Introduction

Since 2002, the commercial spaceflight industry in the West has witnessed the growth of a number of emerging space enterprises as represented by SpaceX, blue Origin and OneWeb. With the retirement of the space shuttle program, the extension of the ISS’s operation by 2030, and the budgetary cut in NASA, many rocket and spaceship R&D programs and grants were given to the commercial space sector, epitomized in COTS (Utrilla, 2017), CRS (Gendreau et al., 2016) and CCDev (Lambright, 2018) programs. Combined with the funding and technological support from NASA, commercial space companies represented by SpaceX are able to develop space programs such as falcon-serial rocket (Harris et al., 2019), starlink (McDowell, 2020) and starship (Heldmann et al., 2022), thus drawing worldwide attention.

The Chinese commercial space sector seems to be catching up with its Western counterpart partially as a result of policy support and capital involvement. Many emerging companies such as iSpace and Commsat have rapidly developed particularly since 2015. Consequently, the year of 2015 is a milestone in the history of the development of Chinese commercial space industry (Guo et al., 2020; Li et al., 2021).

Given that China’s commercial space industry is mainly encouraged by government policies and that the commercial space companies can be sustainable if they are under good economic situation, the commercial space industry is significantly affected by the economic climate and policy (Weinzierl, 2018; ** status and predicting the future potential directions of China’s commercial space industry. This study hopes to explore China’s commercial space development from the perspectives of policies, innovations and economies, enabling commercial space companies to recognize the direction of improving their competitiveness in a changing environment.

Methodology

The study was conducted at a time when China was transitioning from a develo** space power to a well-developed space-faring nation, calling for a concerted effort by state owned enterprise and commercial space enterprise. Three major issues will be discussed in this section: classification of commercial space companies, data collection method, and data analysis method respectively.

Classification of commercial space companies

Particularly worth-noting is that in order to fully depict the panoramic view of the commercial space industry in China, the companies were classified into three major categories to represent the major segment in the industry. The criteria is as follows: (1) commercial space companies (CSC) incorporating the established and the emerging startup companies. (2) the state-owned companies (SOE) and (3) Chinese Academy of Sciences (CAS) spinoff companies.

In this study, a total of fifty respondents, with forty-two respondents representing 12 companies, six researchers from higher education institutions, and two government officials, participated in the study. The selection criteria for three groups of interviewees were defined, viz, professors or researchers from top-tier research universities/CAS whose areas of expertise fall in commercial space, satellite development, and related field, corporate leaders from commercial space companies, and government officials whose responsibilities are relevant to commercial space development in China. The detailed information regarding the interviewees could be found in Table 1.

Table 1 The participating representatives.
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Data collection method

The study aims to analyze the status-quo of the Chinese commercial space development from political, innovation, and economic perspectives. The following themes were undergirded through the in-depth interviews:

  1. a.

    whether the national or provincial policies are consistent and supportive of the industry development;

  2. b.

    whether these commercial space companies were economically sustainable and viable;

  3. c.

    Whether the companies exhibit characteristics in technological, cost and business model innovation.

The interviews were conducted intensively between April and September in 2022. A one-day focus group meeting consisting of more than twenty researchers, senior corporate members, and government officials was assembled to engage in intensive discussions, clarifying and dispelling any erroneous notions, misconceptions, and misunderstanding that may arise in the course of researchers’ investigation. After the focus group discussion, the participants were individually contacted and interviewed to collect further responses. Moreover, the participants were requested to provide more corporate contacts within their company for in-depth interview. Given the prevailing Covid-19 pandemic situation, face-to-face interviews were largely canceled, at the easy convenience of the respondents. Instead, the interviews were conducted through telephone interviews, online conversations epitomized as “wechat,” and electronic questionnaires represented as electronic responses. As a result, hundreds of corporate senior members were reached out for their expert responses and more than forty corporate employees accepted the interview invitations.

It is worth noting that the interview questions were evolving and first administered to a group of senior researchers to solicit feedback. The interview questions were fine-tuned to fit with the themes in this research. To triangulate the data, the respondents were reached out for clarification if any potential misunderstanding arose. The data transcript was represented by fifty respondents and contained ~150,000 Chinese characters. The data transcript and theme-classification were transcribed, proofread, and cross-checked by two research team members and reviewed by an external expert.

