Business World

Tuesday 23 July 2019

High-flying China: Nation tipped to be global aviation leader as it develops drone technology

The Big Picture

China's leader Xi Jinping
China's leader Xi Jinping
Ellie Donnelly

Ellie Donnelly

China is set to become a leading force and disrupt the world of aviation, according to a paper from the World Economic Forum (WEF).

American and European companies have traditionally led the way in the aviation industry.

Companies such as Boeing and Airbus have had a duopoly in passenger aircraft manufacturing, while the Federal Aviation Administration and European Aviation Safety Agency's regulatory leadership has set the global standard for aviation safety.

However, the WEF has outlined three reasons as to why Chinese progression in the industry is happening on such a large scale. Firstly, the Chinese are innovating faster. The drone industry, it notes, is characterised and driven by one company; Da-Jiang Innovations (DJI). This company has over 70pc of the global market share for the consumer drone industry, and in 2017 the business posted revenue of $2.7bn (€2.3bn).

Given its comprehensive supply chain integration, manufacturing pipeline, innovative pace and logistics support, it has clear competitive advantages over other companies operating in the sector.

In addition, the report states that Chinese manufacturers are well ahead of their competitors in the development and testing of autonomous systems for personal mobility.

The second factor that will help China become a major player in the aviation industry concerns its size.

With around 1.4 billion people, and many cities on the top 20 list for highest density, China has an urgent need for greater movement of people, property and services.

JD.com, China's second-largest online retailer, has built a drone delivery business that reaches 100 villages in the country, leveraging 40 unmanned aircraft. In comparison, in the US, Amazon is still hoping for approvals to begin flight testing.

As an estimated eight in ten business to consumer deliveries are falling into the high-value, low-weight category, drones will soon be a disruptive force in last-mile delivery in China, then the rest of the world, according to the WEF.

The third factor behind why China will be in a position to take on the West's aviation industry is down to state support.

The WEF states that it is the government's ability to both invest heavily into the technology and aerospace sectors, while also supporting both through regulatory agility, that may be the country's greatest asset as it develops its presence in the sector.

President Xi Jinping's 'Made in China 2025' initiative will play an important role in leading the aerospace industry globally, the paper finds. With China projected to become the world's largest passenger aviation market by 2024, much of the technology being developed for drones will transfer to larger aircraft and autonomous personal mobility platforms.

Irish Independent

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