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Hefei sets sights on aerospace information industry as the next frontier

Written by 36Kr English Published on   4 mins read

Hefei is a city that does not shy away from investing heavily in technology.

In April 2008, a pivotal meeting facilitated by an independent director of BOE Technology sparked a transformative collaboration between the company and Hefei city. At the time, BOE was considering establishing a sixth-generation LCD production line in Shenzhen. However, Hefei’s compelling offer, which included earmarked land and a substantial investment of RMB 6 billion (USD 828.6 million), swayed BOE to choose Hefei as the project’s location.

The level of commitment Hefei demonstrated in securing the BOE project was extraordinary, even going so far as to halt a subway project to allocate sufficient funds for the LCD initiative. This sixth-generation line, along with subsequent eighth and tenth-generation lines, filled a critical gap for LCD panels in Hefei’s home appliance industry. Hefei’s strategic approach to industrial development is straightforward: identify key sectors, enhance, extend, and strengthen the supply chain to form robust industrial clusters. This methodology has been applied multiple times, including the 2020 investment of RMB 7 billion (USD 966.7 million) in Nio.

Today, Hefei-produced home appliances, including washing machines, air conditioners, refrigerators, and televisions, consistently rank first in national output and have expanded to international markets. While the media and public celebrate these achievements, Hefei is already setting its sights on the next frontier: the aerospace information industry.

Bridging the gaps

Hefei’s strategy of enhancing, extending, and strengthening the supply chain is not incidental but a necessity dictated by the increasingly fragmented nature of industrial development.

In May, Hefei-based company Monks secured an eight-figure RMB sum of Series A financing from several state-backed funds in Hefei. Monks is one of only two private companies in China with the capability to develop, design, and produce integrated rocket composite fairings.

Rocket fairings, which are smooth, external shells used on rockets and aircraft, serve crucial functions such as protecting satellites, reducing atmospheric drag, and ensuring the safe separation of satellites. Manufacturing these fairings is challenging due to the extreme conditions they must endure, such as atmospheric friction, low temperatures, and vacuum environments.

Early fairings were typically made from aluminum alloys, which, despite their strength and heat resistance, hindered satellite communication. Modern fairings, therefore, use composite materials like resin-based fibers and carbon fibers, which are lighter and offer better wave transmission. Monks uses resin-based fiber technology, aiming to reduce structural weight and satellite launch costs.

Globally, the US, Russia, and China lead in fairing technology. For example, SpaceX has developed lightweight, reusable fairings that significantly cut launch costs, while China’s liquid-propellant Tianlong-3 rocket features a full carbon fiber composite fairing. Hefei’s investment in Monks represents a strategic bet on next-generation aerospace information technology.

Reaching for the stars

On September 12, 2008, when BOE officially signed the deal with Hefei, Shenzhen made a last-minute effort to offer the same incentives. Shenzhen’s attempt was to no avail, but it marked a significant moment in the increasingly fierce competition for high-quality projects among Chinese cities.

Competition for projects has become fierce between cities, especially in cutting-edge industries. Several cities in China are vying for aerospace information industry projects, but the limited number of high-quality opportunities makes rapid growth challenging. For instance, one high-quality project was reallocated to another city at the last moment before the signing, highlighting the intense competition.

To attract good projects, cities need to excel in top-level design, infrastructure, and operational services. According to the draft action plan for promoting high-quality development of the aerospace information industry in Anhui, the province aims to produce 100 each of commercial rockets and engines, commercial satellites, and general aircraft by 2030.

To achieve this goal, cities like Hefei must expedite the engagement and cultivation of companies along the industry chain. Notable developments include the January 2024 establishment of Jugong Technology’s headquarters for liquid rocket engine development in the Hefei National High-tech Industry Development Zone.

Beyond rocket design and manufacturing, Hefei has made significant strides in satellite launching, ground equipment manufacturing, satellite operation services, and data applications. Since Anhui launched its plan for the aerospace information industry in 2021, Hefei’s high-tech zone has attracted over 110 enterprises, 11 research institutes and innovation platforms, and 43 key projects with a cumulative investment amount of RMB 28.6 billion (USD 3.95 billion).

Hefei’s proactive measures have not gone unnoticed among industry players. A manager from an industrial design software company told 36Kr that he has learned about Hefei’s strong emphasis on the aerospace information industry through interactions with clients and investors. His company aims to serve high-end clients like rocket design firms and integrate into the aerospace information supply chain.

These developments symbolize Hefei’s ambitious vision. With investments in companies like Monks and the influx of leading enterprises such as Leitu Tech, Piesat, Guodian Gaoke, and Beihang UAS, Hefei is steadily constructing a comprehensive landscape, laying a solid foundation to excel in aerospace information technology.

​​​​KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Wang Shun and Zhang Xiuxiu for 36Kr.


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