Data analysis method and preliminary interpretation

A regression model was established to verify that the policy, innovation and economics mentioned in the data are crucial factors influencing China’s commercial space industry. And the LDA method was applied to specifically analyze the collected qualitative textual data in this study. LDA topic modeling, also known as Latent Dirichlet Allocation, is a machine learning approach for text mining (Blei et al., 2003; Jelodar et al., 2019; Kherwa and Bansal, 2019). It can automatically summarize themes from texts through unsupervised learning and mine potential implicit themes from massive documents, so it is often used to analyze text data (Joung and Kim, 2021; Prihatini et al., 2018; Schwarz, 2018). The key words were extracted from the corpus, and further form a Bag-of-words for feature extraction. A dictionary was then created from the Bag-of-words to analyze the literature without having to go through the entire text (Albalawi et al., 2020). The implications of applying LDA modeling method was threefold: (1) assist in the translation of the textual data, leading to a panoramic understanding of the status-quo of commercial space in China, (2) triangulate the data, ensuring that the data interpretation does not go astray, (3) pave the way for a better interpretation of the results.

To underscore the close correlation between corporate development and influencing factors such as policy, innovation and economics, a regression analysis was conducted. A sample company which participated in the study was selected for the analysis and the data was from 2015 to 2022. The number of policies, patents, financing are set as explanatory variables and the revenue of the commercial space enterprises is the response variable. And the model was established as \(y = \alpha + \beta _1x_1 + \beta _2x_2 + \beta _3x_3 + \varepsilon\). Then, the description analysis of the variables is shown in Table 2.

Table 2 Descriptive statistics of variables.
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Subsequently, based on the value of the variables, the regression result was obtained (Table 3). The regression equation is significant and the goodness of fit is acceptable. It indicates that the policy, innovation and economics are important factors related to the development of China’s commercial space industry and specific analysis in the three aspects are needed.

Table 3 Regression result.
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To conduct a specific analysis in the aspects of policy, innovation and economics, the topics concerned by experts were extracted through text data mining. First, the collected text data was classified into three major themes, viz, policy, innovation and economy. Then, the text data of the same class were grouped into different topics by LDA topic model, and the related topics were summarized by keywords. Finally, the corresponding text was pinpointed and the key points of experts’ concern were explicated. The detailed word cloud of policies, innovations and economy was illustrated in Fig. 1.

Fig. 1: Word cloud of Policies, Innovations, and Economy.
figure 1

The figure exhibits the keywords in the research data, reflecting the main concerns of the respondents about the policy, innovation, and economics of China’s commercial space industry.

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In terms of the views on commercial space policy (Table 4), the respondents focus on: (1) Basic norms and regulations for commercial space in China. (2) Competition regulations and rules for commercial space in China. (3) Strategic support documents for commercial space in China.

Table 4 Keywords of policy research.
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Summarizing the key words in the innovation study (Table 5), experts pay keen attention to innovation in commercial space in China. More specifically, experts focus on: ① Innovation in quality and technology (management). ② Innovation in cost management and financing methods.

Table 5 Keywords of innovation research.
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Key words in the economic aspect of commercial space were shown in Table 6. Experts focus on: (1) The investment, projects, and services in the satellite industry. (2) The cost, demand and market of satellite companies. (3) Comparing the revenue of domestic and foreign commercial space companies.

Table 6 Keywords of economic prospect.
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Results

The results indicated that China’s commercial industry development is heavily driven by national and provincial policy, Innovation, and economic sustainability. Since 2015, the emerging policy leaning toward supporting the development of commercial space companies in China facilitated the burgeoning growth of China’s commercial companies, rising from a dozen companies to more than 300 by 2022. Despite the fact that the current business model is potentially feasible, the Chinese commercial space companies are still struggling with making a profit. The challenges lie in twofold: (1) the commercial products becoming available to the public may hinge on a price widely acceptable. And the price has yet to be reduced substantially. (2) most startup companies are generally in the stage of financing and a sustainable influx of capital money remains problematic. With regard to innovation, compared to their Western counterparts, Chinese commercial space companies have made a few strides in terms of cost and business model innovation. However, they may still lag behind with respect to technological innovation (Qi et al., 2021). The findings are presented as follows.

Definitions revisited: commercial space and space commercialization in China

The definitions of commercial space and space commercialization have been discussed and debated widely in the last decade. A simple definition in the Western context is that “one definition to encompass all sets of commercial players is to define commercial companies as profit-pursuing companies that engage in space activities in a competitive marketplace.”(Liu et al., 2021). In this study, of the interviewees that gave a snapshot of the defining characteristics of commercial space, “market” and “profit-making” have been universally underscored by almost all respondents. For example, one expert noted the importance of the market in commercial space: “There are two elements in commercial space which are business and space. That being said, commercial space is not the pioneer in the industry, it is the pioneer of the market.” Therefore, a feasible working definition for commercial space in the Chinese context has to be associated with elements such as a market-driven approach and profit-driven ethos.

