Beidou's clients tap into benefits

15 years after satellite system's launch, it is set to generate $31b for companies

China's commercial eye in the sky is ready to produce solid down-to-earth profits for its customers.

Fifteen years after the Beidou satellite was launched, the GPS-like navigation system is helping to generate billions for online clients such as China Aerospace Science and Industry Corp, AutoNavi Holdings Ltd, and China North Industries Group Corp.

Already, 70 percent of China's population of nearly 1.4 billion use smartphones to search for popular locations, call taxis, work out travel arrangements and even jogging routes.

That is all made possible because of Beidou, which literally touches hundreds of millions of lives every day as it hovers more than 20,000 kilometers above the Earth.

"The system will help create 200 billion yuan ($31.5 billion) in turnover for its customers this year," says Miao Qianjun, secretary-general of the Global Navigation Satellite System and Location-based Services Association of China.

"It will be a good start for Beidou, which only launched commercial operations two years ago."

Work started on the system in 2000 with initial funding from the Ministry of Science and Technology. During the following decade, a network of satellites was rolled out, laying the groundwork for China's online expansion and e-commerce growth.

A regional system started to take shape three years ago, with the Beidou grid providing real-time navigation information in China and several other Asian countries, including Vietnam, Thailand and Cambodia.

By 2020, a constellation of 35 navigation satellites will come on stream.

"Beidou will be able to provide global coverage with positioning accuracy of less than 10 meters and a timing accuracy of 20 nanoseconds," a government report highlights.

Annual turnover for China's satellite navigation market will reach 400 billion yuan by 2020, the GLAC estimates.

A key growth area will be navigation systems in commercial vehicles. A report released by the Ministry of Industry and Information Technology, shows that up to 20 percent of the 1 million commercial vehicles in China use GPS products that access Beidou's technology.

But there are still challenges ahead for China's commercial satellite chain.

In the ministry report, it was revealed that Beidou still lags behind global positioning networks in the United States when it comes to GPS systems in privately-owned vehicles.

"Less than half a million, or 5 percent, of private cars had a navigational device installed that was compatible with the Chinese satellite system by the end of last year," the report says.

Still, Peng Hongbing, deputy director of the division overseeing China's electronic information development at the ministry, is confident Beidou's market share in commercial and privately-owned vehicles will continue to grow.

The country's leading auto manufactures, including SAIC Motor Co in Shanghai and Dongfeng Motor Corp in Northeast China's Jilin province, have started to roll out the network in new vehicles.

"The good news is that the market is starting to realize Beidou is a great platform because it offers an efficient and stable service," Peng says.

Other business sectors are also taking advantage of the satellite system.

Revenues generated by the geographical information industry, including mapping and hardware equipment, has risen by 20 percent annual over the past few years, according to the Ministry of Land and Resources.

With the market booming, Alibaba Group Holdings Ltd set up a 2 billion yuan joint venture with China North Industries Group Corp, which helped develop Beidou, in September.

Along with the state-owned military equipment manufacturer, Alibaba launched Qianxun Location Networks Co Ltd, an Internet company, that will use the satellite system platform for location and data analysis services.

"Beidou plays a fundamental role in a good number of sectors that provide basic services to Chinese people," Miao at the GLAC says.

"More location-based services, including transportation, healthcare and disaster relief, will be dependent on Beidou in the future."

The vibrant online-to-offline market has been one of the major reasons for Beidou's rapid expansion in the commercial world. This allows shoppers to buy goods online that are then delivered to their homes.

"Smartphones have fueled the demand in growth for location-based services and so boost Beidou," Dong Xu, a researcher at Analysys International in Beijing, says.

In fact, there is hardly an online sector that has not been affected by the eye-in-the-sky network.

Apart from taxi-hailing mobile apps, an array of booking services have sprouted up on smartphones ranging from restaurant reservations to film tickets.

All need real-time location information, which is supplied by Beidou, or other satellite services.

Even so, the biggest potential customers online could be companies such as Didi Kuaidi, a car-hailing platform, and its rival US-based Uber.

Didi Kuaidi is linked to the GPS mapping and location services operated by its backer, Tencent Holdings Ltd, which is one of the big three online players in China. Uber uses investor Baidu Inc's technology.

While the government is asking all smartphones manufacturers to install GPS systems that are compatible with Beidou, many still lack that function. But, again, that is changing.

"Our devices are using Beidou because the company embraces good-quality services that can lift customer experience," Lei Jun, CEO at Xiaomi Corp, one of the largest electronics companies in the country, says.

About 10 million Xiaomi smartphones, equipped with Beidou chips, are sold each quarter in China, proving the commercial eye in the sky has excellent vision.

gaoyuan@chinadaily.com.cn