A self-sufficiency story… It is well-known that China is seeking to become more sufficient in areas from semiconductors to electric vehicles. However, for this to become a reality, manufacturers need to become more automated. And that means a lot more spending on automation equipment like robots, motion controllers, and inverters. That’s the long-term argument for China’s automation industry and the focus of this report, but the short term is just as positive. The pandemic has pushed manufacturers to adjust their supply chains and buy more from local vendors. That means domestic automation leaders are particularly well-placed, given their competitive products, high R&D spend, and faster response times to local customer needs. …and a market share gain story. China has a lot of catching up to do to match and beat the latest technology by global peers that currently dominate the industrial automation industry. We think domestic companies will benefit as the local industry is set to grow at 10% in 2021e and

5% in 2022e, driven by the continued recovery in China’s industrial sector and the pick-up in automation adoption. In particular, we see solid demand from industries like semiconductors and renewable energy.