Particularly noteworthy is that despite a lack of “government” in the definition of commercial space, the respondents have admitted that commercial space cannot be separated from the government guidance and the governmental needs is also the key. The layout and planning of commercial space must be combined with relevant governmental policies. (Company D) The interviewee from company E further noted: “at present, from the perspective of market demand and policy development, the impact of [government] policy on commercial space has increased. With respect to application, government is the final owner of space application.” Commercial space cannot be independent from the government, Company F added. Company F’s argument was further corroborated by Company H’s statement:

Given China’s reality, the role of the government cannot be excluded from commercial space (Bazavan, 2019). In the development of commercial space abroad, the government also played a huge role. Among the launch missions of Spacex, Rocketlab, and the early ATK companies, government missions accounted for a high proportion (Davidian, 2016). The development of SpaceX is inseparable from the large capital and order support of NASA’s CRS program (Gendreau et al., 2016). However, it should be noted that the CRS program is not only a government initiative but a commercial procurement, which is also in line with the characteristics of commercial space.

With respect to the working definition of space commercialization, respondent from company B stated that it refers to the transformation of current space technologies and capabilities into commercialized products and services. Regarding the nature of the commercialization process, one company representative wrote with verve that: space commercialization is the direction for commercial space. To a certain degree, the commercialization process can contribute to commercial space, further leading to technological advancement. (company F) While one expert noted the partnership between commercial space companies and SOEs, the argument underpinning the role of government stated that the government and military enter the market as “big customers,” conducting business activities in accordance with the business roles. (Company A&F, expert)

In the eyes of the researchers and company representatives in this study, overall, the Chinese definition of “commercial space” is aligned with the Western one. The commercial space and the space commercialization are inextricably intertwined, with the former referring to the end results and the latter denoting the process. The function of government is emphasized in both definitions, cementing the role of government on commercial space endeavor.

Policy influence

There has been unanimous consensus by the interviewees regarding the era of China’s commercial space, which is the year of 2015. As previously mentioned, recent policies enacted at the state and local level both encourage the private capital to develop commercial space(Sénéchal-Perrouault, 2023). In a similar vein, the geographically located and concentrated commercial space businesses in China are positively correlated with favorable policies promulgated by the provincial and municipal governments aimed at nurturing commercial space sector.

Government support

At the national level, the Chinese government has set the tone of supporting the development of commercial space businesses.” This refreshingly new wave of support received overwhelming endorsement by the respondents. For example, “The Plan “(2015–2025) has been mentioned multiple times by the respondents as the watershed event boosting the vigorous growth of commercial space sector in China. The governmental official interviewed stated that “in terms of band license, the government embraces a very open and encouraging attitude which regards SOE and CSC as equal participants. And major national projects should actively involve CSC as a key player.” Moreover, company H stated confidently that “commercial space sector is closely associated with the opening of domestic policy and the introduction of management norms. The relevant policies and rules ensured the fast, orderly, and healthy development of commercial space in China.” The favorable comments by the interviewees suggested that the adjusted policy is conducive to commercial space in China per se. Thus, given the amelioration of policy, it was not surprising to witness the founding of more than three hundred commercial space businesses since 2015 and quick rise to prominence of commercial space businesses in China.

A lack of specific and operational policy that provides guidance at the implementation level

Despite the open endorsement of commercial space sector at the national level, many interviewees expressed the view that the extent to which the opaque policy might hinder the course of commercial business undertaking warrant people’s immediate attention. Four company representatives and one expert were seriously concerned about the specific guidelines in develo** a burgeoning sector like commercial space. A company representative noted the specific areas to which commercial space policy should be paid attention.

[The policy] should aim at solving realistic issues such as (1) issue band and launch permit; (2) issue operation license (internet communication and the Internet of Things, IOT communication). Commercial space is heavily influenced by the regulating policy. Therefore, the policy should clearly define the specificity and boundary as to what commercial space should do and can do. In terms of policy’s openness with regard to commercial launch management, an expert stated succinctly that there is a large gap between China and the West. At the implementation level, the representative from company B spoke positively of the prowess of national policy while downgrading the bureaucracy.

