How Shenzhen, the hi-tech hub of China, became the drone capital of the world
- Shenzhen is home to more than 600 licensed commercial drone companies, out of a total of about 7,000 in mainland China
- Founded in 2006, DJI now accounts for about 80 per cent of the world’s commercial drone market
What began as a Sunday market for factories that assemble gadgets and toys for major global brands, Huaqiangbei has evolved in less than 10 years into a communal focus group – where customer feedback and consumer demand are instantly fed back to hardware and software developers – resulting in a stream of new products that get updated within weeks. It has easily adapted to what consumers want.
It is also the place where the world’s largest market for recreational drones was born, according to Yang Yang, executive deputy secretary general of the World UAV Federation (WUAVF), the organisation behind the annual Drone World Congress and the Shenzhen International UAV Expo, events which highlight the latest advances in unmanned aerial vehicles.
“I think the government has always used DJI as kind of a shining star to attract new talent and more companies to the city,” said David Benowitz, head of research at DroneAnalyst.
DJI and other UAV firms selected Shenzhen as their base because of the city’s proximity to a supply chain of manufacturers and component vendors, as well as access to hi-tech talent and low-cost labour, especially those who know their way around assembly lines, according to Benowitz.
“For a drone company, or just any consumer electronics manufacturer, Shenzhen has been the most valuable city to be [located] due to the speed [in hardware development] and the talent pool that’s there,” said Benowitz, a former senior executive at DJI.
Although China is said to have been making military UAVs since the 1960s, drones for recreational use made up just a tiny segment of the consumer electronics market in Shenzhen when DJI’s Wang moved to the city in 2006.
Drones soon turned from expensive and clunky flying machines for affluent hobbyists into more sophisticated, but affordable, devices for consumers to take high-definition aerial pictures and videos, as DJI’s operations and technology developed, according to WUAVF’s Yang. The company is credited with quickly adopting advances in mobile internet technology, battery life and video stabilisation, among many hardware and software upgrades.
“DJI and Frank Wang actually made [drones] too easy to use,” said Yang.
The city initiated an aerospace industry development plan from 2013 to 2020, which supported batches of drone companies each year, according to Liu Guozheng, head of marketing at drone company Autel Robotics.
In 2018, Shenzhen introduced the country’s first UAV supervision platform, opening up the flight management systems of the air force, civil aviation and local government. That has enabled the three sectors to get connected, share information, determine responsibilities and pursue joint supervision.
“Shenzhen leads the UAV industry in several aspects,” Liu said. “The first is government support.”
Autel, which makes both industrial and consumer drones, is one of the UAV and robotics companies that used Shenzhen as a springboard to international expansion. Founded in 2014, the company has been investing in the US and is expected to replace Yuneec as the distant No 2 challenger to DJI, according to Benowitz of DroneAnalyst.
Will Chinese drone giant DJI fly the friendly skies under Joe Biden’s watch?
Apart from government support in getting office space, Liu said Autel has benefited from the city’s fully developed industrial supply chain and openness in welcoming top talent from around the world.
“Shenzhen is a competitive market,” Liu said. “But as long as you work hard, you will keep growing.”
Industrial-grade drones made in Shenzhen account for 60 per cent of the domestic market. In 2019, the city’s total drone exports reached 18 billion yuan (US$2.8 billion), led by consumer UAVs.
The central government has also included UAVs in national development initiatives, such as the previous five-year plan from 2016 to 2020. Agricultural drones started receiving subsidies as a part of a nationwide programme to modernise farming in 2017. UAVs were even mentioned in a national plan promoting the country’s artificial intelligence industry.
Much of the success in China’s drone’s industry has also come from strategic alliances formed with other industries, according to Jessica Chung, co-lead of the centre of excellence for commercial drone adoption at Ipsos Business Consulting.
“In China, when they were developing this, I think the culture was much more open to trying different technologies and applying these into different arenas,” said Chung. She indicated that the country rolled out drone regulation faster than some markets, as UAV applications expanded.
“It’s not so much a flying machine, but something that’s actively collecting information you would otherwise not get or have to purchase at a very expensive price on an infrequent basis,” said Chung of Ipsos. She indicated that opportunities in China’s vast economy have attracted drone makers from the US and Europe to push their products in various industries.
Still, competition is tough in a market led by DJI. Robotics and drone companies in China have developed and prospered in tech hubs, including universities and technology parks, according to Kay Wackwitz, founder and chief executive at market research firm Drone Industry Insights in Hamburg, Germany. He described Shenzhen as a “perfect infrastructure supported by the government, with mass production for a global audience”, where [every drone company] is “fighting against the Chinese giant DJI”.