China NewSpace No. 9: Follow the Money (Part 1)

Funding rounds, corporate takeovers, and geoeconomics

Welcome back to China NewSpace, your weekly dose of the Chinese private space industry. If you haven’t subscribed yet, sign up here.

This week we take stock of the funding that Chinese newspace firms have raised and also check back in on OneWeb, the beleaguered Anglo-American satellite company that everyone seems to want a piece of.


Translation

Our translation comes from TMTPost, a Chinese tech news website where Lin Zhijia wrote a piece about efforts to create a domestic version of SpaceX.

While the article itself is worth reading, what caught my eye was that it included a chart of venture funding raised by rocket and satellite companies. This is particularly interesting because all of this information is not easy to find in one spot, at least not for free.

I’ve been focused on the chart itself this week so I sadly don’t have a full translation of the article for you. I summarize some of the main points below, but if you’d like to read the whole thing in Chinese, the link is here:

Why Hasn’t the Chinese SpaceX Emerged Yet?

Anyway, the chart:

The original includes the venture firms as well. I’m busy finding their English names and will have an updated chart for you next week.

Note: I have taken the liberty of converting the amounts in RMB to USD at today’s conversion rate for easy comparison; these amounts are not in TMTPost’s chart.

Some initial thoughts: it’s interesting how tight-lipped iSpace, the first private Chinese rocket company to reach orbit, has been. It has been reported (link in Chinese) that they have raised over 600 million RMB total, which, depending on how much over 600 it is, would put them in the same league as OneSpace and somewhere around half the funding of LandSpace. The funding disparity really makes their achievement last July that much more impressive.

As for the article itself, Lin says there are four main reasons that China does not yet have its own version of SpaceX:

  1. China’s private space sector started later

  2. Its technology is not mature

  3. It’s difficult for Chinese companies to get support from the government

  4. SpaceX and Chinese newspace companies have different market positioning

The third point might strike some readers as surprising: foreign commentators tend to assume that the Chinese government supports all strategic industries with its largesse, while scrappy American companies pull themselves up by their bootstraps.

Lin argues that it’s more like the opposite:

As of 2016, SpaceX had received more than $4.6 billion in commercial contracts awarded by NASA.

In addition, NASA transferred a number of core technologies to SpaceX, and deployed core technology backbones to SpaceX to ensure the success rate of its technology research and development.

According to the US federal procurement database, the System for Award Management (SAM), the ratio of SpaceX’s private orders to US government/military orders is almost 1:1.

… Compared with SpaceX being able to obtain NASA orders for a long time, at present, China's private aerospace has hardly received government orders.

… SpaceX’s core competitiveness in winning government orders is cheap prices + high-frequency launches, which is the foothold in the market for private space companies. However, in China, the "National Team" aerospace products have a price advantage, and there is clearly little room for private companies to further lower the launch price.

At the end of 2017, the CASIC Fourth Institute stated that the price of a Kuaizhou 1A launch vehicle was less than US$20,000 per kilogram, and that of the Kuaizhou 11 launch vehicle (KZ-11) was not even US$10,000 per kilogram. International commercial small-lift launch vehicles cost from more than US$25,000 to US$40,000 per kilogram. Overall, the price of the Kuaizhou series is more competitive.

It’s fascinating stuff, but until we have private Chinese rockets routinely taking satellites to orbit, we won’t know the real market price of a ride on a private Chinese rocket and be able to see whether or not it’s competitive with the state-owned sector.


Interesting Links: the OneWeb Saga

This is one hell of a story.

I mentioned in the May 19 issue of China NewSpace that some Chinese companies were interested in bidding for the bankrupt Anglo-American internet satellite provider OneWeb.

Apparently one of those companies was Geely, but they’ve been scared off by US regulators.

More recently, the British government has expressed interest in buying a stake. Since the UK can’t use the European satellite navigation system Galileo anymore (because of Brexit), the UK had been considering developing its own system. But with the bankruptcy of OneWeb, the British government instead sees an opportunity to take over an existing satellite internet system and convert it into a satellite navigation system.

The idea is that it would complement the American GPS rather than serving as the UK’s own global satellite navigation system. This has the benefit of cozying up to the Americans as well as being cheaper.

The most recent developments are covered by the Telegraph here:

Britain's $500m OneWeb bid faces Canadian gatecrashing from Telesat

Apparently, Canadian firm Telesat is planning on bidding for OneWeb, putting the UK’s plans in jeopardy. The auction itself is on Thursday, so we’ll find out what happens soon enough.

Also, Bharti Enterprises, an Indian telecoms company, is bidding as well, but as part of the same consortium as the UK.

Some arguments as to why this plan might be ill-considered are covered by the Guardian:

'We've bought the wrong satellites': UK tech gamble baffles experts

In the Guardian piece, Dr. Bleddyn Bowen expresses doubts about the project’s feasibility:

If you want to replace GPS for military-grade systems, where you need encrypted, secure signals that are precise to centimetres, I’m not sure you can do that on satellites as small as OneWeb’s.

To help you make up your own mind about the virtues of this decision, Dr. Brian Weeden from the Secure World Foundation has a great Twitter thread on how exactly the system might work. It would be similar to the Japanese QZSS system, amplifying GPS in in a specific geographic area:

Also, if you missed it, check out last week’s China NewSpace, where I discuss China’s BeiDou system as well as its competitor systems around the world.

Things I’ll be looking for when the bidding goes down on Thursday:

  • Do any Chinese companies show up?

  • Is the British bid for 500 pounds or dollars? (There’s actually been some confusion about this.)

  • Who else is in the UK-led consortium?


News Roundup

June 22: Spacety, also known as the Tianyi Research Institute, had its cubesat design endorsed by the Chinese Society of Astronautics as a standard (link in Chinese)

Some more on Spacety from Andrew Jones if you’re interested

June 24: Chinese state-owned space companies CASC and CASIC were among the 20 Chinese companies that the US Department of Defense put on a list of firms the DoD claims assist the Chinese military. Congress is not obliged to do anything with this information, so it remains to be seen what will happen

June 29: US Commerce Secretary Wilbur Ross said that with the new Hong Kong security law, the US would be suspending export license exceptions that the US has previously granted to Hong Kong

June 30: Satellite constellation operator Hong Kong Aerospace Technology Group and CASC subsidiary China Great Wall Industry Corporation have signed a strategic partnership cooperation agreement


Until next time

My name is Cory Fitz and I write the China NewSpace newsletter. To make you smarter about China’s rapidly evolving private space industry, China NewSpace brings you translations of Chinese-language articles, as well as a roundup of links and news.

If you have any questions or comments, feel free to contact me at chinanewspace@gmail.com

You can also find me on Twitter at @cory_fitz