At present, the local government policy seems to work in tandem with the policy at the national level. On one hand, the national policies are in the midst of lending strong support to commercial space in China. On the other hand, leaders at the grass-root levels take on a proactive and calculating approach toward the approval, evaluation, and direct implementation of the policy, making good use of the commercial space sector to serve the local economy and people.

Policy lessons from the U.S

In addition to the well-known commercial programs such as COTS and CCDev, the powerful endorsement of commercial space by the U.S. government is visible in almost all sectors of the commercial space industry, as evidenced in the recent commercialization of projects such as Communication Service Project (CSP) and Space Launch System (SLS). For instance, the commercial companies selected for the CSP project will be called in to provide operational services by 2030 since the Tracking and Data Relay Satellite (TDRS) will be gradually discontinuing its services.

Six company representatives and two experts quoted the U.S. policy on commercial space, underscoring the importance of learning from U.S. lessons. Compared to that of the U.S., China’s commercial space is still at its infancy stage, facing many daunting challenges such as reliability, cost, supply chain, and management.

One company representative (D) picked NASA as the unparalleled agency that embraces dual roles:

China does not have an institution like NASA that performs government roles and has rich experiences in technology and engineering management simultaneously, which could in turn nurture commercial space businesses. Under the current laws and regulations in which a new national system, combining the traditional strengths of SOEs and innovative “gene” of commercial space sector, could facilitate a brand new market and platform by mobilizing national resources. The representative from the same company above further noted the vision of NASA in choosing programs that have promising prospects and asserted NASA would compare favorably with that of its Chinese counterpart (if there exists such an institution in China).

The respondents also emphasized the continuous revision of U.S. policy and law, enabling more businesses and resources to enter commercial space sector. For example, representatives from company F stated that the U.S. government issued a series of policies such as CSLCA of 2015, providing guidance at the national strategic level, setting up the industry requirements, and creating an equal and competitive environment. In addition, Company F also noted that several Acts were passed by U.S. congress dedicated to promoting commercial space sector in the U.S. As a result, a number of commercial launch service providers emerged, providing launch services at amazingly low prices and the call for commercial utilization of space was greatly echoed among entrepreneurs.

Innovation in technology, cost, and business model

The stereotypical perspective of Chinese commercial space companies is that they have been associated with a lack of technological innovation. With a quick growing number of Chinese companies between 2015 and 2022, recent media reports seem to indicate that the Chinese companies are making great progress and are catching up with their U.S. or Western counterparts (** low-cost satellite may significantly increase the company’s competitiveness, there has been an emerging trend in the space sector that prioritizes new technology, new materials, and new method in enabling satellite’s lightweightness and stability. Correspondingly, a quality control system that underpins both low cost and reliable commercial components was installed in commercial space companies (Liu et al., 2021).

This view was endorsed by the interviewee from company A: As a commercial space company, we spare no effort to reduce cost while maintaining quality. Our company’s cube-sat was supplied in accordance with customizable needs. For example, the industry chips will be applied in most cases unless it was specified that anti-radiation chips must be utilized. The cost-effective practice has enabled us to break away from traditional thinking in the space industry.

An expert further added that: to take additive manufacturing as an example, by replacing traditional molding and machine method with additive manufacturing could save as much as 1/2 cost of production and shorten the production cycle by 2/3.

Business model innovation

In contrast to the relatively rigid business model of SOEs, the CSCs could allow for tremendous flexibility in develo** appropriate business models. Company J noted that the bottom of the pyramid for CSCs is the market, namely a great sense of market sensitivity; the other is innovation in technology, management, and business models. Many companies we interviewed confirmed the efficacy of innovative models in boosting businesses.

The CSC companies we interviewed expressed with clarity the business model innovation recently:

Many CSCs are dedicated to innovation and breakthrough in order to adapt to corporate business models. (1) The direction of commercial satellite is aiming at small-size, light-weight and highly integrated satellites. (2) With respect to payload, the major directions for commercial satellite center on functional-specific payload such as remote sensing, communication and space experiments. (3) According to different payload requirements, the company is dedicated to realizing satellite mass and integrated production, ultimately achieving the in-stock sale.

In depicting the trend, the expert we interviewed suggested the emerging internet-based thinking, which proposes a new business model encompassing remote-sensing application with the mobile internet, thus facilitating the capacity to provide customers with up-to-date information, products, and services.

