The Legion of Science and Technology, "Putting Satellites" in Commercial Space

Image source @ Visual China

Text | Sunday Finance, author | Zero dew

For the first time, mankind has developed the commodity economy into the field of aviation.

At 11:17 a.m. local time on April 8, with the successful launch of the "Five Hands" rocket Falcon 9, 3 tourists began an 8-day journey to the space station, the crew members of the flight were paid tourists, and each paid $55 million (about 350 million yuan) to buy a "ferry ticket" to leave the earth.

Not long ago, on March 3, a Chinese aerospace company was about to get a "ferry ticket" for the capital market. Haitong Securities issued a listing counseling filing report on its official website, and the object of counseling was Changguang Satellite Technology Co., Ltd. This is the first commercial remote sensing satellite company in mainland China, covering satellite design, research and development, satellite remote sensing information services and other aerospace fields.

Just in November 2020, Changguang Satellite announced the completion of a Pre-IPO round of financing of 2.464 billion yuan, becoming the only unicorn enterprise in the northeast region with a valuation of about 12 billion yuan, which can be described as the light of the northeast. If it goes well, Changguang Satellite will become China's first commercial aerospace listed company, and it will also mark the official entry of China's aerospace industry into the capital market.

Since the 1960s, the leading economies in the development of the development of the economy began to compete fiercely in the field of space, until nearly 60 years later, human yearning for space has not weakened.

And, a good sign is that more and more private forces are joining.

The advent of SpaceX accelerated the space race to the "market-oriented" stage, directly making the plate bigger. According to the latest Space Report released by the American Space Foundation, the global space economy has grown by 4.4% to reach $447 billion in 2020.

In the process of realizing the space dream, the world space pattern has gradually shifted from the initial national strength competition to the commercial operation in the field of space. In China, when changguang satellite IPO, it will also join the world's space economy, which in turn will promote China's aerospace industry to enter a new stage of global competition.

This paper will look for new opportunities in space technology in the current situation of space market-oriented operation and in the current trend of space commercialization. The curtain has been lifted on the commercialization of space, and what changes will future space exploration driven by commercial interests bring to people under the stars?

01 NASA borrowed the East Wind for the money to go to the sea SpaceX

NASA was the first space administration to capitalize aerospace, and the main reason for this change was NASA's tight budget.

In the late Cold War, spacecraft launch costs remained high, launch vehicle safety accidents were frequent, NASA began to significantly reduce the budget under the voice of the public, and finally had to outsource some space business to market-oriented companies, and through commercial means to promote market competition. At the same time, NASA will take out some space technology to support private companies to devote themselves to the development of space industry. Since then, the government is no longer the only agency in the United States that has mastered space technology.

With the support of NASA's cutting-edge technology, private companies have bypassed the huge funding threshold for basic research and have been able to quickly enter the space field. From Bezos's "return to the moon" to Musk's "colonization of Mars", there is a shadow of NASA behind it. NASA also attracts social capital through "technology investment", eliminating budget headaches.

I have to call it out that this wave of "military-civilian integration" in the United States is playing well.

The "capitalists" of the United States may really understand the things on the earth, feel that they are bored, and want to spill unlimited energy into space, neither speculating in houses nor rolling inwards, but concentrating on spaceships.

Far from it, back to the point. In order to make these space companies have nasa requirements, NASA has "delegated" many core technologies and research and development elites to these space companies to ensure the success rate of their technology research and development. For example, Space X's launch CEO, John F. Muratore, was a project manager at NASA.

Enterprises are different from research institutions in terms of management philosophy, research and development direction, and production model, and the essence of enterprises is "profitable" and mining business value in mature technologies. Research institutes are more focused on forward-looking project goals, pursuing groundbreaking while weakening the economic concept of return on investment. Therefore, the joining of enterprises has changed the research and development direction of the aerospace industry to a certain extent. Due to the existence of commercial competition, enterprises are more focused on cost control.

