Chinese RPA (Robot Process Automation) startups were off to a good start in 2020 amid coronavirus fears.
Last week on March 16, China’s BotTime intelligent RPA developer Encootech raised $30 million in series B financing, led by Sequoia Capital China and joined by GSR Ventures and Future Capital. The total investment amount raised by the startup born in 2017 now exceeds $45 million.
Just three weeks earlier, “the Chinese UiPath” Laiye Technology also announced their completion of a Series C round totalling $42 million, making the company one of the most funded RPA startups in China.
A total of $70 million in investments that these two startups received collectively is not a small amount given that the coronavirus epidemic has hit financial markets hard, ushering in a capital winter. According to Preqin, Chinese venture capital funding plummeted by 61.3% in the first two months of 2020 compared to last year, with only $1.79 billion invested and 168 deals completed. As most Chinese tech startups are experiencing a slowdown in their fundraising pace, how could the RPA industry get insulated from the inevitable recession?
RPA, or robot process automation, is a software using Artificial Intelligence (AI) bots that automate regular operations based on rules, such as repeatedly reading and sending emails, carrying out tedious calculations, processing files and reports in large quantities and completing file inspections, etc. In short, RPA bots can learn and execute mundane tasks to reduce the workload for human.
RPA has become prominent in the enterprise technology sector in China in mid-2019. In the first five months of 2019, investment into China’s AI industry, once the hottest segment in the market, decreased by 50% year-on-year, totaling only 16.3 billion yuan ($2.3 billion), according to Deloitte’s data. However, RPA, which combines software process automation and AI, found its way out of the cooling capital investment market with total market value quadrupling in the first half of 2019.
In June 2019 alone, three Chinese RPA companies successfully raised funds with the investment amounts exceeding $10 million. Laiye, Encootech and Cyclone all provide companies and individuals with professional and safe robot process automation solutions. Their products such as UiBot and Tianjiang RPA help consulting companies with tax declaration and management, processing orders from logistics and supporting IT enterprises with data back-up and transferring services.
Another key area is the use of RPA in fighting the coronavirus by speeding up information processing. Shanghai has taken a series of measures on epidemic prevention including issuing a personal “follow-up code” which could track every citizen’s movement within China and their health condition. Encootech’s RPA product processes all the registration orders and background data automatically, significantly simplifying the process.
However, even though local RPA developers in China grow faster, they are still facing increasing pressure from their overseas competitors. The leading companies in the foreign RPA industry UiPath, Automation Anywhere and the UK-listed Blue Prism whose technologies are at least 5 years ahead of their Chinese competitors, are also targeting the giant mainland market and aiming to localize their more widely-used RPA+AI products.
The New York-based unicorn UiPath, the fastest growing technology company in North America, whose market value reached $7 billion last year after its 568 million dollars Series D round, announced its deployment in Greater China in November 2018. In order to localize its offerings, UiPath has been expanding its local R&D department in the second half of 2019 with the number of Chinese employees now exceeding 70 people.
“The Asia Pacific region is a huge market for RPA, and we see companies and governments seeking RPA as a solution to improve productivity and drive development,” Thomas Chin, the Vice President of Sales for APAC at UiPath said. “Developing nations will use RPA to help firms become more competitive, speeding up development and moving them up the value chain.”
Meanwhile, the British listed Blue Prism also landed in the Chinese market in September of 2019. Victor Zhuang, the Vice President overseeing North Asia said in an interview with industry media RPAPlus that Blue Prism has already launched two bureaus and 20 employees in China.
“The Chinese market has great potential, so that’s why we list China as one of Blue Prism’s global markets,” Zhuang said. “We are the first overseas company to launch a Chinese version of an RPA product.”
Current top RPA players in China also face increasing competition from domestic internet giants like Alibaba. The Chinese e-commerce behemoth set up its Ali Could RPA for internal use only in 2011, and is now providing services to all its partners.
The race to dominate the Chinese RPA market has accelerated. Uncertainty grows as local RPA companies are struggling to stand out among their numerous domestic and international competitors, while new entrants keep stepping in to take a slice of the cake.