The Great Expansion: Will Chinese Warehouse Automation Vendors Dominate The World?

In recent years, Chinese automation vendors have begun to look beyond their domestic market, driven by slowing economic growth and increasing competition within China. Margins in their home market are being squeezed, prompting companies to seek new opportunities in regions like Europe, North America, and the Middle East. By expanding into these markets, Chinese automation vendors are looking to capitalize on higher margins, while offering competitive solutions that can meet the needs of cost-sensitive buyers.

As these companies expand globally, they present both opportunities and challenges for established Western vendors. While their competitive pricing may lead to increased pressure on margins for Western brands, it also provides a broader range of automation solutions for customers. Furthermore, the increasing presence of Chinese vendors in international markets has sparked a conversation about how Western companies can differentiate themselves in ways other than price.

What’s led to the Great Expansion?

Over the past ten years, multiple Chinese mobile robot vendors have successfully expanded out of China, such as Hai Robotics, Geek Plus, and Hikrobot. However, in recent years we’ve witnessed the expansion of fixed automation vendors such as Wayzim, KENGIC, and BlueSword. Their growing influence has become particularly evident at major warehouse automation tradeshows like Logimat, MODEX, and ProMAT, where Chinese companies have had a strong presence. At MODEX 2024, for example, over 100 Chinese vendors participated, accounting for more than 9% of the total exhibitors, up from less than 3% the previous year.

The primary reason Chinese fixed automation vendors remained largely absent from international markets was huge domestic demand, which had been surging at an extraordinary pace until recently. The rapid expansion of China’s e-commerce sector and its accompanying express parcel delivery infrastructure fueled a massive wave of investments in warehouse automation. Additionally, the booming new energy vehicle (NEV) industry drove the development of numerous greenfield production sites, each requiring advanced logistics solutions.

Since 2022, automation investments have slowed significantly, driven by China's weakened economic performance. The housing crisis, sparked by the collapse of Evergrande, has dampened consumer confidence, leading to a decline in fulfillment and sortation capacity expansions. Simultaneously, the past decade has seen a surge in Chinese automation vendors, and with demand now softening competition has intensified. As a result, companies are being forced to cut margins to stay competitive, with many, including KENGIC, operating at a net loss.

As a result, many Chinese automation vendors, particularly those in the fixed automation sector, are increasingly looking to expand beyond China. In fact, an analysis of 18 leading Chinese fixed automation vendors (featured in our Warehouse Automation – 2024 report) revealed that geographic expansion is a central component of their growth strategy, ranking as the second most cited initiative after entering the NEV industry.

Expansion Plans: How Chinese companies plan to expand into Europe and North America

Chinese vendors frequently cite Belt & Road Initiative (BRI) countries as key targets for expansion. Companies like Wayzim and BlueSword highlight this strategy in their annual reports. However, their actual expansion patterns appear more sporadic and opportunistic. While Wayzim references the BRI in its plans, many of the countries where it has established sales offices — such as the UK — are not affiliated with the initiative.

That said, certain countries serve as strategic gateways for expansion. Hungary, for instance, has become a hub for Chinese companies entering Europe. As the first European nation to sign onto the BRI, Hungary is aligning itself more closely with Eastern markets, making it an attractive entry point for Chinese firms.

One of the primary challenges facing Chinese vendors in Western markets, particularly Europe, is compliance with safety standards. Mobile robot manufacturers like Hai Robotics and Geek Plus have already secured CE certification, a crucial requirement for European market entry. However, many fixed automation vendors still face hurdles in meeting these regulatory standards. For example, Wayzim recently obtained CE certification for its 3D scanner and singulator, yet these products collectively account for less than 1% of its total revenue — highlighting the gap between compliance efforts and its core business.

Due to their relatively weaker brand recognition, we expect Chinese OEMs to increasingly pursue partnerships with established system integrators to enhance credibility and market access. HAI Robotics has excelled in this approach, frequently appearing at trade shows alongside system integrators that highlight their robotic solutions. The key competitive edge for Chinese OEMs lies in their lower cost base, giving them a pricing advantage over Western competitors. However, when it comes to integration, software, and service, their advantage is far less pronounced, making strategic collaborations even more critical for market expansion.

