Summary of Key Points
China's low-altitude economy (related to industries such as drones and eVTOL aircraft) has become a globally coveted opportunity. On one hand, its market size of 1.5 trillion yuan, policy support (such as the "14th Five-Year Plan" for hydrogen energy), and complete supply chain attract numerous overseas companies to seek investment in China. On the other hand, Chinese local enterprises (especially upstream suppliers) are also expanding their presence overseas, securing orders in international markets. Both parties benefit from this cooperation: overseas companies bring technology, airworthiness experience, and distribution channels, while Chinese companies provide access to markets, supply chains, and cost-effective services. However, "airworthiness certification" (the legal qualification for aircraft to operate) remains a critical challenge for both Chinese and foreign enterprises.
Why Are Overseas Companies Flocking to China's Low-Altitude Market?
Simply put, the Chinese market is extremely attractive, coupled with supportive policies and a robust supply chain:
- Large Market Size: By 2025, the scale of China's low-altitude economy is expected to reach 1.5 trillion yuan, with eVTOL (electric vertical takeoff and landing aircraft) generating annual orders worth over 30 billion yuan. With nearly 20,000 drone companies in the industry, who wouldn't want a share of this lucrative market?
- Policy and Technological Support: The "14th Five-Year Plan" places emphasis on hydrogen energy, attracting companies like Intellidrive from the UK, which is looking for opportunities to apply hydrogen fuel cells in drones in China.
- Supply Chain Advantages: China has a complete supply chain for key components such as membrane electrode assemblies. Overseas companies can not only sell their products but also integrate into this supply chain to reduce costs and even supply globally.
Companies like Ortalli from Europe, with 40 years of airworthiness certification experience, are drawn to China to offer their expertise and help in breaking into the market. Intellidrive, which previously targeted only European and American markets, is now specifically seeking cooperation in China due to these advantages.
How Are Chinese Upstream Enterprises Expanding Overseas?
Chinese suppliers of aircraft systems and batteries are not just entering foreign markets blindly; they have two key strengths:
- Strong Risk Resistance: Many European suppliers focus on a few products, making them vulnerable to market fluctuations. Chinese companies like AVIC Civil Aircraft offer a wide range of 300 products covering sensing, energy, control, and other areas, ensuring stable long-term supply and greater customer trust.
- Cost-Effectiveness: Many startups in the low-altitude economy require customized solutions, but overseas manufacturers often charge significantly more. Chinese suppliers provide cheaper customization services. For example, NIOWATTIC has secured orders from the Middle East and UK markets by offering competitive pricing.
Moreover, foreign aircraft manufacturers are actively seeking Chinese suppliers, not only because of China's lower-cost supply chain but also to position themselves in this growing market, which is one of the largest in the world.
Mutual Benefit in Cooperation
The cooperation between Chinese and foreign companies is mutually beneficial:
- What Overseas Companies Offer to China: Technology (such as hydrogen fuel cells), airworthiness certification experience (e.g., Ortalli's help in obtaining international certifications), and distribution channels.
- What Chinese Companies Offer to Overseas Companies: A vast market, an open attitude to cooperation (even small companies like Ortalli can collaborate with large Chinese firms), and a complete supply chain.
For instance, officials from the Uzbekistan Space Agency visited Shanghai to learn about drone technology and management systems, demonstrating another form of collaboration where China shares its expertise while the other party gains valuable knowledge.
The Crucial Issue of Airworthiness Certification
Whether Chinese companies are expanding overseas or foreign companies entering the market, airworthiness certification is a necessary hurdle. It's like obtaining a driver's license for aircraft to operate legally in any country.
- Challenges for Chinese Companies: Meeting international safety standards is essential, such as those required by Europe and the US. Many companies consider these standards early in product development but still face challenges in balancing cost, weight, and performance.
- Benefits for Overseas Companies: Their experience in certification can help Chinese companies avoid unnecessary detours. Ortalli's company uses its 40 years of expertise to facilitate this process.
In summary, China's low-altitude economy is a platform where both parties are moving towards mutual success. However, overcoming airworthiness certification remains a critical barrier that must be addressed for all involved companies to fully benefit from this emerging market.