As a result, the first benefit of space commercialization is that the cost of space launch is reduced. If Tesla brings a new design style to new energy vehicles, then SpaceX has changed the rules of space flight.

SpaceX has low-cost launch technology and poses a threat to the traditional space industry. According to spaceX's official website, compared with traditional launch vehicles, the cost of a single launch of "Falcon 9" can be reduced by about 40%, and if the recyclability of the rocket is added, the cost can be reduced to 70%. This is why SpaceX has repeatedly won the bid in its cooperation with NASA. Musk's appearance put an end to the embarrassing situation of renting Russian rockets for many years.

The success of SpaceX also allowed capital to see the potential of spaceflight, space began to be rapidly commercialized, and many companies opened the first cosmic speed mode to try to enter space first.

Amazon founder Bezos founded the commercial space company Blue Origin and in 2021 took the New Shepard spacecraft developed by his own company to a height of 100 kilometers above the surface.

In February, another aerospace company, Virgin Galactic, announced that it would resell space travel tickets for $450,000 and open them to the public. With the boom in business, Virgin Galactic shares rose more than 10% in the past month.

In addition to billionaire StarCraft, there are also a number of space unicorns. According to the Hurun Research Institute's "2021 Global Unicorn List", there are 8 companies in the commercial aerospace field, except for 5 American companies, the remaining 3 are from China.

There are private commercial space rocket company Blue Arrow Aerospace, galaxy aerospace that can benchmark the low-orbit broadband satellite of the United States Starlink, and the long-light satellite mentioned at the beginning of the article. In the new round of space competition, China's private aerospace companies have entered the core circle of commercial space competition.

02 China's commercial aerospace industry has accumulated a lot of money

From the perspective of market magnitude, the mainland's commercial aerospace industry has begun to take shape. According to the statistics of the Prospective Industry Research Institute, in the past five years, the scale of China's commercial aerospace market has continued to grow, with a market size of about 1,254.8 billion yuan in 2021, and with the gradual improvement of the market, it is expected that by 2024, the scale of China's commercial aerospace market will reach 2,406 billion yuan.

In recent years, China has made remarkable achievements in aerospace, and aerospace technology has entered the forefront of the world. In May 2021, China's manned space station Tiangong successfully entered the predetermined orbit, starting a space journey expected to be up to 10 years, while the normal retirement age of the International Space Station is 2024, at which time, China's Tiangong will become the only space station operating in space. In the context of the rapid development of the national space industry, can there be enterprises like "Space X" in China's private space enterprises?

In fact, the development path of China's private space companies is different from that of Space X. There are no rocket companies controlled by state-owned capital in the United States.

China's private space companies are basically "newcomers" born after 2015, before that, large-scale space projects such as rocket launches were undertaken by state-owned enterprises [China Aerospace Science and Technology Group], commonly known as "national teams".

The "national team" has the endorsement of the national scientific research force, the product series is perfect, and the strength is strong.

According to incomplete statistics, In 2021, China carried out a total of 46 rocket launches, of which 44 were completed by the "National Team's" "Long March" and "Fast Boat" series of carrier rockets, while the remaining two rocket test flights of private space companies did not achieve the expected results. From the perspective of private enterprises alone, there is still a large technological gap between China's private aerospace technology and world-class enterprises such as SpaceX.

There is an old saying in China's aerospace industry: the gap of thirty or forty years does not necessarily take thirty or forty years to catch up.

Unlike NASA, which has to "cast a wide net" when its funds are trapped, China's exploration of commercialization in the space industry began with a focus on doing big things.

In the early stage, through the formation of the "national team" to form a technical accumulation, the industry can continue to take shape, form a rich supporting supply chain and abundant social capital, which also reduces the development pressure of China's private aerospace enterprises and reduces the cost of trial and error.

