10 July 2011

In Oct. 2010, China’s State Council issued the Decision on Accelerating the Development of Strategic Emerging Industries (No.32 (2010) of the State Council), which clearly emphasized the acceleration of space infrastructure construction as well as the development of satellite and its application.

The independent development of China’s own satellite navigation and positioning system is crucial for the country. The rapid development of the self-developed COMPASS Navigation and Positioning System and the expansion of its application market will require various governments’ coordinated planning and a reasonable industrial layout design.

At the beginning of China’s 12th Five-Year Plan period (2011-2015), CCID Consulting conducted an analysis on the future layout of China’s COMPASS navigation satellite industry based on a summary of the characteristics of other GNSS systems’ industrial layout and the domestic industry’s current layout pattern.

China’s COMPASS navigation satellite industry has not seen any obvious industrial agglomeration.

China’s COMPASS navigation satellite industry is still at an initial stage of development with a relatively small size. According to CCID Consulting’s statistics, China’s COMPASS navigation satellite industry was valued at RMB 6 billion in 2010, accounting for merely 6% of the total of China’s GNSS industry.

According to CCID Consulting, China has about 200 enterprises engaged in the R&D of COMPASS products. Among them, only a small proportion is above a designated size, and they are scattered in more than a dozen of provinces and municipalities.

Figure 1 Industrial Size of China’s COMPASS Satellite Navigation Industry by Region

Source: CCID Consulting in May 2011, based on data provided by China Technical Application Association for Global Positioning System.

With their advantages in the GPS industry, the Yangtze River Delta, the Circum-Bohai-Sea Region and the Pearl River Delta are actively developing their COMPASS capacities.

As the center of the Pearl River Delta, Guangdong Province has take the lead in the country’s promotion and application of COMPASS. Guangdong Province has gathered a number of major COMPASS satellite navigation enterprises and research institutes, while a pilot application project has been initiated in the province and has made progress in industrialized applications.

In March 2011, the Economic & Information Commission of Guangdong Province recognized the Pearl River Delta COMPASS Satellite Navigation System Demonstration Project as one of its important goals in its 2011 Plan for Promoting the Development of Strategic Emerging Industries.

As the center of the Yangtze River Delta, Shanghai Municipality had an early start in satellite positioning and navigation application. It made great efforts to promote the application and services of the satellite positioning system during the 11th Five-Year Plan period (2006-2010). In 2010, Shanghai set up the Pujiang National Satellite Navigation Application Base. In June 2010, Shanghai further established Shanghai Strategic Technical Innovation Alliance of Satellite Navigation & Positioning Industry, aiming to finally commercialize the satellite navigation terminals and services through the industrialization of the COMPASS Navigation and Positioning System and its compatible navigation applications.

As the center of the Circum-Bohai-Sea Region, Beijing has the country’s most comprehensive COMPASS navigation industry chain, and has gathered China’s major COMPASS satellite navigation enterprises, research institutes and aerospace talents. The city also owns a national satellite navigation industrial park, a national satellite navigation technical innovation incubator and the Beijing Navigation Demonstration Base. Meanwhile, other provinces and municipalities have also been engaged in the development of the COMPASS navigation industry. Tianjin Municipality reached an overall cooperation agreement with the National Satellite Navigation Information Service Center in March 2011 to introduce civilian projects of COMPASS satellite navigation; Shandong Province started the construction of a COMPASS satellite navigation application system industrial park in the Jiaozhou Bay Industrial Area in February 2011, which is estimated to cost RMB 3 billion and cover an area of 666,667 square meters; Hebei Province is expanding its COMPASS satellite navigation positioning industry with the strong R&D capabilities of the No. 54 Institute of China Electronics Technology Group Corporation; Shenyang City in Liaoning Province, one of China Mobiles’ eight bases, is also active in promoting the civilian application of COMPASS navigation.

Figure 2 China’s COMPASS Navigation Industry in Major Cities in 2010

Source: CCID Consulting in May 2011.

Trends in China’s COMPASS Navigation Satellite Industrial Layout

The industry will move to spread over the country.

Currently China is building four COMPASS navigation and positioning system operation centers in the cities of Beijing, Shanghai, Chongqing and Xi’an. In future, with the maturation of the COMPASS application system and the substitution of COMPASS for GPS, China’s COMPASS industry will extend from a few key regions to cover the entire country and form a layout pattern resembling that of the current GPS industry.

The upstream sectors will be scattered in several key cities.
For example, Beijing will be the center of basic COMPASS technology research and standard development, while Shanghai will be the upstream chip design and manufacturing center.

The downstream applications will be further diversified to cover more application areas.

At present, the COMPASS system is mainly used in maritime, telecommunication and power time dissemination and emergency rescue. In future, it will meet more civilian needs such as vehicle and ship monitoring, LBS services and so on, and eventually civilian applications will make the largest sector of the industry.

Meanwhile, the operation services will see multiple operators active in each regional market to serve the local customers.