South Korea’s Hyundai Heavy Industries (HHI) Holdings Co. will roll out robotics from China through a joint-venture established near Shanghai possibly from the second half next year.

The holding entity of the country’s largest shipbuilder said Thursday that it signed an agreement with Chinese robot maker Jiangsu Hagong Intelligent Robot Co. to set up a joint venture to build a factory during the China International Industry Fair 2018 in Shanghai. Jiangsu Hagong, China’s top supplier of welding robots for automobile manufacturing, is actively engaged in robotic service business and research and development of artificial intelligence.

The two companies agreed to construct a smart factory by the first half next year that would be capable of producing up to 20,000 units of industrial robots per year for HHI Holdings. They plan to build the factory in an approximately 100,000-square-meter area near Shanghai and aim to start operation in the second half. They expect that sales of industrial robots produced at the new plant would reach over 17,000 units by 2022 in Shanghai and Huadong region.

Although the two firms did not disclose the exact amount of their investment, market experts estimated they would spend at least 30 billion won ($26.8 million).

HHI Holdings expects the agreement would help it secure production bases in China and enhance market share in the country. It is the first time for the company to export its factory automation technology to overseas countries, raising expectations of additional exports of the technology to other regions in China or developing countries.

The Chinese market for industrial robots is expanding at a fast rate. According to data released by the Korea Development Bank (KDB), sales of industrial robots in China reached 138,000 units last year, accounting for 36.3 percent of entire global sales. It was also up 58 percent from the previous year. Robotics is one of the 10 sectors that the Chinese government plans to bolster as part of its ‘Made in China 2025’ initiative aimed at making China a high-tech powerhouse by breaking its reliance on foreign technology.

On Friday, shares of HHI Holdings fell 0.65 percent to close at 384,500 won.

By Woo Je-yoon and Choi Mira

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