China robotics: Rise of the machines

"Pepper, let's have some tea!" an interviewer suggests. His companion - the humanoid robot Pepper, designed by Japanese firm Aldebaran Robotics - swivels its head to look up at him. "I don't know if you realize, but I can't drink tea. I would break," Pepper responds.

With its self-deprecating personality, large round eyes, and perpetually grinning mouth, Pepper is designed to convey gentleness and simulate human emotions - the opposite of decades of science-fiction images of robots as cold mechanical men. When Alibaba Group and Foxconn Technology Group announced a joint investment of JPY29 billion ($233 million) in Aldebaran's parent, SoftBank Robotics Holding Corp, one of their goals was to bring Pepper to world markets as a helper for the elderly, families and businesses.

While photogenic robots such as Pepper may warm the hearts of ordinary consumers, it and its brethren such as ASIMO represent just the tip of the robotics iceberg. A wave of start-ups, many with VC backing, is taking advantage of recent advances in hardware and software to design robots for use in a wide variety of settings. Despite largely flying under consumers' radar, these companies are likely to end up reshaping the systems that we take for granted.

Big in China?

China's robotics sector is still relatively small, but investor interest has been picking up pace recently. AVCJ Research shows that of the $149 million deployed across 20 total deals in the segment since 2010, $107 million has gone into five transactions this year alone.

Ninebot accounts for three quarters of the 2015 total. In April, WestSummit Capital, Shunwei Capital Partners, and Sequoia Capital backed the automated scooter maker, which went on to buy US-based rival Segway Personal Transport. Raymond Yang, WestSummit's managing partner, said at the time that the firm sees great promise in the robotics sector. He still believes that demographic shifts will make the population ever more accepting of robotic assistance.

"Particularly in China, there's a growing middle class, which means these kinds of things have become much more affordable," says Yang. "Also, people now live at a very fast pace, so they would rather have a machine to take care of their home or family. The demand is there."

Ninebot is one of numerous Chinese start-ups bringing robotics technology to unlikely applications. Another is Hong Kong-based Insight Robotics, which manufactures automated fire detection stations for forestry departments, and also creates agricultural monitoring tools. The company was incubated by the Hong Kong Science & Technology Parks Corporation and then raised a $2 million Series A round in November 2014 from Bright Success Capital, Caldera Pacific Capital Partners and Radiant Venture Capital.

The company's goal is to identify jobs that machines are naturally better at. Fire detection is an obvious choice, since machines do not tire or become distracted. Insight Robotics' devices can free human labor to do things that people are better at, such as making decisions on how to respond to a fire.

"The robot doesn't know if it's a good fire, or a bad fire, or an intentional fire, or an out of control fire," says Erica Young, Insight Robotics' chief product officer. "But when we look at it, we can say that's a controlled burn, that's intentional. It's not that every fire needs to be put out, it's that we need to be aware of every fire and then we can make an intelligent decision about what to do about it."

It's used in hospitals, it's used in factories, it's used in industrial applications where it's too dangerous to send a man in. All that relies on core components and those have been around for a long time. So when we put that together into a home application, it's just extracting those technologies and components and putting it in a form that addresses the current need - Jenny Lee

Robotics start-ups are targeting the business sector as well. Simbe Robotics, a US-founded company based in Shenzhen, is currently developing an autonomous robot to manage in-store inventory work for supermarkets and other consumer goods stores. The company has been supported by Shenzhen-based accelerator HAX, which has other robotics ventures such as Petronics, which makes self-driving toys for cats.

The high volume of robotics start-ups under development would not be possible without recent technological advances. In particular, software has been critically important in driving the creation of new and creative uses for hardware designs that are, in many cases, not that different than robotics that have been used for years in military or industrial capacities.

"This is not a brand new area. It's been in development for many years. It's just that it hasn't made it into the home," says Jenny Lee, managing partner at GGV Capital. "It's used in hospitals, it's used in factories, it's used in industrial applications where it's too dangerous to send a man in. All that relies on core components and those have been around for a long time. So when we put that together into a home application, it's just extracting those technologies and components and putting it in a form that addresses the current need."

Essential advances

Visual processing has been an essential part of robotic software development. Machines that operate independently need to be able to understand the world around them, and for companies like Insight Robotics, which builds devices that rely on visual scanning, it is especially pressing that a robot knows what it is looking at. Insight Robotics' software allows its automated watchtowers to look for clues of fires in progress.

Robots that move on their own need another part of the toolkit: mapping. Without understanding the shape of the space that it is operating in, a robot's functionality is constrained. IRobot's popular Roomba series of self-propelled vacuum cleaners is a good example of the advances in this space: early incarnations would build an internal model of a room by recording the positions of obstacles, but more recent versions use a radar-like technology to help the unit create its map.

