Drone-makers target Asia for growth
- 16 February 2012
- From the section Business
As geo-political tensions remain, the demand for drones is set to skyrocket in Asia, and that means new players will battle with industry giants for market share.
"We've got quite a bit of interest from Japan, Korea, Singapore, Australia, India," says Bill Schaefer from Northrop Grumman Aerospace Systems, a dominant player in the unmanned aerial vehicle (UAV) industry.
The US company is at the Singapore Air show, showing off its wares such as the Global Hawk to potential customers. This UAV in industry parlance is a high altitude long endurance (Hale) platform.
"Something like a Global Hawk from Guam can cover 10,000 sq-mile area, so it can provide real-time surveillance of the area from a military standpoint," says Mr Schaefer who is vice president of business development.
That is exactly the kind of monitoring countries in the region are looking to use UAVs for, according to James Hardy from IHS Jane's Defence Weekly.
"In Asia-Pacific the big projects, big procurements gaining traction are ones where it's more about high altitude reconnaissance. UAVs which are not armed, but are designed to give you information, intelligence and surveillance," Mr Hardy says.
Given the the many pockets of tensions in the region; the South China Sea, the Spratly Islands and border between South and North Korea, nations in the region want to keep an eye on what their neighbours are up to.
The UAV market in Asia Pacific is growing fast with Frost and Sullivan reporting it the second biggest buyer after the US. In 2011 the region as a whole spent $590m (£376m) on UAVs, Frost and Sullivan estimates that figure could rise to $1.4bn by 2017.
And for makers of large UAVs such as the Global Hawk, Asia may the one of the only places still buying.
"For all of those organisations in the defence sector that invested heavily in large UAV platforms, they need to focus on the Asia-Pacific market, given military budget cuts in Europe and US and a move to rely on the smaller platforms," said Bruno Mucciolo, from Frost & Sullivan.
The UAV industry was born out of military needs to be able to conduct operations without risking human lives. As those in the industry like to say; UAVs are made for work that is "dirty, dull and dangerous".
The drones that get the most attention are the combat-capable kind, which the US uses in Afghanistan and Pakistan.
Only the US, UK, Italy and Israel are known to have used armed UAVs, and there are strict regulations around who they can sell that technology to.
"In Asia Pacific, its possible South Korea, Japan and Australia could enjoy the benefits of combat-capable Western made UAVs," said Mr Mucciolo who is a senior consultant for aerospace, defence and security.
"Other than that I would think that it will indigenous development."
Countries including China, Australia, Singapore, South Korea, India and Japan have UAV programs under way.
However, armed drones are not the big game in Asia yet. Mr Hardy says the reason is that they are expensive and require complex infrastructure.
"You don't just buy the vehicle, you also need land systems, radar systems; a lot of infrastructure has to be put in before you can operate a UAV successfully."
However, there are less controversial uses for UAVs that are being explored increasingly in the humanitarian, environment and agricultural sectors.
"The technology has been around for a while and used for defence purposes, but as the technology matures, new applications have come up," says Gretchen West, from the Association for Unmanned Vehicle Systems International, a group representing the industry.
Those new applications range from crop-dusting and mapping to surveillance as well as border or maritime patrol.
Disaster management is another sector in which UAVs are playing a part. Global Hawks were used after the tsunami and earthquake in Japan in March of last year, as well as in Haiti after the earthquake in 2010.
"What you got in the tsunami was to track what's going on and provide real time data to disaster relief," says Mr Schaefer.
They were also able to assess the situation around the damaged nuclear reactor in Fukushima, when the threat of radiation kept humans away.
The vast potential in the market has lead to a surge of companies within the region wanting to compete, although none are yet a threat to the pioneers of the technology in the US and Israel.
China is one country that keeps its UAV development programme details to itself.
However, a Chinese company that's hoping to target South East Asia with its unmanned helicopter has a pavilion at the Singapore Air Show for the first time.
Yotaisc Technology has so far only sold its X200 within China, but says it is the biggest private player in the UAV market there.
The machine can perform functions such as surveillance and monitoring, oil and electricity inspection, mapping and border patrol according to the company.
Yotaisc is hoping to sell 50 of them this year, and will compete on cost.
"In China, we have skilled human resources, but our labour costs are much lower than other countries," Yang Zhao, chief operating officer at the Beijing-based company told the BBC through a translator.
"Therefore we have a very significant price advantage."
Mr Zhao says the company will begin by targeting South East Asian nations such as Indonesia and Malaysia, but then seek out other markets.
"Our technology and our team's technical level have reached an advanced level in the world. Therefore, we want to step out of China and compete for international market share with other advanced drone builders around the world."
While Yotaisc Technology may not be a threat in the market just yet, Asia is poised to eventually be both a big market as well as a competitive player in the UAV space.