The CEO of ABB, a multinational robotics firm, recently stated that he is “disappointed” with the state of the Chinese market and expects challenging conditions for the rest of the year.

Bjorn Rosengren, CEO and chairman of ABB, explained in an interview with that the company has been affected by a decline in China’s property sector.

According to Rosengren, the decrease in Chinese real estate development and the heavy debts faced by the sector have negatively impacted ABB’s residential construction segment, which is more vulnerable to changes in the economy.

Despite being one of the largest companies in industrial manufacturing, ABB’s performance is considered a reflection of the manufacturing sector’s health and the broader economy. China, as the company’s second-largest market, has significant influence on ABB’s overall performance.

However, ABB has noticed signs of weakness in China. In the second quarter of 2023, the company reported a decline of 9% in order intake in China compared to the same period last year.

More than 50 Chinese property developers have defaulted or failed to make payments in the last three years, according to credit ratings agency Standard and Poor’s. The Chinese real estate sector has been in turmoil, exemplified by the financial troubles of property developer Evergrande.

Economists have raised concerns about structural issues in China’s economy, including debt, an aging population, youth unemployment, and tensions with the United States. These factors contribute to the uncertainty surrounding the country’s economic development.

Despite the challenges in China, ABB sees electric mobility as a fast-growing area globally. The CEO mentioned that the electric vehicle market has shown positive growth and has been beneficial for the robotics market. ABB is planning an initial public offering for its e-mobility business, which has already raised significant investments.

Rosengren emphasized the importance of transitioning to green energy and building electrification infrastructure worldwide. ABB’s e-mobility division focuses on developing electric charging solutions for the EV industry.

However, ABB’s e-mobility unit faced losses in the second quarter due to macroeconomic conditions.