Robotics may be Silicon Valley's latest obsession, but China has spent years building up its industry.
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American investors are touring China’s robot factories to size up the competition
Chinese robots are advancing too quickly; Americans have to go there to investigate.
Given the rapid development of China's robotics industry, many Silicon Valley investors are traveling directly to the country to assess the strength of their competitor.
Cunningham is one of a growing number of Silicon Valley investors looking to China to learn how the country is building an advantage in robotics and other hardware industries.
For many, the goal isn't to find investment opportunities in China, but rather to assess the strength of competitors vying for positions with American companies in their investment portfolios.
These trips take many forms, including private tours organized by venture capital funds or tours costing $10,000 per person, which include factory tours, interpreter services, stays at 5-star hotels, and meals with local tech leaders.
Behind these trips lies an uncomfortable realization: China has built a significant advantage in key links of the robotics industry, from manufacturing and supply chains to field deployment and data collection to improve them.
According to research firm Omdia, two Chinese companies, Unitree and AgiBot, accounted for 71% of all humanoid robots shipped
worldwide last year.
The Mercator Institute for China Studies, a German research organization, reports that China controls 63% of key companies in the global supply chain for humanoid robots. Meanwhile, the majority of US humanoid robots are still under development and not yet widely available on the market.
Stanford's 2026 Emerging Technology Review also shows that the majority of American companies still rely on Chinese suppliers for components or assembly.
This is a crucial issue for American investors pouring capital into robotics and physical AI. They expect that advances in AI, increasingly cheaper hardware, labor shortages, and the trend of bringing manufacturing back to the US will create the next generation of tech giants.
The rapid development of the robotics industry has also led the US to pay more attention to technology management and supply chains. In July, the US Federal Communications Commission (FCC) announced restrictions on certain advanced robotic devices of foreign origin.
While robotics has only recently become a focal point of Silicon Valley, China has spent years building this industry.
"The Chinese are very focused on hardware development. They are striving to expand their role in the global robotics supply chain," Wendy Chang, a senior analyst at the Mercator Institute for China Studies, told
Business Insider.
In a 2023 policy document, the Chinese government compared the potential impact of humanoid robots to computers, smartphones, and
electric vehicles , and set a goal of integrating humanoid robots into various economic sectors by 2027.
In recent months, dozens of venture investors, including representatives from Eclipse, G2 Venture Partners, and Chemistry VC, have traveled to China.
The
Information reported last month that partners at Founders Fund and Khosla Ventures also made similar trips.
The reality is forcing Silicon Valley to take a step back.
Late last year, partners at G2, a San Francisco Bay Area-based fund, decided they needed a clearer picture of China.
"We knew they were ahead, but you don't really feel it until you get there," said Neel Mehta, an investor in G2.
Earlier this year, he and a colleague traveled to Shenzhen and Beijing, combining attending Morgan Stanley's China Conference with field trips to robotics, autonomous vehicle, Xiaomi, and BYD companies.
According to Mehta, for many years, American investors have believed that Chinese technology is of lower quality. The prevailing notion is that while China may excel in manufacturing, the US will always produce better AI.
After the trip, Mehta realized that both of these assumptions could have been wrong.
At a Xiaomi dealership in Shenzhen, he saw the SU7 electric car model firsthand, which has a starting price of around $30,000 .
"The quality and finish are absolutely on par with what you would expect from a luxury car like a Porsche, and that's no exaggeration," Mehta commented.
This model is not yet sold in the US, where electric vehicles imported from China face restrictions and a 100% tariff.
Mehta was also particularly impressed with China's data collection capabilities. Robotics companies need vast amounts of real-world data to train their systems to recognize their environment and perform physical tasks.
At one data collection facility, he witnessed hundreds of people working continuously in separate compartments, remotely controlling robots to generate data on a large scale.
"If you consider data to be the core bottleneck of robotics, then there's a good chance they have better models than anyone else," he said.
Rui Ma, who runs Tech Buzz China, said that Silicon Valley investors are showing renewed interest in Chinese technology after a period of sluggish cross-border investment activity.
According to her, the turning point came when Chinese AI models, including DeepSeek, Alibaba's Qwen, and Moonshot AI's Kimi, demonstrated that the country's technological capabilities could no longer be underestimated.
"It's very specific, tied to the DeepSeek moment," Ma said, referring to the Chinese company's launch of its AI model in 2025, which is expected to shake up Silicon Valley.
"People started thinking, 'Oh, so China actually has AI and other technologies worth paying attention to.'"
The trip changed the perspective of entrepreneurs like Mehta regarding China's technological capabilities, particularly in the areas of manufacturing and robotics development. What they witnessed firsthand in Shenzhen and Beijing showed that Chinese companies have progressed far beyond what many American investors had imagined.
