China’s Thriving Drone Industry
Drone Industry Overview
Lately, the media have been filled with articles and clips of drone shows that have painted Shanghai’s iconic skyline in different shapes and words. A recent event used over 3 000 drones to paint the skyline with their huge company logo, another used it to create a huge, mysterious, scannable QR code advertisement in the night skies of the city, shaping the future of high-tech advertising. These record-breaking publicity stunts are a milestone in the deployment of massed drones.
Future of Drones: Applications & Uses
The drone industry in China, also known as Unmanned Aerial Vehicle (UAV) industry, has expanded rapidly in the recent years with the emergence of many companies making drones for commercial, industrial, and military use. The leading technology, coupled with the increasing domestic demand in different fields as well as supporting policies of government are driving the growth of China’s UAV industry strongly and making it an attractive market for businesses.
Over the past few years, unmanned aircrafts have become central to the functions of many businesses and governmental organizations and have managed to pierce through areas where certain industries were either stagnant or lagging behind. Individuals, commercial entities, as well as governments have come to realize that drones have multiple useful features that can be applied in various fields and are putting more focus on this technology. Increasing work efficiency and productivity, improving accuracy, refining service and customer relations, and solving security issues are some of the common applications of drones globally.
The Chinese Drone Market Outlook
The Chinese market is currently the second largest drone market in the world and will continue closing the gap with the leading market, the United States, until 2024. In the upcoming years, the market is expected to grow strongly with a CAGR of 40.57% between 2017 and 2024. The volume of drones in China is also predicted to witness an impressive growth of 25.7% in 2022 and amount to 3.08 million pieces by 2025.
As the home country of DJI, the world’s largest drone maker, drones are becoming increasingly popular in China. DJI has long been the global leader of drone manufacturing, and holds over 70% of the global drone market share. During 2013 – 2017, its sales revenue almost doubled every year and its industrial output exceeded $3.8 billion in 2019. The success of DJI is mainly driven by its low production cost, skilled labor as well as its responsiveness to the market needs.
Opportunities and Challenges
The aggressive growth of the UAV industry in China can be attributed to the policy and regulatory support as well as tremendous investments from the Chinese government. According to the UAV guideline published by the Chinese Ministry of Industry and Information Technology, the ministry has planned to establish and revise more than 200 rules covering the research, production, application, and safety regulation of civilian drones. Also, recently in May 2021, Chengdu Aircraft Industry Group (CAIG) – a subsidiary of the state-owned Aviation Industry Corporation of China signed a deal with the provincial government of Sichuan to jointly invest around 1.55 billion USD to establish an industrial park in the region, dedicated to UAV.
With the great support from government and the accelerating development of technology, China is dominating the global consumer and commercial drone market, and the buzzing center of this industry is Shenzhen. The city is widely regarded as China’s Silicon Valley and is the home to over 600 licensed drone manufacturers, out of a total of around 7,000 in mainland China. The concentration of drone enterprises in Shenzhen is ideal for the industry’s global competitiveness and innovation.
The increasing demand for a next-generation logistics network is also offering significant growth prospects to China’ drone market. With the population of over 1.4 billion and various cities in the world’s top 20 list for highest density, China has an urgent need for greater movement of people, goods, and services. JD.com – China’s second largest online platform, has been building a drone-delivery network that covers 100 rural villages leveraging 40 unmanned aircrafts since 2017. SF Express, one of the global leaders in drone delivery, recently became the first company with a Drone Operator License in China; providing a scale of delivery that is unparalleled to anywhere else.
Besides the great opportunities, the drone industry in China is also facing numerous challenges that might affect its aggressive future growth. Drone applications are spreading rapidly, but how to prevent their potential public safety hazards has become a common issue of public safety management around the world. China wants to support its booming drone market, but still needs to regulate it to prevent accidents. Certain commercial drone uses in densely populated areas such as Beijing and Shanghai have been limited and this would pose a challenge to the potential implementation of the emerging drone delivery method.
The drone market in China is also witnessing the emergence of hundreds of new entrants, which will possibly drive down the average selling price of drones significantly in the upcoming years. Investors or industry players seeking opportunities to enter China’s drone industry should be of aware the increasingly fierce competition in this booming market.
It is undeniable that drones are rapidly growing in popularity at a global scale with its diverse applications in different industries. As the home of the world’s largest drone manufacturer, China’s drone industry has witnessed an impressive growth in the past few years and is opening concrete opportunities for businesses. Driven by the strong governmental support as well as technological advancements and the surging domestic demand, the industry will continue to thrive in the upcoming years despite some of the regulatory and safety management challenges it might encounter.