china

Many countries have created policy measures to boost commercial space development. At present, China’s private space industry is still in its infancy. In recent years, under a national strategy for civil and military integration, large-scale space state-owned enterprises have begun to enter the commercial space arena to promote space commercialization.

To promote the development of China’s commercial space industry, there is a need to overcome technical challenges, policy and regulation restrictions, financial security, and cooperation issues between institutes.

Opportunities

The space industry is a high-tech field. When the technology and industry mature to a certain extent, commercial space will flourish (e.g. the rise of nanosatellites). The global satellite industry has doubled its output value from 2006 to 2015. By 2015, it has reached to US$335.3 billion, with the output value of the satellite industry US$208.3 billion.

After 60 years of accumulation, China’s space development has formed a strong industrial base. In addition, it has informed policies, for example, the State Council issued in 2014 the white paper The State Council’s Guiding Opinions on Encouraging Social Investment in Key Areas of Innovation to encourage private capital to participate in commercial space field.

In addition, the white paper 2016 China’s space proposed to encourage and guide private capital and social forces to participate in space research, manufacturing, space infrastructure construction, and other space activities.

Key Influencing Factors

Legal Framework

We can divide the legal framework in two parts: international and national. Let‘s take a look:

  • International
    • The Outer Space Treaty (OST) is the basic legal framework of international space law. China is a formal party to this treaty and obeys every principle in it. Space startups in China shall pursue their business under the framework of it.
  • National
    • The Chinese government adopts supportive policies towards the commercial space activities. Non-governmental capital and other entities are encouraged to participate in space-related activities, including scientific research and manufacturing, space infrastructure, space information products and services, and satellites.

However, China’s legislation in the space industry is inadequate, especially for the commercial space sector. There are several important legal issues that need to be addressed including:

  • national permission to different activities in different space markets conducted by different act-bodies;
  • legal liability in launch and reentry activities; and
  • intellectual property protection in space sector.

Funding Sources

Funding sources for space startups in China are basically the same as with other countries around the world, including: the three Fs (family, friends and founders), government, angel investors, corporate investors, venture capitalists, banks, and crowdfunding. Below are four of the most important sources for space startups in China.

Government. China’s national government and local governments play an important role in helping small startups. For instance, on the local level, Xi’an Aerospace base has set up special funds to promote innovation, 50 million yuan per year, in order to encourage public entrepreneurship and innovation.

Private Investors. Private investors are high-net-worth individuals who either come from an affluent background or have made their fortune by successfully exiting their own company. For instance, Zhao Wenyu, vice president of Harbin robotics industry fund, invests in Onespace, which is a company that focuses on low cost small space vehicles.

Corporate Funding. In China, corporate funding is a very important source for startups. Large corporations, such as China Academy of Space Technology (CAST) (en.cast.cn), tend to fund their internal R&D less in certain areas and invest in external small startups. What’s more, they have developed many supporting programs for space startups that can provide considerable amount of capital.

Venture Capital. Venture capital firms differ from each other depending on the area in which they invest. Nowadays, China has more venture capital firms whose interest lie mainly in the space sector. As space industry is high-price and high-risk business the investment activities of venture capital firms are focused on small scale space startups.

Government Policy

The national development and reform commission of China issued relevant policies to accelerate and support the satellite application industries development as early as 2007. In 2014, Document No.60 issued by the State Council of China pointed out that private capital should be encouraged to develop, launch and operate commercial remote sensing satellites and to provide market-oriented services. In 2015, the Chinese government revised and simplified the policies for rocket and satellite development, production and launch processes. From 2015, the Chinese government has been encouraging companies to carry out commercial rocket and satellite development and production. State owned space enterprises help the commercial space sector to develop their technology and human resources. Through government stimulation, the commercial space companies could cooperate with the state enterprises and promote the application of space technology in other fields, also known as spin-off technologies. Since 2014, a lot of commercial space startups have emerged. For example, in the city of  Shenzhen, four private space companies have been set up.

Market

Space industries can be divided into many segments: launch vehicles, satellites, manned space laboratory, etc. There are a lot of single satellite industry segments, each of the future are likely to be one of billions dollars scale. For example, the commercial space company Aerospace Corp (OneSpace) has formulated and completed more than 100 million yuan (Ren min bi)  of round A funding, valuing currently at 500 million yuan.

Human Resources

There are many experienced managerial personnel, but most of them are working in state-owned enterprises. With the continuous development of commercial aerospace, more and more people are willing to invest in the commercial space sector. Judging from the development of China’s education, more and more people receive better education to provide talent support for the commercial space industry. At the same time, China has carried out a great deal of international exchanges and cooperation in recent years. China has a large number of students studying abroad who can become founders of aerospace start-ups in the future.

Success stories

The Whole Industry Chain

Chang Guang Satellite Technology

Chang-Guang-Satellite-Technology
Typical Mapping services

Established in December 1, 2014, by the Jilin Province investment and Changchun Institute of Optical Machine technology.

The company relies on space-based integration, airborne integration and other technologies, established from the satellite, UAV R&D and production to provide remote sensing information services, a complete industrial chain.

The company has made a close connection with the government, through the naming of satellites for Jilin (name of Province) on the 1st and other measures to fully make use of the provincial government and municipal government policy support. Also the joint establishment of industrial funds and industrial area, the company gets the common support in Jilin Province development.

Focus on One Part of the Industry Chain

Twenty First Century Aerospace Technology

Twenty-First-Century-Aerospace-Technology

They deal with remote sensing satellite operations and data mining.

Established in 6th June 2001 and invested in by the Beijing government. Their business scope includes Internet information services business, the first domestic commercial remote sensing satellite operators and application service providers.  

In the development of space information application services, the company adheres to the user needs, accurate understanding, depth analysis, special production, long-term operation of integrating multi-source data, production of multiple products, Services for the business models, a comprehensive commitment to the application of personalized services, specialization and diversification.