Commercial Drones in China - The Global Drone Powerhouse

Estimated Supply of the World's Civilian Drone Market

China has quickly grown to become the drone industry’s manufacturing and technological powerhouse over the past 10 years, unlocking new market opportunities through affordable and accessible drone equipment.

It is estimated China supplies up to 70% of the world’s civilian drone market, with the number of Chinese civilian drone manufacturers still on the rise. In 2013, there were  approximately 130 drone manufacturers in China; a figure that has increased to an estimated 1,200 drone companies by the beginning of 2019.

The growth in China’s production capabilities is, in part, driven by increasing global demand. However, recent trends indicate a big shift in the drone industry from manufacturing consumer and hobbyist drones towards aircraft for commercial applications.

Beyond videography, photography, and aerial imaging, drone technologies have become increasingly important to support applications in construction, energy, agriculture, forestry, security and emergency operations, logistics, and transportation. Commercial applications are also driven by favourable domestic policies in China to promote technological advancement of industrial sectors.

The widening application areas for drone technology has increased demand for these aircraft in China. According to the Civil Aviation Administration of China, there were 285,000 drone aircraft registered at the end of 2018. By June 2019, the number of registrations increased to 339,000 drone aircraft[1].

Registered Drone Aircraft

These numbers do not reflect all civilian drones sold and used in the market, nor reflect China's total production capability.

China’s drone manufacturers are mainly located along the Eastern and Southern coasts of China, with the highest concentration of drone companies in Guangdong province. In 2017 alone, production by the Chinese drone industry is estimated to have exceeded 2.5 million units (including aircraft for exports).

While consumer hobbyist drones used to dominate the civilian drone market in China, commercial and government (public security and emergency rescue) drones are estimated to account for half, or more, of drone aircraft usage in 2019. Agriculture accounted for the largest commercial sector, followed by energy inspection.


TOP CHINESE DRONE BRANDS FOR COMMERCIAL APPLICATIONS

While DJI has become synonymous for consumer drones and videography across the world, over the past years DJI has also been systematically developing expertise across commercial segments and developing data services that it markets to companies as enterprise solutions.  

However, across commercial segments DJI does not have the same level of expertise that enables it to command the same dominating position as it does in the consumer/hobbyist and videography segments. Most notably, DJI is not active in urban air mobility (also known as drone taxis and UAM) nor has it yet marketed drones for the emerging last mile logistics segments.   

The Top 10 list of Chinese commercial drone brands — other than DJI — provides a glimpse of 10 unique drone brands that have been quietly and intelligently developing their expertise away from the limelight. This is taking place across various commercial segments and more importantly these brands are also transforming their businesses from being a hardware manufacturer to providing integrated enterprise solutions.

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The use of commercial drones for inspection, monitoring, surveying and surveillance is the primary application for commercial drones today. This includes industries such as construction, infrastructure, agriculture, energy, mining, telecommunications and insurance. Typical examples of applications across these industries include using drones to monitor construction sites, transmission lines, stockpiles and analyse the health of plants and fields.

This is a very competitive segment with many drone brands trying to establish themselves with a competitive offering. Drone companies which wish to be successful in this segment will need to increasingly focus on data analytics services to provide an added value to their clients.

  •  ZeroTech, a drone company from Beijing, sets itself apart from many of the other mainstream drone companies in China as it offers gasoline and electric powered fixed-wing and hybrid fixed-wing drones for surveying and mapping.

  • Yuneec International, based in Jiangsu, is leveraging its experience in consumer drones and videography applications to transition into commercial applications, including search and rescue and inspection.

Another unique segment for the use of unmanned aircraft is agriculture. Here, drones are not only used to analyse the health of plants and fields, but also used for spray applications. In China the leading use of drones in agriculture today is in fact for spray applications. While DJI has aggressively been developing capabilities in this segment, other companies that provide drones with spray application include XAG, TTA and Walkera. 

  • XAG, headquartered in Guangzhou, focuses purely on the agriculture segment and can be considered a leading player for agriculture drone applications. XAG has made a remarkable development since its founding in 2007 and today has the ambition to become a leading global smart agriculture solution provider. Today, XAG provides drones for spray applications, surveying and seeding, as well as offering cloud-based analytics solutions for analysing field data such as plant growth, germination rate and crop stress from the surveying and mapping data. With its focus on developing AI-based agriculture solutions, XAG is focusing on becoming a leading precision agriculture ecosystem player.

This is a very competitive market with many drone brands trying to establish themselves with a competitive offering.
— Ipsos Business Consulting

The application of drones continues to develop, with two emerging segments which will bring major changes to our cities — UAM and logistics. In both segments, players from China are at the forefront. 

  • Ehang can be considered one of the pioneers in electric UAM with a focus on developing autonomous air mobility solutions. Ehang has showcased its drone during several high-profile test flights in Dubai, Qatar, Guangzhou and Vienna. With its focus on unmanned traffic solutions, Ehang is also active in logistics after recently signing a strategic partnership with DHL-Sinotrans to develop and launch a fully automated and intelligent smart drone delivery solution to tackle the last-mile delivery challenges in urban areas of China. The company is also developing a logistics drone capable of carrying up to 260kg of cargo.

Some other notable drone companies are involved in long-distance logistics, as well as the gasoline and electric industries.

  • Beihang UAS Technology Co. Ltd has a military background and is developing an autonomous long-distance logistics drone with a payload delivery of 1500kg.

  • Efy Technology Co. has an impressive portfolio of gasoline and electric logistics drones, and automated platforms. As drone delivery starts to ramp up, it will be low population density areas in remote or difficult to access regions which will benefit first. Scalability will require beyond visual line of sight missions and most likely larger payloads. Efy has an especially well-positioned portfolio for this emerging logistics application.


CHINA’S DRONE INDUSTRY LANDSCAPE TRANSFORMATION

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Even though the drone industry in China is clearly still emerging, it is already undergoing a strong transformation. 

Together with increasing demand, policies, and growing application areas for drones in commercial sectors, drone companies have matured with increasing specialization into specific application areas, or, have expanded their aircraft portfolio to cover segments beyond consumer hobbyist customer segments.

Venturing into precision and data-based commercial applications has elevated the level of aircraft quality and capabilities from Chinese drone manufactures. This shift has also transformed the domestic drone ecosystem away from hardware manufacturing and towards services such as software analytics, pilot training, and other professional drone services catering to specific industry applications.

However, mass adoption of autonomous commercial drones integrated into the civilian airspace flying beyond visual line of sight missions will require a further technological leap. Drone services will need to be priced at a service level that consumers will want to buy, and at a safety level, regulators are willing to allow. This will require an autonomous system to fly each drone without the need for a pilot to be in direct control. 

Ipsos Business Consulting expects China’s drone industry will continue pushing the development of drone aircraft capabilities and standardization. With China’s leading position in artificial intelligence, we also expect to see an increase in artificial intelligence applied to drones, not only for interpretation of video and sensor information but also for improving decision performance and transparency of decision-making to enable true autonomous applications.

 For more information on commercial drone applications: http://www.ipsosconsulting.com/




[1] These figures do not reflect all civilian drones sold and used in the market, nor reflect China’s total production capability.