Hav­ing cre­ated a splash at this year’s Con­sumer Elec­tron­ics Show in Las Ve­gas, Chi­nese mak­ers of drones for civil­ian use are en­ter­ing a crit­i­cal phase in their evo­lu­tion, and tech­nol­ogy, scale and ecosys­tem are the new buzz­words

China Daily (Canada) - - DEPTH - By ZHOUMO in Shen­zhen, Guang­dong sally@chindai­

FLYPRO Aero­space Tech Co Ltd, a Shen­zhen-based drone maker, made its Con­sumer Elec­tron­ics Show de­but in Las Ve­gas this year from Jan 6 to 9, and im­me­di­ately sparked chat­ter about the en­tire Chi­nese drone in­dus­try.

At the CES, FLYPRO launched its lat­est prod­uct XEa­gle, de­signed for sports en­thu­si­asts, which can be con­trolled by voice and linked to a smart­watch. The prod­uct re­ceived pos­i­tive re­views.

That’s say­ing some­thing about FLYPRO be­cause the an­nu­alCESat­tractsmorethan 3,600 ex­hibitors from over 150 coun­tries and re­gions, who show­case their lat­est in­ven­tions and break­through tech­nolo­gies. So, to be able to stand out from the crowd is no mean achieve­ment for a Chi­nese firm.

“The mar­ket for drones used in smart sports is huge and un­tapped,” said Lin Hai, chief ex­ec­u­tive of­fi­cer of FLYPRO. “As peo­ple be­come health-con­scious and seek phys­i­cal ac­tiv­ity that could also prove en­ter­tain­ing, smart sports like en­gag­ing with in­tel­li­gent drones are ex­pected to see huge op­por­tu­ni­ties.”

China’s grow­ing prow­ess in mak­ing world-class un­manned aerial ve­hi­cles, which are com­monly known as drones, was very much in ev­i­dence at the CES this year. Chi­nese com­pa­nies’ booths were ubiq­ui­tous at the venue, and ex­hi­bi­tion of in­no­va­tive prod­ucts like XEa­gle gar­nered wide­spread at­ten­tion.

At the CES, Shen­zhen-based DJI, the world’s largest maker of con­sumer-level drones with a 70 per­cent share of the mar­ket, launched Phan­tom 3 - 4K, a new drone in its Phan­tom 3 se­ries. The model en­ables4K-that is, ul­tra high-def­i­ni­tion -video shoot­ing.

Guangzhou-based Ehang also made a splash by un­veil­ing the world’s first bat­tery­pow­ered, auto-pi­lot drone ca­pa­ble of car­ry­ing a pas­sen­ger. Af­ter a two-hour charge, the ve­hi­cle can fly for 23 min­utes with a pas­sen­ger on­board to its desti­na­tion, which can be pre-set by link­ing it to a mo­bile app.

Nearly 400 com­pa­nies make drones for civil­ian pur­poses in China. The world over, civil drones are be­ing sought to ac­com­plish tasks like fast food de­liv­ery, couri­ers, land sur­veys, pes­ti­cide spray­ing on farms, traf­fic man­age­ment and po­lice sur­veil­lance, sub­ject to reg­u­la­tory ap­proval and lo­cal laws.

A June 2015 re­port by big data anal­y­sis and rat­ings firm Analysys In­ter­na­tional shows the civil drone mar­ket in China is ex­pected to grow 181 per­cent from 3.95 bil­lion yuan ($600.4 mil­lion) this year to 11.09 bil­lion yuan by 2018.

“The ex­pected ex­plo­sion of the civil drone mar­ket would be mainly due to de­mand for con­sumer-level drones,” said JeanXiao, a re­search man­ager at mar­ket in­tel­li­gence firm IDC.

Ship­ment of con­sumer-level drones rose con­sid­er­ably last year. “But in terms of mar­ket value, it is still the in­dus­trial drones that take the lead,” Xiao said.

While the ex­pan­sion has brought huge amount of cap­i­tal into the in­dus­try and at­tracted more peo­ple to join in, some play­ers say the mar­ket­may see a shake­out within the next two or three years, when a num­ber of man­u­fac­tur­ers may be weeded out.

Many drone mak­ers in the coun­try have al­ready en­tered the stage of B-round fi­nanc­ing, and fund­ing has been tight­en­ing, Gui Xiaoyan, founder of drone maker Skye In­tel­li­gence, said.

“The drone in­dus­try has, in gen­eral, gone through the start­ing-up pe­riod. If those who en­tered the in­dus­try at an early stage aren’t able to de­velop ad­van­tages in their prod­ucts, they may soon be weeded out,” Gui told the Se­cu­ri­ties Daily, adding only those with ad­van­tages in spe­cific func­tional ar­eas would sur­vive in the long term.

