The listing of Yushu Technology and the opportunities and challenges of China’s robot industry

Hundreds of companies attended the World Robot Conference, which opened in Beijing on Wednesday, as advanced robotics becomes the new frontier of artificial intelligence. On the same day, Unitree, a leading company in humanoid robots in China, was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange. The stock performed extremely violently, gapping short and opening high at the opening, once soaring more than 600% to exceed 1,100 yuan, and then opened higher and moved lower. At the end of the morning, it fell back to 883.87 yuan, with a turnover rate of more than 85% throughout the day.

Despite the decline in gains, Yushu Technology's market value still reaches about US$50 billion. However, in sharp contrast to its hot debut, China's benchmark stock index fell 2% as a whole that day. Technology sector stocks generally suffered heavy selling, and related sectors did not rise accordingly. Yushu Technology's public offering raised approximately US$900 million, and founder Wang Xingxing's book wealth also jumped to more than US$12 billion.

Despite the enthusiastic response from capital markets, this is very much a bet on the future. Yushu Technology admitted in its prospectus that large-scale commercial deployment "still faces uncertainty and there is a risk that progress will not be as good as expected."

At the Hangzhou Robot School, a robot developed based on a Yushu Technology model admitted to visitors that it was "still in its internship period." Zhao Han, the person in charge of the school, told AFP that the school aims to help companies make up for their shortcomings in professional knowledge, provide customized training for robots and issue qualifications to move towards practical applications.

Industry experts point out that there is still a long way to go before robots can respond independently to unpredictable real-world situations. Zhu Tianle, an engineer at the Hangzhou Robotics School, told AFP that training a robot's "brain" is an extremely difficult task, and making robots understand the world remains a global challenge. Lian Jye Su, an analyst at the technology research institute Omdia, emphasized in an interview with AFP that the challenge is far more than just embedding artificial intelligence into robots, and the hardware solutions are also highly complex. He pointed out that if consumers think that the elderly at home can talk to artificial intelligence, it means that robots will soon be able to provide care. The reality is actually very far away from this future. Su Lianjie warned that the high valuations of related companies are based on the premise that robots will eventually become universal equipment. If this fails, it will cause a huge blow to the industry.

Beijing has strongly called for the development of the robot industry in its past two five-year plans in order to cope with labor shortages caused by the demographic crisis. Morningstar stock analyst Li Kangyuxiao told AFP that China's manufacturing supply chain is quite complete, and the focus of the next stage is to prove that robots can perform tasks with economic and practical value. However, in addition to hardware issues, large-scale deployment also requires the collection of massive amounts of real-world physical data. When AFP visited a training institution, it was found that staff were holding game controllers to repeatedly perform single actions such as folding clothes for the robot to imitate. Building a usable model usually requires tens of thousands of hours of operational data.

Unlike most of its peers, Yushu Technology has achieved profitability, but analysts warn that most of its existing sales are one-time sales. A large number of products are sold to universities and scientific research institutes, and the proportion of actual applications in commercial scenarios is extremely low. Yan Kai, a partner at Shanghai Ivy Capital, told Reuters that Yushu Technology's price is driven by political and economic considerations rather than a pure valuation model. William Xin, chairman of Chunshan Pujiang Asset Management, told Reuters that the first-mover advantage helps companies obtain resources and maintain endurance in the early stages of widespread losses in the industry.

China’s strategic layout in this field has also attracted checks and balances from Washington. In July this year, the U.S. Federal Communications Commission (FCC) banned the import of future models of foreign-made humanoid and quadruped robots on the grounds of national security. Previously, the U.S. Department of Defense had included Yushu Technology on the list of military-related companies. Reuters quoted former U.S. defense officials and experts as saying that Yushu Technology’s early robot dog designs drew on open source research funded and publicly published by the U.S. military. Yushu Technology previously stated that its robot products are mainly used in the civilian field.

Major Chinese export companies such as Yushu Technology did not respond to requests for comment from AFP and Reuters regarding the U.S. restrictions. Ethan Qi, an analyst at research firm Counterpoint, pointed out to AFP that China's advantages lie in manufacturing scale and cost, while the United States is stronger in software and cutting-edge research. The industry has generally downplayed the impact of the US ban. Rui Ma, founder of the technology information platform, told AFP that relevant companies are currently busy with technological breakthroughs and scale-up, and overseas markets are not the only focus. Data shows that the U.S. market accounts for only a small part of the revenue of most Chinese companies, while China accounts for more than 90% of the global humanoid robot market. With the listing of Yushu Technology, many Chinese companies such as Yunshenchen Technology, Leju Robot, Mecamander, Xingdong Era and Zhiyuan Robot are also accelerating their listing in the mainland or Hong Kong.