If you Google for the keywords “talking drones,” a lot of news and videos will show up about how China started to deploy flying drones with speakers to call the attention of people not wearing facial masks amid the coronavirus epidemic. Some of these drones were produced by Shenzhen MicroMultiCopter (MMC), a drone company led by Lu Zhihui, who thinks that drones could play larger roles to support government policies.
Lu, one of the founders of commercial drone company DJI, who went on to establish MMC, anticipated the widespread use of drones for public service long before the lockdown of Wuhan and the coronavirus crisis.
In 2008, he left DJI and organized a research team to start up his own business in 2009. While DJI was growing to be the world’s largest consumer drone maker, Lu’s new drone company focused on industrial drones. He believed these machines could play an even larger role in society, with drones being more than just toys.
Over the past decade, MMC has developed a range of drones for aerial photography, electric power line inspection, land monitoring, city planning, forest fire fighting, traffic management, and disaster relief among other uses.
The company is now the largest drone supplier for State Grid Corporation of China, the country’s major grid operator, and Sinopec Group, China’s largest oil and gas company. MMC is also the main drone supplier for the Chinese departments of public security and fire fighting.
Amid the coronavirus outbreak, over 100 drones made by MMC have been used around China for different purposes, including spraying disinfectants in public places, aerial broadcasting, aerial thermal sensing and traffic control. MMC has also mobilized over 200 employees to support drones utilization during this period.
KrASIA recently spoke with Lu about his entrepreneurial experience and his predictions for the drone market.
KrASIA (Kr): What are some ways in which MMC’s drones have been deployed?
Lu Zhihui (Lu): Drones, carrying loudspeakers, were first used to dispatch gathering people in some communities, to remind them about wearing masks and to help traffic officers maintain the order.
Some governments later asked us to add functions for group temperature testing at railway or long-distance bus stations, and to include disinfection capabilities for neighborhoods with suspected or confirmed cases.
After our Research and Development (R&D) team upgraded our drones, they have been used to detect individuals with temperatures above 37 degrees in seconds, and have been carrying up to 15 liters of disinfectant each to spray in risky areas.
Kr: How have you managed to keep staff working during the outbreak and Chinese New Year?
Lu: Our company has 500 employees now. About 100 employees are stationed in our seven control centers, in cities including Zhaoqing, Guangdong, and Shanghai. This group is on duty 24 hours a day, seven days a week to fulfill any request from authorities within 30 minutes.
In addition, we have summoned another 100 employees and transported them to where they are needed to fulfill emergency duties, such as controlling drones in Chaonan district in Shantou, Zhejiang. Meanwhile, our R&D team has continued to work remotely.
They are our heroes. When they return, salary hikes and promotions are waiting for them.
Kr: How do you provide your services?
Lu: In cities with drone control centers, we provide different drone services for authorities, instead of directly selling drones. We charge drone flights by the hours and for data reports, if needed. After the outbreak, we have been asked for more services including patrolling and disinfection, so our employees are now very, very busy.
Also, we have received orders from cities where there are no drone control centers, so we have to rely on the closest centers to fulfill the duties.
A video provided by MMC shows how drones are used to remind people to wear a mask.
Kr: How do you see industrial drones being used after the virus, and what difficulties hinder more widespread adoption?
Lu: The coronavirus can help more and more authorities realize drones can play a larger role in society, and they may need more drone services.
However, there is a large barrier due to the segmented governmental system. For example, the police might need a drone to help arrest a criminal, while the fire station might need a drone for firefighting. But, these are both low-frequency events, which makes it hard for a service provider to make ends meet while only providing single services in this way.
If upper governments could establish drone control centers and all lower governments can use these drones, things could be much better.
Kr: What do you think about many drone makers going bankrupt in recent years?
Lu: You know, being a startup founder is like being a programmer. The programmer launches the first version of a software and needs to debug from time to time and roll out updated versions. If you cannot debug faster than the growth of the bugs, your system crashes. As a founder, I need to update my self and my team fast enough to adjust to the ever-changing social and economic environment.
Kr: MMC has gone through an unsuccessful merger with Shenzhen-listed De’ao General Aviation Company Limited in 2018. How do you view these ups and downs?
Lu: It was an unsuccessful merger but this did not mean our business was unsuccessful back then, and I did not think my company had entered a low time after the failed deal. On the contrary, I think business has been going on smoothly. I have felt pressure, but I never felt I encountered a failure. Our company turned profitable in 2018 for the first time and our net profits increased 200% in 2019.
Kr: What is your path to profitability?
Lu: We sell drones, and we also sell services. Sometimes, drone buyers return to us for more services when the drones they bought are not enough to meet their needs. For example, grid operators always buy drones from us in the first half of the year. Then, in the second half, they buy our services to help them finish their projects.
Kr: You mentioned that your company plans a 40% increase in sales from overseas markets. How do you plan to reach that goal?
Lu: One major reason is that our joint venture manufacturing plants in India and Uzbekistan have started operations since the middle of last year. In addition, we would like to set up joint ventures in Indonesia, South Korea, and Japan. We are the perfect partner for overseas companies that want to enter the industrial drone market. This is because we have acquired 13 companies in the entire supply chain and we can cover about 95% of the parts needed to produce drones, such as batteries. So, to overseas partners, we can provide all our expertise and supply chain resources.
Kr: How do you view the fact that consumer-facing drones have a much larger market than industrial drones currently?
Lu: Right now, it is the truth. But as industrial drones see more and more usage, in about five years, the market for these drones can exceed that of consumer drones.
Consumer-facing drones have a natural advantage in branding, but branding is not our priority now.
Kr: Will your company plan an IPO?
Lu: We are going to start a pre-IPO financing round soon, but we think that an IPO could occur several years from now, as we still need venture capital to support our business.
This article is part of KrASIA’s “Inside China’s Startups” series, where the writers of KrASIA speak with founders of tech companies in the country.
