Welcome back to TechCrunchs China Roundup! This digest contains the most recent developments in China's tech landscape, and what these mean for people around the globe.This week has been turbulent for the Chinese tech industry. The government is reorganizing its $100 billion private education sector and removing billions from market capital of the most profitable players in the sector. The assault on Chinese internet giants went on. Tencent's suspension of user registration caused tech stocks to plummet, raising fears about who might be next in Beijing's gripe.Inquisitive observers point out that Beijing has been pursuing strict regulations against China's education and internet firms for years. This is not surprising. The central government is not shy about its desire to increase manufacturing and limit the unchecked power of its service sector, which can include everything, from film studios to after school centers, to control.A few weeks back, I had an interesting conversation with a Chinese venture capitalist. He has been investing in industrial robotics for more than a decade.Automate the factoriesChina is rapidly putting robots in factories. Huang He, Northern Light Venture Capital's partner, sees three factors that are driving the demand for industrial robots, especially those made in China.Beijing has been a strong advocate for localization over the years in many technology sectors. These include enterprise software and production line automation. In a few years, one may see Chinese robots with the same capabilities as those made by Schneider and Panasonic. CRP, an NLVC-backed manufacturer of industrial robots, is already in production across Southeast Asia, Russia, and East Europe.China faces a serious demographic crisis, in addition to tech localization. China's labor shortage is further exacerbated by the unwillingness of young people to work in menial factories. Robotic factory workers could be a solution.Today's young people would rather be food delivery drivers than work in factories. Huang noted that robots are replacing low-skilled jobs, while those that can't be replaced by robots earn well and offer great benefits.Due to their proven stability, large corporations in China still prefer imported robots. Problem is, imported robots can be expensive and selective about who they are used to.To operate [Western] robots effectively, companies need to be skilled technical professionals, Huang said. However, such companies are very rare in China. Huang also stated that most Chinese businesses are small or medium-sized.Huang stated that while the semiconductor and automotive industries still heavily rely on imported robots, most local automation needs can be met by affordable, simple-to-use Chinese robotics.China uses almost one million six-axis robotics per year, but it only produces 20%. This gap and a national plan to localize have sparked a rush of investment in industrial robotics startups.Huang said that the rush isn't always a good thing. This bizarre phenomenon is occurring in China where the most valuable and well-funded industrial robot firms generate less than 30 millions yuan annually. It's not known by the real users of the industry.This industry is not one where you can create giants by spending cash. It's not the internet industry.Small-and-medium-size businesses are happily welcoming robots onto factory floors. Let's take welding as an example. The average welding machine costs 150,000 Yuan ($23,200 per year). An average welding robot costs 120,000 Yuan and can replace three workers per year. It also doesn't complain about work, according to the investor. The financial incentive to automate is clear since a quality robot can be used continuously for six to eighteen years.Advanced manufacturing does not only benefit local bosses. This will lead to increased dependence of foreign companies on China for their efficiency. It will make it difficult to cut off Chinese supply chain despite efforts to minimize the geopolitical risk associated with manufacturing in China.For electronics, the majority of supply chains are located in China. Therefore, factories outside China spend more on logistics to move parts. Huang said that although 3C manufacturing is highly automated and heavily depends on electricity, production is disrupted in many emerging economies.Internet titans are at warAlthough the shock at Alibaba's antitrust violations from last year still resonates, another round of scrutiny has already begun. The ride-hailing company was asked to stop user registration shortly after Didis's New York IPO. It also had to work on national security.Tencent stock fell Tuesday the most in a decade following it stopping user signups for its WeChat messenger. It is upgrading its security technology to comply with applicable laws and regulations. This is the latest company in a growing number of companies that are being affected by Beijing's tightening grip over the internet sector. The sector has been flourishing for more than two decades under laissez faire policies.Beijing's growing discontent with the unchecked accumulation of wealth and power in the service sector is the driving force behind the clampdowns. China is determined to develop its tech sector. But Beijing does not want video games that cause myopia in children or algorithms that keep adults addicted to their screens. China's five-year plan, which includes a number of economic and social initiatives, makes clear that it will invest heavily in hard tech such as semiconductors, biotech, and industrial automation, like factory robotics.China also pledged to combat inequality in wealth and education. According to the authorities, the expensive and for-profit after-schools that are scattered around big cities hinder education attainment of children from less privileged areas. This eventually leads to an increase in the wealth gap. New regulations have restricted hours, content, and funding of private tutoring institutions. This has dragged down the stock prices of top companies in the sector. There have been strong indications that President Xi Jinping wanted to put off-campus tutoring back on its educational track. This is why all China-focused analysts and investors are now reading Xis directives and thoughts.
