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Competition heats up drone industry
http://www.ecns.cn/business/2015/10-30/186453.shtml
Oct 30th 2015, 00:34
Chinese tech startups rushing into commercial UAV market
China's commercial market for unmanned aerial vehicles (UAV) has been seeing rapid growth in recent years. Not only have the country's leading drone makers such as SZ DJI Technology Co (DJI) and Beijing-based Ehang Technology Co (EHang) been continuously coming up with new products, a number of small-sized enterprises and startups are also rushing into the industry, with the aim of getting a bigger slice of the market.
Jiang Chunxi, the 24-year-old chief operating officer at a startup company based in Harbin, capital city of Northeast China's Heilongjiang Province, said he has been working on UAVs for about three years, mainly focusing on R&D.
"We've completed 70 percent of our model aircraft, partially supported by the Harbin University of Science and Technology, and we intend to put them into the market by the end of this year," Jiang told the Global Times Monday.
He noted that the company's "SmallSmart" drone is expected to be used by both individual consumers and commercial enterprises. Despite intensifying competition in the domestic drone market, there will be growing demand for more diversified products, Jiang said.
US-based aerospace and defense market intelligence company Teal Group Corp estimates that worldwide UAV production will reach $93 billion in 2015, as it is seen as the most dynamic sector in the aerospace industry, according to a report published on Teal Group's website in August.
The UAV market is at 72 percent military, 23 percent consumer and 5 percent cumulative for the decade.
The Internet has also powered UAV companies in expanding their marketing shares and sales channels while building up loyal customer groups, according to a report by Beijing-based market research firm iResearch in March.
For example, some drone makers started to open stores on Chinese Internet giant Alibaba, such as taobao.com and tmall.com in 2013. Meanwhile, drone enthusiasts have created online forums to share and discuss the footage they have captured with their aircraft, according to the report.
Peer pressure
While small tech companies adopt different strategies in the drone market, China's electronics company Xiaomi Inc has expressed its intention to enter the UAV industry, domestic news portal qq.com recently reported.
Instead of establishing in its own team to produce an aircraft, Xiaomi is reportedly more likely to invest in its partners like Huami Inc, which will be equipped with the company's "Mi" brand, according to qq.com.
"It's not true that Xiaomi itself is making drones. However, I will not comment on the question that Xiaomi will invest in related companies in this ecosystem," Li Lei, a spokesperson from the company, told the Global Times Monday.
In terms of its electronic products, Xiaomi has largely benefited from Internet-powered platforms, which have helped the company build up a "Xiaomi" ecosystem, said Wang Gao, professor of marketing at China Europe International Business School. "In fact, this ecosystem would not be easily applied in the production of UAV aircraft," Wang noted.
One of the priorities in Xiaomi's corporate strategy is highlighting its loyal fan base and making customers think that they are part of the company's products, Wang told the Global Times Monday.
"However, what is coming next will not always be affordable for its loyal customers. For example, a drone product will be considered too expensive by those who buy cheaper Xiaomi smartphones," he said.
"It's no surprise that tech giants want to be players in an emerging and promising market," said Derrick Xiong, the co-founder and chief marketing officer of Beijing-based drone maker EHang, in an e-mail sent to the Global Times Monday.
EHang, which focuses on the mass consumer market instead of professional pilots, is to launch a new consumer product on November 4, which integrates an app-controlled smart aircraft with an advanced VR goggle, he noted.
Competition heating up
EHang is not the only startup that targets the commercial drone market, with a "Ghost" drone equipped with a smartphone app and aerial system designed for individual consumers. Eular Space, another robot and drone startup founded in 2014 in Shenzhen, South China's Guangdong Province, has raised about 720,000 yuan ($113,214) since it was launched on October 13 on a crowdfunding platform under taobao.com.
"The aircraft is smaller in size than products of the DJI, and by using crowdfunding platforms, we want to get closer to our potential customers," Tang Xinge, CEO of the Eular Space, told the Global Times Tuesday.
Tang noted that Hon Hai Precision Industry Co, also known as Foxconn Technology Group, had provided Eular space a package of qualified technology design solutions, which allows stable flying and solid video quality.
However, unlike those designed for professional unmanned aerial filmmaking, Eular Space's upcoming aircraft, named "Pi", is seen as an easy-to-fly aircraft, which could be more accessible to the public, he noted.
China's commercial drone market is considered an immature industry, which needs to be fully explored, even though leading companies like DJI have largely expanded in overseas markets, Zhao Yang, an analyst from Beijing-based CCID Consulting, told the Global Times Tuesday.
"As well as dealing with fierce competition in the commercial drone market, companies need to figure out a specific sector in which they are going to apply their aircraft sooner or later," Zhao said.
Startups, in particular, should be more focused instead of trying to market their drones across multiple industries. Zhao noted.
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