Economic sustainability and viability

It should be noted that China’s commercial space industries are mainly in three areas: communication, navigation, and remote sensing (Gui et al., 2013). As China’s satellite communication and navigation are mainly dominated by the government, remote sensing plays a leading role in satellite applications, which has great prospects for commercial space, whether in terms of output scale, industrial value, or industrial investment. Specifically, satellite applications in the downstream occupy the majority of the commercial space market, which have great potential in the market and can bring considerable economic benefits. After 2015, the annual scale of remote sensing satellite output value remains above USD 1.5 billion (Qi et al., 2021). Overall, the satellite application field occupies 90% of the commercial space market scale, and the global market business revenue also shows an overall trend of gradual growth.

China’s commercial space industry is still in its infancy but promising

The respondents of Company A identified most of China’s commercial space companies are still unprofitable, and the funds for their operation and development mainly rely on financing. Chinese companies’ products are not yet mature, and many respondents admitted that there are gaps in technological prowess, supply chains and commercial applications compared with foreign commercial satellite manufacturers. China’s commercial space industry has begun to take shape with the support of policies and capital, and has made strides in many fields. Many companies see navigation satellite applications as their first choice to enter commercial space, while ambitious companies tend to manufacture satellite or rocket. Compared with foreign enterprises, China’s commercial space development is still in the early stage, and faces many challenges such as reliability, efficiency, and cost balance. However, as a new force to help China become a space power, Chinese commercial space undoubtedly has broad prospects for development.

Chinese commercial space companies believe that cost reduction is the key to sustainable development of commercial space. In other words, the hallmark of China’s commercial space development is the low-cost strategy. A professor interviewed believes that the main reason restricting the development of the company lies in the high cost of satellite manufacturing and launching, and underscores the need to break through technical difficulties as soon as possible to reduce costs. The respondents of Company F identified cost reduction as primary issue in commercial spaceflight. Some other respondents agreed that cutting costs would improve competitiveness. The expectations of many respondents for the future market are pinned on the future commercial space policies of the Chinese government, and they have reservations about opening up the market. After the policy amelioration, low-cost space products will quickly occupy the market, and China’s commercial space companies will embrace developmental and profit opportunities. Thus, it is anticipated that China’s commercial space companies are ready for the vast space product market in the future.

Despite its ingrained ambiguity in profit model, the profit growth can be expected

In regard to the ambiguous profit model, this view was championed by both interviewees from higher education institutions and commercial space companies. For example, one researcher stated that: China’s commercial space has not yet been able to make immediate profits. Although the current commercial satellite market has great potential, its profit model is still confusing. Another researcher added: the profit model is still unclear, irregular, and unsustainable. In addition, Company H considered that “until the large-scale commercialization of space applications is achieved, even though rocket launches and satellite production and development may be profitable at some point, these profits will be temporary and localized.” Specifically, the profit model of commercial space companies is still unclear and ambiguous, characterized by concealment, ambiguity, and transience. However, as they explore the market, analyze market demand, and focus on the demand side and consumer side, the profit model of commercial space companies can then shift to providing customized products and technical services, coalescing a clear, relatively stable, and conscious profit model that adapts to the market environment.

Discussion

Since 2015, guided by the state and provincial policies, we have witnessed a steady growth of Chinese CSCs. Accompanied by the state and media propaganda of China Space accomplishments such as “China Space Station,” the commercial space sector has also drawn keen attention from all walks of life. The policies have opened up the gateway for CSC to develop its business tremendously and consistently. However, problems persist when CSC will have to face issues such as sustainable profitability. Thus, it is noteworthy that measure-specific policies are pivotal to guide the vigorous growth of Chinese CSC.

In addition to the pervasive claims that the CSCs are lacking in technological advancement, our results seem to indicate that technological breakthroughs are tangible among CSCs. There is little doubt that the Chinese CSCs have gained recognition in cost innovation. Moreover, it should be noted that the cost innovation is intricately interwoven with technological innovation, as evidenced from the interviewee responses in both the rocket launch and the commercial satellite sector.

Policy influence

Arguably “the new force” in China’s space endeavor, many emerging CSCs are cautious about competing with the national team and hesitant about joining the national priority project (** the government devise more effective policies.

In addition, there were some limitations in this study. First, the participation of more respondents could be an asset for this study. The large sample size may warrant some compelling results. Second, more intriguing responses may be expected if the study involves a more diverse group of respondents. Third, to add to the credibility of the study, future research might combine qualitative and quantitative data to identify the statistical correlation of main factors, further analyze the status-quo and predict future development trends of China’s commercial space industry.