“The Chinese robotics sector is behind in R&D capabilities and expertise,” said Harrison Po, consultant for Topology Research Institute (TRI), a division of TrendForce. “However, dedicated domestic suppliers have emerged and the country continues to import industrial robots from major foreign manufacturers in order to keep the rising labor costs in check.”

Robotics is one of the ten key industries chosen for state-sponsored development under the policy plan Made in China 2025. Therefore, smart robots will be instrumental in the transformation of China’s manufacturing sector in the next 10 years.

Shrinking workforce and rising labor costs have lifted the global demands for robots for manufacturing and service applications. Across the world, numerous industrial powers are now undertaking robotics-related initiatives, such as Germany’s Industry 4.0, Japan’s New Strategy for Robots and United States’ Advanced Manufacturing Partnership. These programs, along with Made in China 2025, show these countries have made the development of smart robots a vital mission within their respective economic policies.

Germany’s Industry 4.0, for example, aims to keep manufacturing in Germany by encouraging fabrication plants to incorporate robots of different applications as well as other technologies. A small group of senior technicians can oversee the operation of a precision manufacturing fab that employs the Internet of Things, artificial intelligence and cloud computing. The improved flexibility and efficiency under Industry 4.0 would slash costs, preserve industries and ensure steady economic growth.

Aside from manufacturing, a number of IT powerhouses and tech startups are also involved in the building of intelligent service robots. The rapid advances in artificial intelligence and cloud computing benefit the development of assistive robots that can perform simple interactions with humans.

The Japanese automobile giant Honda, for instance, has already launched the bipedal humanoid robot known as ASIMO. Other recent, well-publicized humanoid robots in Japan include Softbank’s Pepper, a small service robot that can read human emotions; and Toshiba’s ChihiraAico, a life-like robot currently working as a receptionist at the Mitsukoshi Nihombashi department store in Tokyo. The Japanese government furthermore is actively promoting the adoption of nursing care robots as a way to address the shortage of caregivers in the country.

According to Po, the robotics industry will continue to develop and sell smart robots that feature the Internet of things and cloud computing. Industry participants will include both major robot manufacturers and startups. TrendForce projects the scale of the smart robot market, encompassing both manufacturing and service sectors, will grow at a CAGR of 20% over the period of 2015~2020.