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Steep Growth Curve and Unrivalled Market Leadership: How China’s Drone Manufacturers Have Become World Champions

Flecher Kong

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Drones have quietly developed into one of the most exciting growth markets in the consumer IoT market. For a long time, drones were a niche market and apart from for industrial usage, hardly anyone trusted the high-tech flying objects. However, China’s flagship brands DJI, Yuneec and Zerotech have consistently slimmed down the devices and made them more consumer-friendly. Now the drones industry is experiencing growth rates in the high double-digit range.

 

 

The share of Chinese manufacturers in the world market for consumer IoT devices could reach 95 percent in just a few years from now. In our last blog report we wrote about the impressive development of China’s IoT industry. What is still a forecast for the overall IoT market has long been implemented in the drone sub-segment. Manufacturers like DJI, Yuneec and Zerotech may not be as well known worldwide as China’s smartphone brands Xiaomi, OnePlus or Nubia, however its market leadership can hardly be shaken.

 

Increasing Growth Rate in Drones Market Thanks to Consumerization

 

According to Gartner, 14 billion electronic connected devices will be in use in 2020. With an annual sales volume in the single-digit million range, the drones segment is currently one of the smaller segments in the global market for consumer IoT devices. However, the prospects are promising: Growth rates in the high double-digit percent range are a safe bet and a further increase in growth rate is likely. This is mainly due to the impressive turnaround that Chinese drones have accomplished. High-tech flying objects were not just invented yesterday. For example, Zerotech can look back on 10 years of experience in the development of unmanned flying machines. However, until recently, the focus of the drones industry was on industrial use such as surveying, security applications, professional film recordings, the agricultural sector or scientific research. The starting prices were correspondingly high and only a small number of private customers bought one.

 

Funny enough, it was a European manufacturer who was convinced that the drone market had bigger potential than the niche market of industrial applications. With the presentation of the French supplier Parrot’s AR model at the Consumer Electrics Show in 2010 in Las Vegas, it became clear that unmanned flying objects have got what it takes to become a mass market. Inspired by the idea of developing drones for private use, China’s tech industry has buckled down and invested in flight control, mechanics and camera technology. While not even 200 patents a year were registered ten years ago, it is now around 2,000. Today, providers such as DJI, Yuneec and Zerotech are undisputedly dominating the global drones market.

 

Customer Care Becomes Key Differentiator for Drone Brands

 

However, competition within China’s drone elite is growing. Almost all products are technically sophisticated, features and functions of the different models are more and more similar and the pricing is also alike. Providers like Zerotech are trying to distinguish themselves from their competitors with new model variants like the latest drone model “Dobby” which fits in your pocket. All providers are also working to improve their software to control drones by an app. It is a development that we already recognize from smartphones: Once a new tech device has established itself in the market and the hardware is sophisticated, providers concentrate on the customer’s overall experience, which goes beyond the actual product.

 

In this context, the establishment of extensive customer care offers could easily be the next logical step. Drones are rather delicate and complex high-tech devices that are exposed to harsh conditions when used, whether it’s recording snowboarding in deep snow or a sailing trip on the Atlantic. Even if drones are robust, problems cannot be avoided in harsh conditions. Quick help is needed when users have software questions or need hardware repair. This is a huge challenge for many Chinese manufacturers that are just entering global markets and are rarely large or experienced enough to operate their own service network. This will create new partnerships to build global customer care ecosystems that will guarantee users quick and trouble-free access to service and support.

 

Summary: Drones are considered one of the best bets in the market for consumer IoT devices. Chinese suppliers such as DJI, Yuneec and Zerotech are capitalizing not only on their own home market, but also the North American and European markets. At B2X, we recently entered a new after sales partnership with Zerotech. We offer customer care services in the US during and after the warranty on behalf of the drone provider. For further information on this exciting project, please contact us today and don’t forget to follow B2X on LinkedIn!

 

Flecher Kong is Senior Account Manager at B2X.

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