Drone makers see soaring growth but dark clouds circle industry

Wang Tao, founder of Da-Jiang Innovations (DJI), controls a drone in his company in Shenzhen, South China's Guangdong province, May 22, 2015. [Photo/Xinhua]

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

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 annual CES attracts more than 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 enables 4K－that is, ultra high-definition－video shooting.

Guangzhou-based Ehang also made a splash by unveiling the world's first battery-powered, 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.

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 market may 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.