Now that the time is ripe, private aerospace has begun to enter the capital market. Gao Hongwei, chairman of the Aerospace Science and Industry Group Corporation, said in an interview with the Central Broadcasting Network reporter that the current mainstream of global aerospace technology has reached the stage of large-scale industrial production, and it is bound to enter the stage of extensive commercialization and promotion.

In recent years, China's industrial policy has also gradually tilted to the aerospace field, according to incomplete statistics, since 2013, a total of 14 relevant policies have been issued to encourage and guide private capital and social forces to participate in space activities. In March this year, the Satellite Environment Application Center of the Ministry of Ecology and Environment of China signed a strategic cooperation with the private enterprise Galaxy Aerospace to jointly explore the commercial construction and operation mode of ecological environment satellites, and the once relatively closed aerospace field was gradually opened.

Under the "policy spring breeze", China's private aerospace industry ushered in a broader "sea of stars". According to the data of enterprise investigation, there are 35 financing incidents of China's commercial space projects in 2021, and more and more VCs/PE will look at the vast universe.

In January, Galaxy Power, which is engaged in low-cost commercial space launch business, announced the completion of a B and B+ round of financing totaling 1.27 billion yuan. New aerospace companies such as Oriental Space, Starry Sky Power, Rocket Pie, and Micro Motion Space-Time have also completed angel round financing.

Tianfeng Securities analysis believes that satellite Internet, Beidou and other space-based system construction and commercial opportunities, or will become a new outlet.

Zhang Changwu, CEO of Blue Arrow Aerospace, said in an interview with Xinhua Reporter that doing commercial spaceflight in China today, including commercial launch vehicles, is the best era.

03 Aerospace applications usher in a new era

While commercialization brings more capital to spaceflight, it also gives us more opportunities to contact space technology. In aerospace technology, satellite technology has the most far-reaching impact on life, and the navigation, communication, transportation, and border inspection, environmental monitoring, and geological analysis of strategic significance required for daily life are inseparable from space satellites.

The number of satellites that the earth can accommodate is fixed, so in the field of space, the competition for space satellite space is particularly fierce. SpaceX's Starlink initiative is expected to build about 42,000 satellites to form a network to provide Internet services. Due to the International Telecommunication Union's "first-come, first-served" approach to orbital and spectrum acquisition, the Starlink program will occupy a large number of low-Earth orbit and space spectrum resources, which will compress the space for space exploration by other countries.

In the face of the increasing number of private space enterprises around the world, China also needs new commercial aerospace forces to supplement the space industry and build China's space ecosystem. The 14th Five-Year Plan and the Outline of Vision and Goals for 2035 released in 2021 clearly stated that it is necessary to build a global coverage and efficient operation of communications, navigation, remote sensing space infrastructure system and build a commercial space launch site.

Under the space crisis, China's private enterprises began to share the pressure for China's aerospace industry.

For example, the "Jilin No. 1" project of Changguang Satellite is currently the largest commercial optical remote sensing satellite constellation in China, which can complete high-resolution image acquisition and complement each other with the Beidou Project in terms of high-resolution remote sensing information. Further improve the ecological circle of Chinese satellites in space.

With the participation of private enterprises, China's aerospace industry has been able to develop rapidly. According to enterprise investigation data, the number of aerospace-related enterprises registered in 2021 was 17,000, an increase of 4.02% year-on-year, and the amount of financing exceeded 10 billion.

In terms of the types of projects financed, satellite communication services, remote sensing satellite research and development are popular projects, mainly due to the high return on investment in this area. According to the statistics of the Prospective Industry Research Institute, the revenue of satellite services in 2020 is 293 billion US dollars, accounting for more than 90% of the overall revenue.

The rapid development of the upstream satellite service industry has also revitalized downstream application industries such as navigation, maps, GPS chips, and automatic driving.

