Midea, Kuka Chase Automation Dreams With $1.6 Billion Park

Home appliance giant Midea and its Kuka German robotics unit began building a 10 billion yuan ($1.6 billion) smart manufacturing park in South China, their first major collaboration since establishing a joint venture last week.

Located in the city of Shunde in Guangdong province, the Midea-Kuka Smart Manufacturing Industry Park will cover an area of about 800,000 square meters (198 acres), according to the partners. It will include a smart manufacturing base, offices and product development labs in its attempts to create a value chain for development of smart appliances and devices.

The project is the first collaboration between the pair following announcement of their formation of a joint venture last week to focus on the fast-growing automation business. The 50-50 venture will work to expand the businesses of industrial robots, health care and warehouse automation, and offer customized products for the China market.

“Kuka will help Midea grab more share in the future robots market,” Kuka Chief Marketing Officer Wilfried Eberhardt told Caixin in an interview.

Beijing has been a strong supporter of such collaborations as they encourage traditional manufacturers to move up the value chain by introducing more automation and developing cutting-edge smart products. Whereas China has recently discouraged overseas investment in low-tech areas like real estate and entertainment, it has been much more supportive of such investment in areas like robotics and artificial intelligence.

Already a leader in air conditioners and washing machines, Midea set its sights on the robotics industry with its purchase of a majority of Kuka AG in 2016. Last year, Midea also purchased Israeli automation company Servotronix for $170 million. The launch of the new park is part of Midea’s broader “smart home” strategy of developing home-based products that can, for example, turn themselves on and off as needed without input from a person.

Kuka, the world's leading supplier of auto factory robots and third-largest supplier of basic manufacturing robots, has a plant in Shanghai and has been selling automation equipment in China since 1994. The company is aiming to boost its China sales to 1 billion euros ($1.24 billion) by 2020.

Midea rivals, including Haier and Gree, are also building smart facilities to enhance their production and efficiency of their logistics.

Contact reporter Sun Congying (congyingsun@caixin.com)