Why China’s humanoid robot industry is winning the early market

China's humanoid robots have captured global fascination, especially after showcasing impressive kung fu moves at the annual Spring Festival Gala. Meanwhile, the tech company Honor is gearing up to launch its first humanoid robot at the upcoming Mobile World Congress in Spain. Initially, robotics in China was primarily associated with factory automation as part of the "Made in China 2025" initiative. However, advancements in multimodal AI are now accelerating the development of embodied AI—machines that can autonomously operate in real-world settings. This shift is seen as a solution to labor shortages and a significant contributor to productivity increases. At this nascent stage of humanoid robot development, Chinese companies are outpacing their American counterparts in both speed and production volume. Selina Xu, who leads AI policy for Eric Schmidt's office, highlighted that China benefits from a robust hardware supply chain, largely developed through the electric vehicle sector. This advantage allows Chinese firms to iterate their products much faster than their Western rivals. Notably, Unitree, a leading Chinese player, shipped approximately 36 times more units last year compared to U.S. companies like Figure and Tesla. According to a recent Forbes report, global shipments of humanoid robots totaled just 13,317 units last year, indicating a burgeoning industry expected to nearly double in size each year, potentially reaching 2.6 million units by 2035. However, caution is advised when interpreting these figures, as it's unclear how many of these units constitute commercial sales versus demonstration models, reflecting the industry's early stage. The top manufacturers in terms of projected shipments by 2025 include Chinese firms Agibot and Unitree, followed by UBTech and Leju Robotics, highlighting China's leading position in this field. The recent trend has shifted from mere excitement over demonstrations to a focus on practical applications. Yuli Zhao, chief strategy officer at Galbot, noted an increasing demand for robots that can perform reliably in real-world environments. This demand is further propelled by Chinese policies favoring automation upgrades, coupled with a manufacturing ecosystem that enables rapid product iterations. Investment in humanoid startups is also surging, with Unitree achieving a valuation of around $3 billion following its Series C funding round, aiming for a potential IPO valuation of $7 billion. Galbot has raised over $300 million, further solidifying its valuation at $3 billion, making it one of the largest funding rounds in China's humanoid robotics sector. While U.S. firms are also moving towards real-world deployments, their ambitious targets, such as Foundation's plan to construct 50,000 humanoid robots by 2027, reflect a competitive landscape. China, however, is diversifying its offerings across both affordable mass-market models and premium applications, rapidly penetrating industrial, consumer, and rehabilitation sectors. As for AI systems, the standing of Chinese humanoid firms is still developing. The industry is exploring vision-language-action models and 'world models', but these technologies remain in their infancy. Nvidia currently leads the sector with its comprehensive humanoid software stack, and many Chinese startups rely on Nvidia’s Orin chips, although domestic chip manufacturers are also working on alternatives. Nonetheless, challenges persist, particularly in enabling robots to predict future physical states in unpredictable environments. Unlike large language models that utilize vast internet data for training, humanoid robotics firms must rely on simulation environments for synthetic data, which leaves a critical need for real-world data gathering. Safety poses another significant hurdle; a single high-profile incident could lead to public backlash. With this in mind, the industry is likely to see increasing regulations as it matures. Zhao believes that initial demand for humanoids will predominantly arise in controlled environments such as industrial manufacturing and retail, where repetitive tasks and clear processes create ideal conditions for robots to add value. Japan is also making strides in humanoid robotics, targeting mass production by 2027. Known for its innovative projects like Honda's Asimo, Japan aims to leverage its strong robotics supply chain amid a growing labor shortage and a cultural attitude that views robots positively. Hyundai's Boston Dynamics is set to introduce a new Atlas humanoid for factory applications by 2028, with plans to manufacture up to 30,000 units annually in the U.S. However, China's unique convergence of government policy, industrial strategy, labor shortages, and substantial private investment is propelling its humanoid robotics sector at an unprecedented pace. Zhao emphasizes that China's approach provides a significant speed-to-scale advantage, allowing companies to swiftly move from prototypes to real-world implementations, fostering rapid learning and iteration.