China made millions of drones. Now it has to find uses for them
Authorities bet ‘low-altitude economy’ will be next driver of growth
In a school district in Shenzhen, would-be truants dodge surveillance drones that patrol the streets. At a nearby park, office workers pick up takeaway delivered by drones from food delivery app Meituan.
Elsewhere in southern China’s technology hub, unmanned aircraft transport vials of blood between hospitals, help police departments with crowd control and extinguish blazes for firefighters.
For years, the government has provided strong support for drone production in the form of tax relief, subsidies and industrial parks, said multiple companies and analysts. Now, it is trying to apply them in other sectors of the economy and make drones a new driver of growth.
The drone network in Shenzhen, which authorities have called a “sky city”, is at the heart of China’s efforts to grow its so-called low-altitude economy, referring to activity in airspace less than 1,000 metres above ground. For comparison, the Burj Khalifa, the world’s tallest building, is 828 metres tall.
While the government and military have so far driven demand, drone makers are now seeking commercial customers.
“The low-altitude economy has gradually moved from a concept to a mature application stage,” said Li Zhizhao, marketing director at Harwar, which develops drones used in schools and is also making aircraft to fight fires and inspect roads. “It’s demonstrating huge market potential.”
China dominates the production of commercial drones, accounting for 70-80 per cent of global supply, according to analytics provider Drone Industry Insights. Shenzhen is home to DJI, the world’s largest commercial drone maker by sales, as well as thousands of parts suppliers, a clustering that has made Chinese drones cheap and efficient to produce, said Li.
The country also has a stranglehold on research and development, accounting for 79 per cent of approved drone patents globally last year, according to a report by London-based law firm Mathys & Squire. DJI alone filed 64 patents among the 7,890 total.
“That’s a huge figure,” said Andrew White, a partner at Mathys & Squire. It “really goes to demonstrate the amount of innovation that’s going on by Chinese entities in this sector”.
The Civil Aviation Administration of China expects the market size of the low-altitude economy, which includes other innovations such as flying cars, to grow fivefold to Rmb3.5tn ($490bn) by 2035. In a sign of China’s ambitions for the sector, the state planner last year established the Low-Altitude Economy Development Division, a rare example of a department dedicated to developing a specific industry.
There were nearly 2.2mn drones registered with the CAAC at the end of last year, according to the latest available figures.
About a third of the country’s industrial drones are used in agriculture or forestry, while more than a fifth are used for geographical surveys. The next biggest uses are patrols, security monitoring, firefighting and disaster relief, according to 2022 figures from analytics provider Guanyan Tianxia Data Center.
Wu Yudong, operations chief at agricultural drone maker JIS, said unmanned aircraft could reduce the time needed to spray pesticides or fertilisers to less than a minute a mu, a Chinese unit equivalent to about a sixth of an acre. Using traditional methods, that might take about half an hour, he said.
But JIS’s sales of training drones, introduced less than a year ago to teach people from across different industries to pilot the devices, now outstrip those of its core agricultural products. “With the country promoting low-altitude airspace . . . lots of people want to enter this industry,” said Wu.
Meituan, China’s largest food delivery platform, in April received nationwide approval to have its drones deliver takeaways to kiosks installed throughout cities. Rivals JD.com and Ele.me have also begun using drones on some delivery routes.
Although many manufacturers are adapting technology for civilian use, the military remains their primary customers, said a number of companies at the Unmanned Aerial Systems Expo, China’s largest commercial drone fair, last month.
The National University of Defense Technology accounted for 73 drone patents in the past two years, according to the Mathys & Squire report, although the number of applications for military technology is likely to be higher because national security-related patents are not made public, said White.
Li Sijia, a project manager at Huahang High-Tech Beijing Technology, which sells 90 per cent of its carbon-fibre body drones to military clients, said it was hoping to expand its civilian market, but the hefty price tags of its products and China’s strict export controls were limiting the company’s potential reach.
“Why would a company like us, that does military-use products, attend a civil drone fair? The first reason is for survival,” he said, adding that profits were “not very high”, given intense competition in the industry. “The second reason is that we want to bring these products to the civilian market.”