Leaderdrive (Leader Harmonious Drive Systems (绿的谐波)) is a private SME and producer of harmonic reducers, a type of core component for robots. Beijing has long sought to build up domestic capabilities in robotics core technologies, where foreign firms dominate.31
Robots and CNC (computer numerical control) machines are among the ten key industries included in the Made in China 2025 strategy. Beijing set targets for indigenous Chinese firms to occupy 50 and 70 percent of the domestic market for industrial robots by 2020 and 2025, respectively. It is also aiming to increase localized production of core robotics components to 50 and 80 percent by 2020 and 2025, respectively.32
But the industry has so far failed to meet the government’s expectations. In 2020, the domestic market share of indigenous brands in industrial robot production was about one quarter.33 With regard to core components in 2020, the localization rate of reducers, servo systems and controllers had reached about 36 percent, 25 percent and 31 percent, respectively.34
Hence, the robotics sector is one where China’s dreams of technological self-reliance remain unfulfilled. This is particularly the case in upstream components, where Leaderdrive has the potential to fill a gap in China’s domestic supply chain.
Abundant guidance throughout the innovation chain
Little Giant program: Leaderdrive was included in the first batch of Little Giant (小巨人) firms, announced in 2019.35 Little Giant companies are high-tech SME firms with strong innovation capabilities operating in niche markets. The designation grants companies special access to government support and encourages both public and private sector actors to facilitate the companies’ growth, which includes not only extensive support mechanisms, but also guidance mechanisms that the firms can tap into.
Government subsidies: Since gaining the Little Giant title, Leaderdrive received CNY 78 million in subsidies between 2019 and 2022, accounting for 6 percent of its revenue over this period. Subsidies amounted to just 3 percent of revenue during the period 2017-2018.36
Equity financing: The company received a large windfall following its listing on the STAR market in August 2020, where it raised CNY 1.06 billion in capital. It has received direct equity investments from private and public investors, including government guidance funds. For instance, the Advanced Manufacturing Investment Fund is the third largest shareholder in the company, holding 5 percent.37
R&D support: Leaderdrive has developed long-term collaborative partnerships with several universities, including Harbin Institute of Technology, Shanghai Jiao Tong University and Southeast University. It led a National Key R&D program project into robotic reducer manufacturing launched in 2017, with CNY 13.4 million in funding support from the central government.38
Customer base: Beijing encourages large firms to build stronger links to high-tech SMEs and support their growth. Leaderdrive counts some of the largest indigenous producers of industrial robots such as Siasun, Estun, STEP Electric and Huashu Robot among its key customers.
Manufacturing Champion program: In 2021, Leaderdrive was further recognized as a Manufacturing Champion (制造业单项冠军), essentially one step above a Little Giant company. This marks it as a leading manufacturing company in a specific subsector and further underlines its importance to the government.39
Leaderdrive as a success story for ccp guidance to further national goals
Leaderdrive’s growth trajectory has accelerated since its selection as a Little Giant. The company’s revenue more than doubled and its assets more than tripled between 2019 and 2022. In 2021, Leaderdrive accounted for 25 percent of the domestic harmonic reducer market, ranking second.40 Among the three main core components of industrial robots (reducers, controllers and servo systems), reducers are the only ones where a Chinese firm has a significant market share (above five percent).41
The firm has been lauded by the Chinese Institute of Electronics for its success in achieving breakthroughs in “bottleneck” technologies and developing robotics core components.42 According to Zhang Yuwen, deputy general manager of Leaderdrive, the company is fulfilling the mission Beijing has ascribed to it. Through its high-quality, reliable and relatively cheap products, it has successfully reduced the dependence of Chinese robot makers on high-end harmonic reducers imported from Japan.43