The "Turnaround" of Small Cities in Commercial Aerospace: How Chizhou Found a Path Amidst Giants?
Hello everyone, I'm your financial analyst. Today, we're going to discuss a topic that may sound quite technical, but its underlying logic is actually very practical: How did Chizhou, a small city in Anhui with no traditional aerospace heritage and not even considered wealthy, manage to make its way into the highly competitive commercial aerospace industry, and even come up with the innovative concept of a "rocket supermarket"?
Many people think that building rockets is the domain of major cities like Beijing, Shanghai, and Xi'an—what's a small city like Chizhou doing in this field? But Chizhou has proven in just six years that as long as you target the right areas, do the math right, and can bring people together, even a small city can get a share of the trillion-dollar space economy.
Below, I'll break down this news into five key points to explain in plain language how Chizhou played this strategic game.
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1. Choosing the Right Entry Point: Focus on the "Heart" and "Assembly" Instead of the Complete Rocket
Core Logic: Avoid the pitfalls of heavy capital investment by focusing on the most valuable and critical parts of the supply chain.
Commercial aerospace is an extremely costly endeavor—research and development, factory construction, and launches all require significant funding. For a city with limited financial resources, trying to do everything from scratch can be overwhelming. Chizhou's strategy was smart: it didn't aim for completeness but focused on two core areas: rocket assembly and power testing.
Think of it like running a high-end restaurant. You don't need to grow your own vegetables, raise cows, or grind flour (the upstream processes); you just need to master the core skills of cooking (assembly) and controlling the heat (power testing).
- Why assemble rockets? According to the news, Xinghe Power established a base in Chizhou responsible for assembling liquid rockets. This means that the actual structure of the rockets is assembled here. The assembly process is the backbone of the supply chain, which can attract related businesses to follow.
- Why power testing? The engine is the heart of the rocket and also the most expensive and technically challenging part. Chizhou took on the production of control valves and attitude control systems. Although it doesn't manufacture the engine components, it has gained significant influence by mastering these key supporting and testing capabilities.
In simple terms: Chizhou didn't compete with larger cities in terms of basic research; instead, it positioned itself as a "super assembly factory" and a supplier of critical components. This approach avoided the most costly research phases and secured a position in the more profitable and technically demanding manufacturing segments of the supply chain.
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2. Making the Right Financial Calculations: Reusable Technology is Key to Reducing Costs
Core Logic: The essence of commercial aerospace is manufacturing, and only by lowering costs can companies scale up. Chizhou bet on the future trend of reusable technology.
A noteworthy detail in the news is that the manufacturing cost of the first stage of the Zhishenxing-1 rocket is about 100 million yuan. If each launch resulted in the complete destruction of this rocket, that investment would be wasted. However, if the rocket can be reused, the initial cost can be spread over multiple launches.
- Chizhou's Strategy: From the design stage, they focused on making the rocket reusable. This wasn't just for show; it was about reducing costs.
- Business Model: Only when launch costs decrease will satellite companies be willing to launch large numbers of satellites (for example, for constellation networks), and rocket companies will have orders, allowing Chizhou's factories to operate at full capacity.
In simple terms: Imagine a ride-hailing app with a fixed starting fee of 1,000 yuan—no one would use it. But if the fee could be reduced to 100 yuan, more people would use it. The companies Chizhou supports are working on the technology that lowers this starting cost. Small cities attract big projects by helping businesses understand how to make money more efficiently.
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3. Creating a "Rocket Supermarket": From a "Handicraft Workshop" to an "Assembly Line"
Core Logic: Traditional rockets are custom-made luxury items, but commercial aerospace needs standardized, mass-produced products. Chizhou has achieved this through industrialization.
The news mentions the concept of a "rocket supermarket," a project initiated by Aerospace Yilong in Chizhou.
- Past Challenges: Building rockets was like making custom suits—each launch required a new design, new molds, and new production processes, which were inefficient and costly, unable to meet the needs of modern satellite networks like Starlink or Qianfan Constellation, which require thousands of satellites.
- Chizhou's Solution: The "rocket supermarket" uses modular and standardized approaches. Parts and components are standardized, and the required rocket can be assembled from these pre-made components.
