ProMat 2023 – The Chinese are coming

 About this time each year, my colleague Roberto Michel begins to put together Modern’s annual list of the Top 20 System Suppliers world wide. It’s purely a numbers game: The companies on the list are ranked by their annual sales and not whether or not we think they’re a great organization.

For the past three or four years, we’ve been contacted by a new and unfamiliar category of solution providers who claim that their annual sales numbers qualify them for inclusion on the list: Chinese automation providers and system integrators. More to the point, Chinese suppliers who claim hundreds of millions of dollars in annual revenue, enough to put them on the list. When we dig a little deeper, they aren’t operating yet in North America or even Europe, although they are eyeing both markets. Instead, they’re operating in China and other parts of Asia, the Middle East and Africa. It’s intriguing to think that there is a materials handling world out there operating almost as a second universe into which we have little visibility.

With that in mind, I was anxious to spend the last day of ProMat with Joseph Wang of the BeJaguar Group, an international exhibition company,  and meet with 3 of the 18 Chinese companies he brought to Chicago. The goal was to learn a little about what each is bringing to the U.S. market. They were Hwachang, VisionNav Robotics and Galaxis Technology.

Hwachang’s roots in shuttle technology go back to a paper released by the company’s founder in 2002 that examined decoupling vertical movement from horizontal movement in automated storage and retrieval solutions, according to Sky Chen, the company’s general manager. Hwachang received its first patent in China in 2007, and completed its first project for a book publisher’s distribution center in 2008. Chen says that since then, Hwachang shuttles have made hundreds of thousands of storage and retrieval moves without breaking down. “Reliability is critical,” he says. “It has to be durable.”

While it’s business is primarily in China, Hwachang is expanding globally and has installed 1 shuttle system in South Korea, another in a 3PL in Canada and a 3rd system in Spain for a sports fashion retailer. Last month, it was in the process of completing its registration to operate in the U.S., with headquarters in Atlanta. The plan is to work through small-to-mid-size system integrators to support their global sales strategy. “We can leverage 20 years of research into shuttle technology and the China manufacturing ecosystem,” says Chen. “We are confident we can deliver highly-reliable systems to this market.”

Of the three companies I met with, VisionNav Robotics, a manufacturer of autonomous lift trucks and tuggers, is perhaps the furtherst along in the U.S. market. The company has also brought on Tim Meyer, an experienced lift truck executive with previous roles at Toyota, as the senior director of sales and business development. Meyer told me the company has been in business for 7 years, has 500 employees and 2,000 units operating in the field, primarily in the Pacific Rim. VisionNav recently raised $110 million in venture capital, and, Meyer says, just landed its first North American purchase order. Its North American headquarters will be in Atlanta. “We’re hiring,” Meyer says.

Like Hwachang, Meyer sees the greatest opportunity in serving small-to-mid-size customers. Initially, he envisions direct sales, with VisionNav providing its own support, but in the future expanding to dealer sales with trained dealer technicians to provide support.

Autonomous lift trucks are an emerging technology; VisionNav is addressing picking and placing of pallets on conveyors, in static rack and drive through rack; and stacking and destacking pallets. In China, the company’s vehicles are loading and unloading sea crates as well as side loading and unloading of trailers. “Loading and unloading trailers is in development,” Meyer says.

My last stop was at Galaxis. It was the simplest booth, demonstrating one product – an AMR for pallet transport. But it had the most extensive product portfolio, with everything from AS/RS systems to shuttles to robots and sortation systems. Established in China in 2014, the company, according to Steven Bian, Assistant Director of Institute for Artificial Intelligence, has put systems in 1,000 DCs for 300 customers in China, supported by 1,000 employees. Galaxis began its global expansion in 2019 and now has systems in operation in Russia, Singapore, Dubai and Hamburg. It just completed its first U.S. system in San Francisco. Among its customer base are facilities for the distribution of medical supplies, 3rd party logistics providers, a battery factory and storage systems for libraries.

While Galaxis is a system integrator in China, working directly with customers, Bian says the strategy for the U.S. is to establish relationships with system integrators. “While we are new to this market, we believe we have very creative solutions and can be very price competitive,” he says.

My takeaway from a few hours spent interviewing these new entrants to the market is that more than anything, there’s a world of materials handling going on outside of North America and Western Europe that we rarely see or hear about. If the three vendors I met with are representative of what’s going on in the Chinese market, they have extensive product portfolios and experience in their traditional markets. Finding U.S. partners to integrate and service their solutions, while also over-coming the traditional barriers to entry that new players face will be their challenge. That along with getting those first reference installations up and running.