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Riya Bhatia


> At the 2023 World Robot Conference, it was shown that China's use of robots in manufacturing has significantly increased, with "robot density" going up to 392 from just 68 in 2016. This increase indicates that robots are taking over many jobs previously done by people. China is using robots to address challenges like its aging population, to boost the quality of its products, to grow its exports, and to deal with trade pressures from the US.

In Dongguan, a city known for its intense industrial activity in southern China, the traditional manufacturing environment is undergoing a significant change. The once common sight of noisy factories filled with rows of workers, immersed in the smell of smoke and sweat, is becoming rare.

Today, the manufacturing floors that used to employ hundreds of thousands of workers have been replaced by industrial robots. These robots, capable of performing multiple functions, have taken over the tasks of several factory departments. As a result, only a small team of mechanics and engineers is needed to manage these automated systems.

A long time ago, factories started using robots because it helped them save money by not spending as much on paying workers. Banks were happy to lend money to buy these high-tech robots because it meant businesses didn't need to use their own money all at once.

#### Demographic Challenges and Government Response

Meanwhile, the government changed the rules that used to limit families to only one child, hoping people would start having more kids. But, they discovered that young couples didn't really want a second child, and many women didn't want to have children at all. In India, the situation is different because there are many young people.

#### Addressing Labor Shortages with Technology

In China, the number of people who are at the right age to work, meaning those between 16 and 59, is decreasing. There were 875.6 million people in this age group in 2022, down from 896.4 million in 2019. At the same time, the number of people older than 65 went up to 209.78 million from 176 million in 2019.

This drop in the working-age population, partly due to the one-child policy, is causing a shortage of workers in industries. China is getting older, and soon there won't be enough people to work. The country is looking at using humanoid robots as a solution. The government's technology ministry has made a plan to start mass-producing these robots by 2025. They want to create new technologies and make sure there are enough important parts for these robots to help with the worker shortage.

#### Expanding Robot Use Across Sectors

By 2027, humanoid robots are expected to become a key driver of economic growth in China. The country plans to significantly enhance robot technology, establish a secure and dependable supply chain for robot manufacturing, build an industry that can compete globally, and achieve a level of overall capability that matches the best in the world.

In 2021, China surpassed the United States to rank as the fifth most robot-intensive country globally, as per the World Robotics 2022 report.

The government has urged sectors like healthcare, domestic services, farming, and logistics to increase their use of humanoid robots. These robots are seen as the next big technological breakthrough, similar to the impact of computers, smartphones, and electric vehicles. They are expected to drastically alter both the production processes and daily life, potentially changing the global industrial landscape.


At the 2023 World Robot Conference, it was shown that China's use of robots in manufacturing has significantly increased, with "robot density" going up to 392 from just 68 in 2016. This increase indicates that robots are taking over many jobs previously done by people. China is using robots to address challenges like its aging population, to boost the quality of its products, to grow its exports, and to deal with trade pressures from the US.

China's Robot Revolution: Tackling Quality and Labor Shortages


> When big companies join forces, it doesn't always lead to success in the stock market. In fact, studies show that mergers where both companies are similar in size often result in underperforming stocks.

These kinds of mergers, called "mergers of equals," usually happen within the same industry. Think finance, energy, consumer goods, and healthcare. But despite some recent buzz about mergers, overall, there haven't been as many deals happening lately. Experts blame this on a slower US economy and uncertainty about interest rates and regulations.

Now, you might think that merging with a similar-sized company is less risky for management. But that's not always true. Sometimes these deals take a long time to go through, like the planned merger of JetBlue Airways and Spirit Airlines. And over the past two decades, statistics show that the stock prices of companies making these kinds of deals tend to fall behind their industry peers by more than 7% over the next two years.

So why do companies still go for these mergers? Well, they might hope for benefits like better pricing power, chances to sell more products, or cost savings. But here's the thing: most of these mergers involve medium or small-sized companies, not the big players. And it's more likely that a company with lower-quality performance will go for a merger of equals than a top-notch performer.

The stock market's reaction to these mergers in the first week can tell us a lot. If it's negative, the merged company's stock tends to keep underperforming compared to its industry peers for the next two years. But if the market reacts positively, there's no guarantee of extra returns.

For companies thinking about merging or investors considering buying the acquirer's shares, there are three key things to keep in mind. First, high-quality companies shouldn't merge as often because they might lose their edge. Second, companies with shaky finances tend to do worse after mergers. And third, if a company is too different from its peers, the promised benefits of merging might not pan out.

In short, merging with a similar-sized company might not be as great as it seems. It's important for companies and investors to look closely at the risks before jumping into these deals.


Understanding the trend of combined company stock underperformance post-deals. Insights and perspectives on this phenomenon and its implications for investors.

Showing posts from opinion category

China's Robot Revolution: Tackling Quality and Labor Shortages

Decoding the Stock Market Impact of 'Mergers of Equals’