- Location Strategy: Chizhou was chosen for its favorable geology (sturdy foundations for heavy equipment) and its excellent logistics (proximity to main roads and ports). These seemingly insignificant infrastructure elements are essential for industrial mass production.
In simple terms: Chizhou has transformed rocket manufacturing from a handicraft workshop into an assembly line, increasing production capacity rapidly—10 rockets per year in the first phase and 100 per year in the third phase. This rapid response capability is a competitive advantage for a small city compared to larger ones.
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4. Weaving a Dense Industrial Network: From a Single Breakthrough to an Ecosystem
Core Logic: Just having one company doesn't count as a victory; the entire supply chain needs to be involved. Chizhou has created a complete aerospace ecosystem.
The news shows a long supply chain diagram hanging in Chizhou's offices. Their investment promotion strategy isn't based on random selection but on the potential of each company within the supply chain.
- Specific Examples:
- Rocket Side: Xinghe Power (the leader of the supply chain).
- Satellite Side: Xingyi Lianxin was brought in to produce satellite communication payloads, meaning both the rocket and its "brain" are manufactured in Chizhou.
- Materials Side: Local companies that produce composite materials have transitioned to the aerospace industry.
- Data Side: Chizhou is also investing in satellite data applications.
- Aggregation Effect: By August, 23 upstream and downstream companies had invested a total of 19.26 billion yuan. This aggregation means that if the rocket factory needs a screw, a nearby company can supply it; if the satellite factory needs testing, there are local facilities available.
In simple terms: Chizhou is creating a space version of the "Yiwu Model" or "Shenzhen Model"—it's not just about producing one product but bringing together all the players involved in rocket and satellite manufacturing, materials, and data processing. This reduces transaction costs and accelerates innovation, enhancing the region's competitiveness.
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5. Overcoming Small City Disadvantages: Leveraging Higher-Level Support and Local Resources
Core Logic: Small cities lack funds, talent, and launch facilities. Chizhou addresses these issues by seeking national and provincial policies, activating local resources, and using talent conversion strategies.
This is the most practical but also challenging part. Chizhou doesn't have the same research foundation as Xi'an or Beijing, nor does it have the launch facilities of Wenchang in Hainan, and its local finances are limited.
- Leveraging Higher-Level Support: Chizhou actively sought national and provincial policies, such as the Anhui Province's support for building a regional rocket sharing test center, and it set up its own guiding funds to connect with the Yangtze River Delta fund.
- Activating Local Resources: It utilized existing manufacturing capabilities, such as companies that originally produced materials for cars or military use, now transitioning to aerospace materials.
- Talent Strategy: Small cities may not be able to retain top scientists, but they can attract engineers. Chizhou collaborates with universities like Beihang University and Harbin Institute of Technology to train applied talents and offers them the opportunity to see their work directly applied in products, providing a sense of achievement and financial benefits.
In simple terms: Chizhou understands that it can't compete with larger cities in terms of research; instead, it focuses on efficiency and practical application. It aims to become a manufacturing base and a hub for technology transfer, offering engineers the opportunity to see their work contribute to actual space missions, which is as appealing as higher salaries.
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Conclusion: The Chizhou Model for Other Small Cities
Chizhou's story shows that in the field of commercial aerospace, small cities have opportunities. The key is to focus on differentiation and specialization:
1. Don't try to do everything: Identify your strengths in the supply chain (e.g., manufacturing, assembly, supporting services) and deepen your expertise.
2. Calculate the economics carefully: Support technologies that can truly reduce costs and increase efficiency (e.g., reusability, modularization) to ensure a viable business model.
3. Build an ecosystem: Bring together all relevant elements of the supply chain to create a cohesive industrial cluster and avoid isolation.
4. Cope with limitations: Use policy support, local resources, and talent conversion strategies to compensate for financial and research shortcomings.
Chizhou is proving that commercial aerospace is not just a high-end research endeavor but also a practical manufacturing sector. The company that can produce rockets efficiently and launch them at low costs will dominate the future. And Chizhou is becoming an important node in this emerging landscape.