Growing storage capacities have also increased functionality. Internal storage allows robots to learn and recall previous experiences rather than being limited to their initial programming, which can deepen their understanding of their environment and their tasks. Machines could even learn new tasks, a job made easier when paired with visual processing advances.

"If you had a robot helper, and you had to use a screen interface to explain to it how you liked your laundry folded, that would be a real pain," says Insight Robotics' Young. "But if you could say, ‘Watch me, this is how I fold my laundry,' and you have this collaborative learning interaction, then it's much more natural."

Beyond increased onboard storage, robot intelligence can be further enhanced through internet connectivity. Being connected to the internet means that robots are not restricted to what they learn on their own, but can download updates or search for solutions to a problem that they cannot solve independently.

While technological innovation is limited only by the imagination and can strike at any time, business success has to wait for when the market is ready. Hugh Mason, a co-founder of Singapore-based incubator JFDI.Asia, observes that even Apple could not make a go of its first attempt at tablet computers in the 1980s.

"The Apple Newton had more or less the functionality of an iPad, but people weren't ready for it. It was too much of a leap to have a portable office in your hand that was paperless," says Mason. "But when the iPad launched, the market was ripe, and we completely re-conceptualized how we would work."

Robotics manufacturers targeting the China market may need to be prepared for a similar challenge when it comes to introducing their products. But in many ways the market could be ready for robots in a way that it was not ready for other innovations that hit before their time.

One factor holding back adoption of automation in industry has been China's low cost of labor. But with wages rising, manufacturers are increasingly open to investing in machines that will never demand a raise. Service positions are coming under similar pressure; as robots become capable of tasks that previously required humans, employers may become more willing to consider replacing temperamental employees.

"With humans, you have a working attitude, you have your working skill, you have your working hours; you may get sick, you may have a headache that day, and you may pass that emotion to your customers," says WestSummit's Yang. "A machine will not have this kind of problem."

Another positive factor is the Chinese government's willingness to adopt new technology in its own operations. Insight's forestry monitors are a case study in the government's ability to move swiftly to encourage positive technological developments.

"In my opinion, the Chinese government is a lot more progressive in terms of testing and adopting new technologies for these types of applications, and I think it's in part because they don't have to answer to anyone," says Insight Robotics' Young.

Of course, the government's lack of accountability also means that its support cannot be counted on. A bureaucrat that approved the purchase of a start-up's technology might be replaced by someone with a less favorable view of the company, while job cuts in certain areas could create local tensions.

Price is another issue that could slow adoption rates. Replacing expensive human labor might be an attractive proposition, but faced with a prohibitive price tag, employers are still likely to balk and stick with methods that they know and understand. Start-ups will have to find ways to economize on cost.

Cross-border angle

Another limiting factor has to do with cultural difference between the US and China; Chinese consumers are more reluctant, overall, than their US counterparts to pick up an unproven piece of technology. This reluctance may be due to China's comparatively recent transition into a consumer society. Whatever the cause, though, HAX General Partner Benjamin Joffe says it means greater challenges for technology developers.

Each robot has its own hardware, and where do you make that? In China. Why? Because it is cheaper, faster. And software-wise, where would it be strong? Most likely in the US, certainly for the most sophisticated ones - Raymond Yang

"There's not as many early adopters as there are in the US, where people are willing to buy things even if they don't work perfectly, just to be the first to have something cool," he explains.

One major opportunity in this space is cross-border collaboration. WestSummit is particularly enthusiastic about the possibilities here; rather than seeing the US and China in competition over hardware, the company wants to see Chinese and US companies sharing their particular strengths.

"Each robot has its own hardware, and where do you make that? In China. Why? Because it is cheaper, faster," says Yang. "And software-wise, where would it be strong? Most likely in the US, certainly for the most sophisticated ones."

This type of collaboration could be a major source of robotics innovation, with Chinese-made hardware interacting with US-developed software. Brad Bogolea, the co-founder of HAX-supported Simbe, believes the exploding diversity in robotics applications is only the beginning of a wave of innovation that will see teh technology grow far beyond their current limitations.

"The state of robotics today reminds me of PCs in the early 1990s, or mobile in the early part of the last decade," he says. "We are starting to see more and more applications, and more and more platformization. When someone wants to build a robot today, they don't necessarily have to build everything themselves."

Bogolea believes that tools like the Robotic Operating System (ROS), a platform for building robotics applications, can help robots expand beyond the specialized-use devices that are the current model.

Pepper could be an early sign of Bogolea's expectations being fulfilled. The robot has been developed with an open model in mind, and its designers hope that developers will expand its capabilities beyond what even they thought possible. Thanks to the efforts of today's robotics entrepreneurs, future generations might see robots become as ubiquitous as cell phones, and just as useful.

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• Topics
• Technology
• Greater China
• North America
• Venture
• Technology
• TMT
• China
• Venture
• USA
• GGV Capital
• WestSummit Capital
• JFDI.Asia
• SOS Ventures