NetEase Shares Near Record High as China's Gen Z Embraces Games
NetEase Inc. shares are closing in on their first new all-time high in over four years, as a wave of youthful consumerism adds to a host of positives for China's game stocks.
Hong Kong-listed shares of the company behind hits like Eggy Party are now less than 3% away from their 2021 record. The stock ranks among the top gainers this year on indexes of Chinese tech and global game companies.
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A few weeks ago, a Chinese startup called EngineAI gave an unusual demonstration of how today's robots learn. A female instructor with long blonde hair showed off a series of dance steps and then encouraged the company's humanoid robot to imitate her moves. 'Five, six, seven, eight,' she said. 'Let's go! Keep the flow.' Using computer vision and machine learning algorithms, the machine watched and listened — and then mimicked a series of steps from her dance routine. Over a few days, EngineAI's robot mastered the Axe Gang dance from the 2004 movie Kung Fu Hustle. A bit silly perhaps, but the dance represents a serious step for China's tech industry. After years of American companies like Boston Dynamics Inc. leading the development of humanoid — or people-shaped — machines, Chinese upstarts are now pushing the boundaries of innovation. In April, Beijing hosted the world's first robot half-marathon, where the city's X-Humanoid bested a field of 20 other bipedal machines. In May, Unitree Robotics, one of the country's prominent players, showcased its machines in what was billed as the first robot kickboxing tournament. While these events don't always go smoothly — 15 of 21 robots failed to complete the Beijing race — the point is progress, not perfection. China, which already has a higher density of robots per human on its factory floors than the likes of the US and Japan, is preparing humanoids to move into increasingly complex roles. EngineAI, Unitree and their competitors have started trials for everything from sorting garbage and delivering medicines in nursing homes to patrolling the streets alongside police officers and guiding tours through museums. The bots are quietly being tested for military combat, according to local media reports. Zhao Tongyang, founder and chief executive officer of EngineAI, figures 50 or 60 companies in China are working on humanoid development now, benefiting from the country's manufacturing expertise and robust government support. They're harnessing artificial intelligence models so the machines can learn how to handle new tasks on their own, without laborious programming for each situation. The company says it has orders for hundreds of its humanoids. 'China has many players involved and there are some very good talents among them,' said the 43-year-old Zhao during an interview over Zoom. 'I hope China will be first when it comes to robots.' The country's startups have caught the attention of Elon Musk, whose Tesla Inc. has set its sights on the humanoid market. On an April conference call, the billionaire said he thinks his Optimus robots lead the industry in performance, but China may end up dominating the field. 'I'm a little concerned that on the leaderboard, ranks 2 through 10 will be Chinese companies,' he said. Leadership in this field matters because humanoids appear poised to move beyond the realms of sci-fi and curiosity. Citigroup Inc. recently projected the market for the machines and related services will surge to $7 trillion by 2050 when the world could be populated by 648 million human-like bots. Beyond the monetary rewards are mind-rattling strategic implications for governments and countries. Whoever leads development of these humanoids could potentially command an army of indefatigable workers, caregivers and soldiers, redefining economic and political strength. Musk made the case in mid-May that the global economy could grow to 10 times its current size with the addition of robot labor. 'It unlocks an immense amount of economic potential,' Musk said during an appearance in Saudi Arabia. 'We're headed to a radically different world.' China's strength in this field isn't an accident. President Xi Jinping and the Communist Party sketched out blueprints for developing strategic technologies — including robotics — more than a decade ago. Local officials then offered financial incentives and support to entrepreneurs to reach Beijing's policy goals. In EngineAI's case, the Shenzhen government helped connect Zhao with funding and other resources. 'Although it is not the government that directly invests in us, at least the government's money is used to guide them to this industry and guide funds in this direction,' the founder said. 'I think this is a great thing.' China announced earlier this year it would invest 1 trillion yuan ($138 billion) in robotics and high tech in the next two decades, far more than the US or Europe. The US has formidable players in robotics — including Boston Dynamics, Agility Robotics, Figure AI and Tesla — and a long track record of technology breakthroughs. Yet some scholars warn that Beijing's approach may give China the edge in developing strategically important, capital-intensive sectors, like it has already done with electric vehicles and solar panels. 'The Chinese model of state-run capitalism might actually be better equipped,' said Julian Mueller-Kaler, director of the Strategic Foresight Hub at the Washington D.C.-based think tank, Stimson Center. 'Digital and tech advancements are geopolitical issues of the highest order.' While it's still possible the humanoid market never takes off, China is making an audacious bet that it will. The country is on track to produce more than 10,000 humanoid robots this year, or more than half of the machines globally, according to an April study from the China think tank Leaderobot and other institutions. 'China is winning the humanoids war, I have no doubt,' said Henrik I. Christensen, director of the Contextual Robotics Institute at the University of California San Diego. Zhao's career mirrors the country's embrace of robotics. After majoring in automation at university, he got into the field eight years ago, motivated not so much by Beijing's strategic priorities as the prospects for innovation. 