The new Transformers

China has surpassed Japan to become the world's biggest, fastest-growing robot market

A worker sits making pullovers, while another next to her puts thread into her sewing machine.

What is special about this relationship is that one doesn't talk, eat, drink or even get paid.

"In the past, robots worked separately from humans, but now they can work together," said Arturo Baroncelli, president of the International Federation of Robotics, as he described the scene at the China International Robot Show in Shanghai recently.

"In future, there will be more interaction, more robots and humans working together."

For 30 years, businesses worldwide have flocked to China, attracted by its cheap labor.

But now, as this human labor force has begun to price itself out of the market, a new brigade of workers is being recruited to entice companies to the country: robots.

Not only will the shift have profound ramifications for the makeup of the workforce, Baroncelli says, but it has already turned the country into the world's biggest robot market.

"What happens here will shape the future of the world robot industry as a whole," he says.

Nearly 180,000 industrial robots were sold worldwide last year, a 12 percent increase on the previous year.

A fifth of those were installed in China, the federation revealed at its annual meeting during the show.

With sales of about 37,000 industrial robots last year, China surpassed Japan's 26,000 sales for the first time, to become the world's biggest and fastest growing market.

During the year, most Western robot markets grew by less than 10 percent, but China's total supply of industrial robots has now grown 36 percent annually on average over the past five years, says Li Xiaojia, a researcher at the China Robot Industry Alliance.

The alliance brings together 100 enterprises, manufacturers, universities and research institutes, and government-sponsored organizations involved in Chinese robotics research and development, manufacturing and services industries.

Over the next decade, Li expects the Chinese market to grow about 40 percent a year.

While Western countries started developing and using robots in the 1960s, China was a latecomer, but has caught up fast, meaning more overseas firms are anxious to establish a presence in the country.

Comau Group of Italy, for instance, a leader in automatic and flexible manufacturing systems, says it plans to transfer its robot production from Turin to Shanghai this year to be closer to customers.

Kuka AG of Germany, one of the world's leading suppliers of robotics as well as plant and systems engineering, opened its first overseas factory in Shanghai in March, which the company says will be able to produce 5,000 robots a year, a third of its production worldwide.

ABB Group of Switzerland, a major supplier of industrial motors and drives, entered China in 2005 and has already localized its whole robotic industry chain, including research, manufacturing and after sales.

"China has a huge number of factories that will need robots, but currently the density of robot use is about a third of the world's average, so we see great potential here," says Daisy Qi, product group head at ABB Engineering (Shanghai) Ltd.

Song Xiaogang, executive vice-president of the China Machinery Industry Federation, says the continuous rise in labor costs over the past few years has been the main driver for the booming robotics market.

"China's demographic dividend has been diminishing over the past few years. Labor costs have increased 15-20 percent every year," he says.

"This has had a massive impact on labor-intensive companies in traditional sectors, whose products are already delivering low profit margins."

Experts suggest the younger generation of industrial Chinese workers born in the 1980s and 1990s are also more choosy, not only about the work they do, but also about their working conditions, whether the environment is safe, toxic or harmful, for instance.

Many even refuse to work in what could be considered traditional manufacturing industries, regardless of payment.

National Bureau of Statistics figures show an aging population is adding to the industrial tension.

In 2012, China's working population was 937 million, 3.45 million less than in 2011, and last year the number fell further to 920 million, accounting for about 67.6 percent of the entire population.

"The working population will continue to fall, so using robots has become an important tool to help companies maintain or improve their productivity," says Song, adding that robots are also better at doing repetitive, tedious and dangerous work.