70% of Serving Robots Are Made in China... Government Subsidies Set the Stage

Last October, visitors are watching a serving robot at 'IFS Franchise Seoul' held at COEX in Gangnam-gu, Seoul.

Recently, serving robots are frequently seen in restaurants. They efficiently handle everything from seating guidance to food serving and errands. As they have become popular among self-employed business owners struggling to find workers, even second-hand trading has become active. However, a significant number of serving robots operating domestically are 'Made in China.' Although some startups are attempting to localize serving robots, they are gradually losing market share due to the low-price competition from Chinese products. Some consumers worry that if Chinese products dominate the Korean market, various distribution market information, including personal data, might be leaked overseas.

The Growing Serving Robot Market... Chinese Products Already Occupy 70%

The places where serving robots are most widely used in Korea are restaurants, cafes, and other food service establishments. As of the end of last year, the number of serving robots supplied by three major domestic serving robot distributors was about 5,000 units. Considering that there are 700,000 food service businesses in Korea, the penetration rate (0.71%) is still at a nascent stage.

Although it is an early market with immense potential, Chinese products have already secured a high market share and gained a competitive edge. The Korea Robot Industry Association estimates that 70% of domestic serving robots are Chinese-made. Generally, Korean serving robot distributors with store automation solutions import products from Chinese robot companies such as Pudu Robotics and Keenon Robotics. Among domestic companies, LG Electronics and KT manufacture serving robots but lag significantly in market share.

Chinese Robots’ Low-Price Offensive... Even the Korean Government Indirectly Supports Chinese Companies with Subsidies

China was able to rapidly dominate the Korean market thanks to full government support. In 2015, China announced the 'Made in China 2025' plan, designating robots as one of the ten core industries. Since then, the Chinese government has provided massive subsidies to robot manufacturers and buyers. In cities like Shanghai and Beijing, robot cluster resident companies receive a 10% refund on investment funds and subsidies amounting to 20% of sales.

In Korea, robot manufacturers receive no significant subsidies even if they produce and sell serving robots. The Ministry of SMEs and Startups provides subsidies covering 70% of the supply price to buyers of serving robots through the 'Smart Store Technology Diffusion Project,' but manufacturers do not benefit. Subsidies are given even when buyers import Chinese serving robots. In effect, the Korean government is indirectly funneling money to Chinese robot manufacturers.

The price of Chinese serving robots ranges from 20 million to 30 million KRW. They are about 20% cheaper than Korean products. Despite the flood of inexpensive Chinese robots entering the Korean market, there are no effective protective measures. The United States protects its domestic industry by imposing a 25% tariff on Chinese robots. A representative from the Korea Robot Industry Association said, "Producing a single robot requires enormous initial investment in time and manpower," adding, "Without protective and nurturing policies for domestic robots, it will be difficult to invest due to the high risks."

Still an Early Market... Both Government and Industry Must Make Efforts

The industry has requested that the government provide more groundbreaking support for the robot industry. Especially for serving robots, which are in the early stages of the market and closely related to daily life, government support has a significant impact on both the industry and consumers, so active involvement is necessary. A representative from a domestic serving robot distributor said, "Of course, we want to use domestic products, but there is a price burden, and China is still leading technologically, so it is an unavoidable aspect."

There is also an opinion that companies should avoid cutthroat competition and focus on growing the market itself. Ham Pan-sik, CEO of VD Company, which holds the number one market share in the domestic serving robot market, said, "Robot manufacturers will invest money only if there is a market to sell the robots they produce," adding, "We should avoid destructive competition among companies and foster healthy competition to grow the market together."

This content was produced with the assistance of AI translation services.