'I believed that humanoid robots would definitely change the way of life for human beings,' he said. His timing was fortuitous. A few years earlier, Beijing had unveiled an ambitious program called Made in China 2025, which set goals for technological accomplishments over the next decade. The Communist Party's drive to develop humanoid technology stemmed from a looming labor crunch. The working-age population is expected to shrink by about 22% through 2050, according to the Lowy Institute in Sydney. The squeeze is particularly acute in manufacturing, with a projected shortfall of 30 million workers in 10 sectors by the end of this year, according to a report from government agencies, including the Ministry of Industry and Information Technology. This gap is aggravated by the younger generation's reluctance to take the kind of blue-collar factory jobs their parents embraced. China's strategy is to integrate people-like robots across sectors like manufacturing, healthcare and hospitality. Factory floors in China already boast a robot density that eclipses Germany and Japan, with levels doubling in just four years. It had 470 robots per 10,000 employees in 2023, well above the US at 295 robots for the same number of workers, according to the International Federation of Robots. Artificial intelligence models are helping humanoid robots become smarter, more adaptable machines. Startups like EngineAI and Unitree are refining their AI applications, allowing robots to see and recognize objects, plan movements, coordinate with each other and teach themselves how to adapt to new situations. 'Previously, robots were very stupid, right?' said Chang Lin, the co-founder and CEO of Leju Robotics, another ambitious startup. Today, the evolution of large language models, like those powering ChatGPT and DeepSeek, is bestowing intelligence on machines so they can learn tasks from their owners, he said. You could, for example, train one of the company's Kuavo robots how you want it to clean the floors or care for the flowers in your house — and then it would take over. 'It'll be easy,' he said. 'Form a data set for watering flowers, it will naturally water the flowers.' This kind of progress has China's robots making their way into the real world. UBTech Robotics Corp., based in Shenzhen, has deployed its 5-foot-6-inch Walker S1 to help assemble iPhones for Apple partner Foxconn Technology Group. More than 500 of its machines work in the auto factories of BYD Co., Geely Automobile Holdings Ltd. and FAW-Volkswagen, lifting boxes, sorting components and testing instruments. At the FAW-Volkswagen plant, they detect refrigerant leaks in air-conditioning systems, a task that could hurt the lungs of humans. Leju, also based in Shenzhen, is pushing the use of humanoids to sort and deliver medicines at elder-care facilities. At least a hundred of its machines have been delivered to carmakers including BAIC Motor Corp. and Nio Inc., exhibition halls in China and nursing homes in Suzhou. Colleges have also bought Leju robots for doing research. Susanne Bieller, general secretary of the Frankfurt-based International Federation of Robotics, sees China emerging as a leading player in humanoids as the country's startups work with its manufacturers to bring down costs and make machines more affordable. 'Within the next 5 to 10 years, we can expect it to be more widely adopted in industry,' she said. EngineAI spent years improving its robots' joints, making them lighter and smaller, while whittling away at expenses. In one case, Zhao and his 40-person engineering team redesigned a power joint that cost 20,000 to 30,000 yuan so they could produce it themselves for one-tenth the cost. Zhao also grew obsessed with figuring out how to create robots that could walk with a natural, human-like gait. He told staff early machines that take slow, awkward steps should be thrown in the trash. EngineAI built humanoids with refined leg joints and then integrated machine learning with neural networks so the machines could learn to walk, much like a real toddler. 'Collect a lot of very beautiful data from the human body, combine these data and let it walk,' he said. Still, even the most elegant humanoids won't have a future unless they provide value. People-like machines captured the popular imagination at least as far back as Isaac Asimov's writings in the 1950s, yet they've remained largely a novelty. Boston Dynamics has impressed tech geeks since its founding in 1992, but it's never built much of a business. Google and SoftBank Group Corp. each bought the startup and then sold it again without commercial success; it's now owned by Hyundai Motor Co. In Beijing, the humanoid half marathon meant to showcase the machines' capabilities instead demonstrated their limitations. One robot participant fell at the starting line. Another had its head fall off and roll on the ground. In the kickboxing tournament this month, the Unitree robots often lashed out at thin air or toppled over on their own, even though they were controlled by humans ringside. The vibe was less Terminator, more Rock 'Em Sock 'Em Robots. Humanoids 'just don't make economic sense for most people and companies for the foreseeable future,' said Romain Moulin, CEO of the French startup Exotec, which makes box-like robots for warehouses that he thinks are more utilitarian. Nevertheless, the number of believers is growing. In its 83-page report, Citigroup tapped 10 of its own staff and seven contributors to explain why it sees robots as a yawning opportunity. It describes such machines as 'physical AI' and predicts they will be used for autonomous driving, cleaning and deliveries. It forecasts that humanoids will be the fastest-growing segment of the robot market, with the flexibility to work in health care, factories, home cleaning, deliveries, supermarkets and hospitality. 'A big part of the thesis for humanoids is simple – we have engineered our manmade world to work for humans so humanoids can fit straight in without significant infrastructure changes,' the authors wrote. Musk has become a leading advocate. He said in April he expects to have thousands of Optimus robots working in Tesla factories by the end of the year, and he is confident of getting to a million units a year in less than five years. The robots aren't on sale for others yet, but they're expected to cost $20,000 to $30,000 as they hit the market in 2027. The economics of such machines will then become clearer, Citi contends. If Musk's prediction is accurate that humanoids cost about $25,000, the analysts calculate they would pay for themselves in 36 weeks, if compared with the lowest US minimum wage of $7.25. The payback equations are more compelling in the states and jobs where wages are higher. 'The argument for humanoids is not just economic. Some jobs are dangerous or undesirable for humans and are better suited for robots. In other cases, labour shortages exist and can fill these roles. Robots also don't leave or take holidays,' they wrote. Chang, the Leju Robotics CEO, said the growing number of humanoid startups in China is driving intense competition. Scores of companies have to race their rivals to integrate AI capabilities and physical innovations. 'The more people enter the industry, the better the industry will be,' he said. 'So what we need to do is to try our best to stay ahead.'— Saritha Rai and Jessica Sui