Mar­ket an­a­lysts, how­ever, are not that con­cerned. “The Chi­nese civil drone in­dus­try is still in its early stage of de­vel­op­ment. The num­ber of civil drone mak­ers is still very small. It is too early to talk about in­dus­try now,” Xiao said.

Wu Xi­uqian, a re­searcher from the Qianzhan In­dus­try Re­search In­sti­tute, agrees. “I don’t be­lieve a pe­riod of ad­just­ment will come in the short term.

“Big dif­fer­en­ti­a­tion in con­sump­tion char­ac­ter­is­tics has not emerged yet. There will be huge mar­ket po­ten­tial for both in­dus­try- and con­sumer­level drones.”

In this rapidly emerg­ing high-tech in­dus­try, there are still a lot of grey ar­eas, blank spa­ces and im­ped­i­ments that need to be ad­dressed be­fore it could achieve sub­stan­tial de­vel­op­ment.

One of the bot­tle­necks lies in the lack of mass pro­duc­tion ca­pa­bil­ity in drone mak­ers, Xiao said. “The sup­ply chain of civil drone in­dus­try is cur­rently im­ma­ture. Fac­to­ries are still mak­ing ef­forts to boost the rate of pro­duc­tion of qual­i­fied prod­ucts.”

Lack of a full-fledged reg­u­la­tory sys­tem is also a con­cern, Wu said. There are cur­rently no sys­tem­atic reg­u­la­tions gov­ern­ing the civil drone in­dus­try in the coun­try.

On Dec 30, 2015, the Civil Avi­a­tion Ad­min­is­tra­tion of China in­tro­duced a regulation for civil drones op­er­at­ing in the area of gen­eral avi­a­tion busi­ness. The regulation, which was open for pub­lic re­viewtill Jan. 8 and is ex­pected to take ef­fect on Feb. 1, rules that civil drones need to get op­er­a­tional ap­proval be­fore they can em­bark on gen­eral avi­a­tion busi­ness.

Some drone mak­ers are not pleased, and ar­gue the civil drone in­dus­try can­not be sub­jected to the same ad­min­is­tra­tive pro­ce­dures as en­ter­prises in gen­eral avi­a­tion.


About 150 in­dus­try play­ers, schol­ars and drone en­thu­si­asts re­port­edly signed a let­ter of protest against the im­ple­men­ta­tion of the new regulation.

De­spite the con­tro­versy, Xiao views it from a pos­i­tive side. “It shows that the govern­ment is mak­ing ef­forts to reg­u­late the in­dus­try. Un­der the regulation, dis­qual­i­fied man­u­fac­tur­ers or those with low ca­pac­i­ty­may be ex­pelled from the mar­ket.”

As the in­dus­try be­comes more reg­u­lated and ma­ture, mar­ket play­ers and an­a­lysts be­lieve it is tech­nol­ogy that will fi­nally de­cide the fate of drone com­pa­nies.

“Ad­just­ment and knock-out are the nat­u­ral laws in any in­dus­try,” said Lin Wei­dong, pres­i­dent of Shen­zhen ArtTech R/CHobby Co Ltd. “Only those with core tech­nolo­gies and a pre­cise po­si­tion­ing (of their prod­ucts) can sur­vive.”

Lin ex­pects the per­cent­age of drone com­pa­nies with man­u­fac­tur­ing and op­er­a­tional ca­pa­bil­ity would de­crease to 2 per­cent, or less, of the cur­rent num­ber within five years.

“Only com­pa­nies with a for­ward-look­ing busi­ness model and lead­ing tech­nol­ogy will stay in the mar­ket longer,” said Ja­son Low, a re­search an­a­lyst from mar­ket re­search firm Canalys.

Low and IDC’s Xiao also be­lieve that a drone ecosys­tem should be built for long-term de­vel­op­ment of drone com­pa­nies.

“At­tract­ing de­vel­op­ers to join and to build up a drone ecosys­tem is a way to dif­fer­en­ti­ate. With help from part­ners and de­vel­op­ers, drone mak­ers are more likely to come up with ver­ti­cals such as farm­ing, land sur­vey­ing, so on,” Low­said.

There will be huge mar­ket po­ten­tial for both in­dus­tryand con­sumer­level drones.”

Michael Perry, di­rec­tor of strate­gic part­ner­ships of DJI, flies a drone in Shen­zhen, Guang­dong prov­ince, on Dec 18, 2015, two days be­fore the open­ing of DJI’s first flag­ship store.

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