Geopolitical headwinds for Chinese automation vendors

Chinese warehouse automation vendors expanding into Europe and North America face several geopolitical headwinds that could hinder their growth prospects. Tariffs and trade barriers are among the most immediate concerns. In recent years, both Europe and the US have imposed various tariffs on Chinese goods, including technology and automation equipment. While some tariffs have been adjusted or removed, the potential for new or renewed tariffs remains a significant risk. These trade barriers could increase the cost of Chinese automation products, making them less competitive in markets already highly sensitive to price.

In addition to trade barriers, rising geopolitical tensions between China and Western countries could have a broader impact on business relationships. With increasing scrutiny of Chinese technology companies, especially in the wake of security concerns around data privacy and intellectual property, Chinese vendors may face growing resistance from local governments, industries, and consumers. Regulatory scrutiny in Europe and North America is likely to intensify as concerns about foreign influence and cybersecurity risks come to the forefront. These tensions could result in delays, compliance challenges, and a more complex regulatory environment for Chinese automation firms attempting to establish a foothold.

Moreover, the global landscape is increasingly defined by strategic alliances and economic blocs that favor domestic over foreign investments. For example, Europe’s push for technological sovereignty and efforts to reduce dependence on non-EU companies may lead to protectionist policies that favor local vendors. Similarly, in North America the push for reshoring and bolstering domestic manufacturing capabilities could prompt governments to offer incentives and protection to local companies while restricting foreign competition. In this context, Chinese vendors may need to adapt their strategies and build partnerships with local firms to navigate these geopolitical headwinds effectively.

What does this mean for Western vendors?

Despite geopolitical challenges, we anticipate continued momentum from Chinese automation vendors expanding into Europe and North America. Recognizing this as the new market reality will enable companies to develop strategies that maintain competitiveness without resorting to price wars. The crucial question remains: how can Western vendors set themselves apart and sustain their competitive edge? We’ve identified three key strategies that Western vendors can adopt to remain competitive in this evolving landscape:

1) Partnering with Chinese vendors

Many European and US-based system integrators have found success by collaborating with Chinese vendors rather than competing directly. Dematic’s partnership with Quicktron and Hy-Tek’s collaboration with HAI Robotics are prime examples. These alliances allow local integrators to adapt Chinese technologies for their respective markets, offering the best of both worlds: cost-effective solutions from Chinese vendors combined with localized expertise in implementation and service.

2) Competing on quality and brand trust

For Western vendors choosing not to partner with Chinese companies, brand strength remains a powerful differentiator. Established Western brands have built long-standing reputations for quality, reliability, and innovation — factors that many customers in Europe and North America still prioritize. By reinforcing their commitment to premium solutions, rigorous safety standards, and exceptional service, Western vendors can continue to attract customers who value trust and performance over cost alone.

3) Moving up the value chain

As Chinese vendors develop more advanced fixed automation solutions at lower price points, Western automation companies may find greater success by shifting up the value chain. Instead of competing on hardware, they can focus on areas where they offer unique value, such as:

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With Chinese vendors benefiting from lower production costs, price-based competition will become increasingly difficult for Western firms. Instead, by prioritizing value-added services, customization, and high-touch customer support, Western vendors can carve out a sustainable competitive edge in an evolving automation market.

Final thoughts

As Chinese vendors expand into new global markets, the competitive landscape for automation solutions is set to evolve. This shift also presents opportunities for collaboration, innovation, and growth for both Chinese and international companies. By leveraging their respective strengths — whether it's the cost-effectiveness of Chinese solutions or the trusted brand reputation of established vendors — both sides can find ways to thrive in an increasingly interconnected market.

Author: Rowan Stott

Our Warehouse Automation 2024 report explores these topics in much greater depth, offering insights into how vendors can navigate this evolving market landscape and maintain their competitive advantage. Furthermore, the report also profiles the leading Chinese vendors. Visit our website to download a brochure. Alternatively, please reach out to [email protected].