High-precision map companies can be said to be the most direct service objects of satellites. The accuracy of ordinary maps is generally about 10m, and as one of the core technologies necessary for automatic driving, the accuracy of high-precision maps needs to reach about 20cm. According to the statistics of the Puhua Industry Research Institute of Zhongyan, with the breakthrough of satellite technology, the market size of high-precision maps will exceed 30 billion in the next 5 years.

In 2020, with the successful global networking of Beidou-3, the high-precision map industry has also ushered in a new performance growth cycle. In February this year, NavInfo, a leading company in the field of high-precision maps, received an order from Volkswagen to provide data enhancement and compilation services for the Volkswagen global market (in addition to Chinese mainland). Founded in 2002, the high-precision mapping company NavInfo has become a leader in this field with the support of the Beidou satellite project.

With the continuous expansion of the new energy vehicle and automatic driving market, it has also attracted more map companies to enter the market, and the high-precision map companies established in recent years, such as Wide Stool Technology, Yijiatong Technology, and Qianxun Location, have raised more than 100 million yuan in the A round. Galaxy Securities believes that the car navigation market is expected to become a breakthrough in the civilianization of satellites.

And these are just the tip of the iceberg of getting bigger gains from the space trade.

The combination of satellite technology and downstream application needs has spawned emerging application markets. Behind the development of new formats such as automatic driving, blockchain, Internet of Things, and artificial intelligence, it is a new deep integration with aerospace satellite technology. With the gradual improvement of China's satellite ecosystem, a 100-billion-level market is waiting to erupt.

04 New opportunities in space

The benefits of the space economy are not limited to verticals. Political ecology, social form, people's livelihood and well-being, and industrial transformation are all closely related to the starry sky above our heads.

In April 2020, the satellite Internet was included in the construction of new infrastructure, and the implementation of the "new infrastructure" policy also brought new opportunities to China's private space companies.

One of the things that is closely related to our lives is wireless network communication technology. In the 5G network to enjoy the speed of us, the future will also embark on the 6G era, and the core of the 6G network lies in satellite Internet technology. An article in the scientific journal Science China has published its views on 6G, and after 2030, traditional terrestrial communications will be integrated with satellite networks, and 6G is expected to achieve global coverage.

At present, Huawei, OPPO and other enterprises have begun to conduct basic research around 6G. Xu Zhijun, Huawei's rotating chairman, said at the Huawei Global Analyst Conference that 6G will be introduced to the market around 2030.

In addition, under the promotion of the commercialization process, space will also become the next tourist destination. In January this year, the China National Space Administration introduced at a press conference that In the next five years, China will cultivate new formats of the space economy such as space tourism. As space technology draws closer to everyday life, the space economy will also develop new types of economies. For example, "Outer Space Item Designer" is a new profession derived from "space travel".

05 Conclusion

Space is an accelerator to solve social needs, and Shu Chang, CEO of Zero One Space, believes that "the biggest problem now is how to create new needs and discover new needs."

At present, the mainland's commercial space is still in its infancy, only from the perspective of rocket launches, there is still a capacity gap in commercial spaceflight, and private enterprises still need time in the commercial operation of rockets.

The Space Foundation has a phrase: "No one can go to space alone", which also means that the space economy needs to work together between various industries. According to enterprise investigation data, there are currently 95,000 aerospace-related enterprises on the mainland. With the continuous tilt of industrial policy, more enterprises will invest in the aerospace industry in the future.

At present, low altitude has been opened to business, DJI drones, Xiaopeng Motors' flying cars, all represent the exploration of low altitude by Chinese private enterprises, some of them have achieved great commercial success, exported overseas, and some are also establishing technical barriers. Then, it should only be a matter of time before Chinese businesses and scientists join forces to venture into higher space.

More crucially, to give the smartest minds of the people a chance to release their energy and wisdom, we cannot exclude folk wisdom by dividing the duality of ownership.

The earth is the cradle of mankind, but human beings cannot be bound to the cradle forever. Chinese companies are now on the road to looking up at the stars.