Late September saw the fourth edition of the China Commercial Aerospace Forum, held in Wuhan, in south-central China at the intersection of the Han and Yangtze rivers. As an American who has spent most of my adult life of China, the conference took place at a fascinating time for me, in the midst of a potential trade war between my home country and my adopted home country.
More importantly, though, the conference took place around nine months into the most fast-paced year in the Chinese commercial space industry that we have ever seen. The energy at the show was palpable. The attendees were predominantly Chinese companies, and indeed, the majority of the Chinese companies in attendance were state-owned companies, mostly under the umbrella of the China Aerospace Science and Industry Corporation (CASIC), the event sponsor and organizer. With that being said, there was a sizable foreign representation, as well as a large and growing number of private-sector Chinese space companies. When looking at this space conference from the perspective of the broader Chinese space industry, several key points emerge:
The Exhibition was mostly about the state-owned companies, and in some instances, the state itself.
The biggest booth at the conference by far was CASIC, with an enormous booth right at the front. CASIC, is a Chinese state-owned aerospace giant and defense manufacturer. The company was the centerpiece of this conference, given their recent investment of hundreds of millions of USD into the Wuhan Aerospace Industrial Base. The industrial base is a project that has included the establishment of CASIC-owned but nominally private rocket company ExPace and multiple LEO constellation-related companies in Wuhan. This is seen as one of CASIC’s main strategic plays for establishing itself in the commercial space industry.
On the whole, this seems to be consistent with broader Chinese governmental policy to develop interior provinces diversifying regional economies. In the context of this conference, the importance of government more specifically was shown on the first morning of the 2-day exhibition. The exhibit hall was crowded and people had their phones ready for photo-taking. You could feel the anticipation in the air. The reason for all of this?
The arrival of Wuhan’s Mayor (Wuhan: population: 10M, GDP: US$180B, capital of Hubei province), and the Vice Premier of Hubei Provincial Government (Hubei: Population 60 million, 2017 GDP: US$540B), with the city and province GDP being roughly the size of Greece and Sweden, respectively. The two leaders and their entourage of dozens of media, politicians, and netizens with cameras, were led around the exhibit hall by the head of CASIC, so they could be given a first-hand account of all the hi-tech jobs and companies that CASIC can bring, and has brought to Wuhan. It was by far the busiest period in the exhibit hall for the entire two days.
While the push towards commercial space in China is very real, the exhibition’s first ~hour was a reminder that the government still has a big role to play. Private space companies in China now employ thousands of people. The big state-owned ones employ tens of thousands to over 100,000 people, and their decisions have a big impact on the industry. With provincial or municipal governments such as Hubei/Wuhan seeing space as an appealing growth industry for their local economy, it makes sense that government regulations and activity would encourage such an industry, and that these regulations and activity would be more focused on the state-owned space companies that employ far, far more people than private ones.
The above was followed by around hours of speeches given by high-level government and state-owned company officials in a very grand ballroom, with the remainder of the conference after these speeches occurring in two significantly smaller, though also very nice ballrooms. The key takeaway from the government/SOE speeches was that the government will continue to work to lessen barriers to the development of commercial space, while unveiling strategic initiatives to help spur the industry.
But the conference was quite different...
While the exhibit hall was clearly indicative of government companies’ importance , the conference in the wonderful Intercontinental Wuhan Hotel—connected to the convention center for easy and convenient access I might add—was quite different. There were many more private companies, both in terms of speakers and attendees, and the dynamism coming from these private sector companies was apparent. The conference was quite full, and on the first day this was spread over two rooms of around 80-100 chairs each.
During the conference coffee breaks, the networking was brisk and there were clearly a lot of ideas being exchanged, people meeting other people, and a certain degree of excitement among the attendees. The attendees were generally very well-informed about the space industry —both in China and in the west—and there seems to be a lot of optimism on the part of private companies more generally in terms of their business moving forward. Beyond this, compared to previous Chinese space conferences that I have attended, the level of English and degree of internationalization among the attendees was comparatively high, with this partially due to the fact that many commercial startup companies have CEOs with experience in the west.
Beyond this, there was a higher degree of diversity of companies, backgrounds, and there were some new faces, even for my business partner Tianyi Lan, who has been in the China space industry for many years. My impression from the conference, and from the private companies present, is that there is a lot of excitement among the private sector, a lot of optimism, and that these companies are moving quickly and have big ambitions.
The Ecosystem Is Starting to Develop
In addition to the many state-owned and private space companies, there were a number of unexpected companies attending the conference. This included a number of regional banks, such as Hankou Bank (based in Wuhan) and insurance companies. Given the fact that most lending to big, state-owned companies (like CASIC) would be done by big, state-owned banks, the presence of smaller, private or local government-owned banks indicates they are looking at private space companies as potential customers/companies with which to do business. Beyond the traditional financiers, there were a handful of VCs present, with this including representatives from Legend Capital (Lenovo’s VC). The entry of VC into China’s space industry has been a recent phenomenon, with activity accelerating over the past 12-18 months.
Additionally, the attendance of a larger number of foreign companies or representatives, ranging from think tanks to equipment manufacturers to consultants was an indication that, at least in a small way, that the Chinese space industry is starting to become more open, international, and globally relevant.
Conclusion
Overall, the China Commercial Aerospace Forum in Wuhan was an interesting event. 2018 has been a pivotal year for the Chinese space industry in terms of funding, technological advancements, and internationalization, and the excitement at this conference was a reflection of that. While the industry remains largely dominated by state-owned companies, there is a real private sector that is starting to show significant signs of life. Moving forward, the state-owned sector is likely to remain dominant in the space industry for some time, especially for cutting-edge mega-projects (space station, moon missions, etc.) and traditional space industries. With that said, China’s competitiveness in fast-growing, nascent industries such as smallsats, small-medium launch, etc., and in particular its competitiveness on the international stage, will likely be driven by the private sector. The 4th annual CCAF was indeed more of the same, but it also showed an industry that is changing quickly.
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Blaine Curcio is the Founder of Orbital Gateway Consulting and a Senior Affiliate Consultant at Euroconsult. He’s an expert on the commercial space and satellite industries with a focus on the Asia-Pacific region. He can be reached at: blaine@orbitalgatewayconsulting.com
