Beijing presses for slice of global commercial satellite market; a desire to challenge SpaceX

One Space successfully launched a suborbital rocket in Jiuquan, China, in September. The Chinese company intends to stage an orbital launch before the end of the year.

SHANGHAI—Space is corporate China’s newest frontier, as Chinese startups prepare to boldly go head-to-head with the likes of Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin LLC for a slice of the space market.

It is still a risky business that must overcome complex technical challenges, as a high-profile rocket-launch failure over northwest China showed in late October. But with about 80 commercial Chinese space-technology startups now operating and competition heating up, the breakthroughs are likely to soon outnumber the disappointments, analysts say.

“Three years ago, no one imagined that a private Chinese company could do this,” said Lan Tianyi, founder of Ultimate Blue Nebula Co., a Beijing consultancy, referring to the launch attempt. “Now, the private sector in China is very strong.”

China has ambitious plans for its national space program. Coming missions include the launch of an unmanned lunar lander in December, while a Mars lander is due to blast off in 2020. China’s BeiDou satellite navigation system—a rival to the U.S. Global Positioning System—is due for completion that same year.

Beijing opened up its space industry to private players in 2014, with the government hoping to snare a piece of the booming global commercial space sector. That industry generated revenue of $348 billion last year, largely from building, launching and operating satellites, according to the Washington, D.C.-based Satellite Industry Association.

Most of the roughly 80 Chinese space startups counted by Mr. Lan are building satellites and related software applications, while as many as 10 are developing launch vehicles, hoping one day to rival existing state and private-sector launch outfits—such as Space Exploration Technologies Corp., as SpaceX is formally known—for commercial contracts.

Landspace Technology Corp. had hoped to become the first Chinese startup to blast a rocket into orbit last month. But its Vermillion Bird rocket failed to achieve its mission of putting a satellite into orbit, opening the door for another launch developer, One Space, to achieve the milestone when it stages an orbital launch slated for late 2018. Should that attempt fail, further contenders are lining up launches in 2019.

Like other entrepreneurs with no background in aerospace, Roger Zhang spotted a big opportunity in the government’s liberalization of the space industry. Mr. Zhang, a former banker with Hongkong and Shanghai Banking Corp. and Santander Group , co-founded Landspace in 2015 with a team of experienced engineers who had worked on the Long March rocket family that underpins China’s national space program. The team had no idea how to turn its knowledge into a commercial venture, Mr. Zhang said in an interview earlier this year.

The U.S.’s fast-growing private space industry was the team’s source of inspiration. “We wanted to do something like SpaceX—they were our role model,” Mr. Zhang said.

Landspace has raised about $72 million from a combination of private investors and city governments, including the eastern city of Huzhou, where Landspace has a factory.

The state is involved in most of China’s commercial launch startups, if only as an investor. One Space, Landspace’s rival, raised its $116 million in funding from private investors and state-owned funds, a spokesman for the company said.

Employees assembled a model rocket at Landspace Technology headquarters in Beijing in September. The company’s Vermillion Bird rocket last month failed to achieve its mission of putting a satellite into orbit.

Landspace needs roughly a further $115 million in capital to reach the stage where it can start commercial operations, Mr. Zhang said. The rocket tested in October can only carry a 300-kilogram (660-pound) payload, but Landspace is developing a larger—and technically far more complex—vehicle that is designed to lift 4,000 kilograms and would put it within touching distance of SpaceX’s Falcon 9 rocket, which can handle 4,850 kilograms.

While SpaceX says it costs $62 million to launch the Falcon 9, Mr. Zhang said clients would be able to lease Landspace’s rocket—which is designed to reach a lower orbit than the more powerful Falcon 9—for about $15 million.

China isn’t the only country with commercial space aspirations; Brazil, India, Japan and the United Arab Emirates are all vying for launch business, too. What’s more, China’s ability to tap the American market is hampered by a U.S. government policy that restricts China from launching satellites made with U.S. parts, effectively barring it from launching American and some other commercial satellites.

But that hasn’t stopped China’s state-run space agencies from winning European contracts, and the entry into the global satellite business by its private sector raises the prospect of cheaper launch costs, both for longtime customers such as telecommunications and media companies, as well as for emerging industries finding new ways to use the technology.

Many of China’s private satellite firms are developing CubeSats, miniaturized satellites that come relatively cheap, can be launched 20 at a time and can be deployed in large constellations to provide widespread coverage.

A CubeSat miniaturized satellite made by ZeroG Labs. CubeSats can be launched 20 at a time and deployed in large constellations to provide widespread coverage.
A CubeSat miniaturized satellite made by ZeroG Labs. CubeSats can be launched 20 at a time and deployed in large constellations to provide widespread coverage. Photo: ZeroG Labs

One such startup, Beijing-based ZeroG Labs, sells CubeSats for about $100,000, a fraction of the cost of a traditional satellite, said Zhang Bei, the company’s chief executive.

A former salesman with Cisco Systems Inc. and Symantec Corp. , Mr. Zhang marshaled a group of aerospace engineers to found the company last year.

ZeroG Labs, which raised about $3 million in its first investment earlier this year, already has three CubeSats in orbit, and plans to launch 132 more by 2022. The CubeSats’ remote sensing and Earth observation capabilities have big-data and artificial-intelligence applications for all kinds of companies, Mr. Zhang said, and can monitor things as diverse as forests, parking lots and shipping lanes.

One example cited by Mr. Lan, the consultant, is Chinese agri-tech startup Beijing Jiage Tiandi Technology Co., which provides a satellite-based crop-monitoring service, telling farmers where and when to irrigate, fertilize or harvest.

The cost-effective combination of CubeSats and commercial launches is “creating a completely new market” that will make space services far more accessible and attract global companies with no prior history of using satellites, Mr. Lan said.