Increasing number of private start-ups entering satellite, rocket market
With more private firms and investors entering the commercial aerospace industry in China over the past three years, the sector, which is currently focused on satellites and rockets, is set to realize enormous value in the near future, industry analysts told the Global Times on Wednesday.
In 2014, the State Council, China's cabinet, formally announced it would allow private companies to research, manufacture and launch as well as operate commercial satellites, which prompted a batch of Chinese entrepreneurs to excitedly pitch some ideas in the industry.
One of those included Yang Feng, CEO of satellite-maker Spacety, which is based in Changsha, capital of Central China's Hunan Province.
Founded in 2016, Spacety has had four of its miniature satellites - designed mainly for scientific research - launched into space so far.
"Most customers of Spacety's satellites are universities and research institutes, plus we have also cooperated with some commercial firms," Yang told the Global Times on Wednesday.
Spacety also plans to have 15 more miniature satellites sent into space this year, which, if done successfully, will further promote the mass production of commercial satellites, said Yang.
The number of China's orbital launches has been on the increase since 2010, bringing the total number of satellites launched from the country in the past 50 years to about 190, while private firms have unveiled plans to launch more than 20 satellites in each of the next two years, the Financial Times reported in November 2017.
On top of the entry restriction ease, the government proposed in 2015 the strategy of integrating civilian and military cooperation in technology to promote the country's space programs, which has further resulted in the rapid development of China's private space sector.
"Taking advantage of the country's opening-up in the aerospace sector, which used to be dominated by State-owned enterprises [SOEs], more private firms have the demand to explore space," Yang said.
For example, a cloud services firm might want to realize data-saving in the space sector, which Spacety can help customize and help launch the business into space, Yang noted.
"A new generation of macro satellites or cube satellites [CubeSats] has seen rising numbers and popularity over recent years, since they can be designed and made in a relatively short period of time at lower costs compared with those big ones usually made by the SOEs," said Lan Tianyi, founder of Beijing-based Ultimate Blue Nebula Co, a space industry consultancy.
CubeSat is a type of miniaturized satellite for space research that is usually made up of multiples of 10x10x10 cubic centimeter units with a mass of no more than 1.4 kilograms per unit. Hundreds of this type of satellite have been deployed into low-Earth orbit and the number is increasing sharply.
"It's hard for these small satellites [those with a mass less than 500 kilograms] to find an exclusive launch vehicle to be sent into space with, since the traditional launch vehicle is much larger," Lan explained, noting the small satellites often have to "carpool" with bigger satellites to act as the secondary payload of a launch mission.
"Although it costs less for the miniature satellites to be carried on the larger launch vehicles, they have to follow the orbit of the big ones instead of going wherever they want to go," Lan told the Global Times Wednesday.
Against this backdrop, private space companies that can make small rockets and provide exclusive launch services have also emerged, including Beijing-based start-up One Space Technology Co.
Targeting the small launch rocket market, One Space has secured financing worth 500 million yuan ($79.52 million) so far since its establishment in August 2015, domestic news site tech.qq.com reported in January.
On January 22, the start-up successfully completed the test for its self-developed liquid attitude control engine of its OS-M rockets. And in June, it is set to launch its first OS-X rocket, designed for suborbital flights in order to provide high-altitude research and test services, following a successful series of tests on its solid-propellant engine in December 2017.
But One Space is certainly not alone in the private small rocket-making and launch sector in China.
Beijing-based LandSpace Technology is also expected to debut its LandSpace-1 rocket this year. In January 2017, LandSpace signed a contract with Denmark-based satellite manufacturer GOMspace, becoming the first Chinese company to develop its own commercial rockets that would provide services to the international market.
Lan also said that State-owned launch vehicle enterprises are paying more attention to small launch vehicles. For instance, State-owned high-tech enterprise China Aerospace Science and Industry Corp (CASIC) will conduct several launches in 2018, including the Kuaizhou ("fast boat" in Chinese) series of solid-fueled launch vehicles, mainly for commercial purposes.
Opportunities and challenges
Xie Wenli, president of Qianhai Mergers and Acquisitions Funds, which has invested 50 million yuan in One Space, said in a note to the Global Times that China should concentrate more on research and technology development, which needs long-term, heavy investment, while the civil sector is suitable to serve the commercial market where technologies are relatively mature, thus supplementing the whole industry.
The global space economy will become a multitrillion-dollar industry within the next two decades, Goldman Sachs said in a report in April 2017.
However, financing poses a big challenge for the survival and then thriving of domestic start-ups since research and manufacturing cost a lot, industry analysts said.
Lan opined that the business logic of launch companies is relatively simple and its returns in later periods tend to be very lucrative, despite current high risks and large investments, adding that some venture capital is sweeping through the market.
He also suggested that satellite companies could offer more pre-orders to support domestic rocket start-ups as a way to help with funding, which could largely help save time in the period between research and launches, citing Elon Musk's SpaceX as an example.
SpaceX, a US space exploration company, was reported to have nailed down over 10 launch contracts before it sent the first Falcon-9 rocket into space in 2010.
Commercial exploration of the satellite industry, the downstream industry for rockets, has not met expectations, possibly bringing difficulty to rocket start-ups at the nascent development stage, Xie noted.
For another thing, the timetable of rolling out related national policy has still not been set, especially that concerned with the establishment of commercial launching sites, Xie added.
"Compared with the U.S. commercial space industry, which the government has been promoting strongly since the 1980s, China is still at the early exploring period in this regard," he said.
He believes that the domestic commercial space industry is set to take faster steps in the future with authorities positively learning and pushing its development.