacturing industry while improving labor efficiency and alleviating labor shortages. As expected, businesses and investors want to take advantage of this trend.

Robotics has been in the spotlight for some time, but its popularity has skyrocketed in the last few years. According to market research firm statistics, the sector will record $ 6 billion in investment and funding in 2021 and is expected to double in size in five years.

However, it is unclear when these investments will bring reasonable returns. Robotics is experiencing the biggest bubble in China’s venture capital industry, flooded with speculation and overrated companies. Compared to similar investment bubbles over the last decade, this can be large, long-lived and more devastating than ever.

Price-earnings ratios no longer apply to many listed companies, and the market-to-sales ratio is out of the window. He is yellow

However, “bust” can be completely avoided. Investors and businesses need to go back to the basics of business and resist the industry’s typical impatience with exits on both sides of the negotiating table.

Understand the market

Due to the influx of capital investment, the Chinese market is partially and periodically overheating. Many investors involved in this investment stream are replicating the software investment model, as many institutions that have invested in Internet startups are also actively entering the field.

So what’s behind this surge? Everything from the policies of the Chinese government to the launch of the Science and Technology Innovation Commission, which has opened a convenient exit channel. Further exacerbating the surge is the driving force for upgrading China’s industrial structure.

However, it is important that investors do not apply software investment rules to industrial technology investments. For one thing, the investment in the end period is different. Investment in robotics and other industrial technologies is relatively long-term compared to Internet companies. Internet companies can publish in 3-5 years after investment, but industrial technology companies can take more than twice as long to publish.

To cool down China’s overheated robotics industry, go back to the basics – TechCrunch Source link To cool down China’s overheated robotics industry, go back to the basics – TechCrunch

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