South Korean Drone Manufacturers Having Hard Time due to Chinese Drone Manufacturers and South Korean Government’s Regulations on Certifications

Apr 04, 2017

South Korea’s drone manufacturers are going through difficult times as they cannot even dare to have their drones take off as Chinese drone manufacturers keep coming out cheaper drones and as certifications for drones in South Korea are getting more strict. Experts point out that although regulations regarding safety of drones are needed, reduction of cost for certifications of drones and preparation of measures for non-certified products are also needed.
According to industries on the 2nd, number of South Korean drone manufacturers is dropping at a rapid rate. It is estimated that there are currently about 1,500 South Korean companies that are related to drones. Out of these companies, only about 30 companies are pure drone manufacturers while most of them import components of drones from China and manufacture drones with those components. There are only a handful of companies that actually manufacture batteries and motors of drones.
Reason why groundwork for South Korean drone manufacturers has gotten so weak results from increased financial burden from costs of certifications and continuous attack from cheap Chinese products.
“Even when we sell 10,000 drones, it does not equal to costs of certifications. It costs more than $8,934 (10 million KRW) to receive four to five certifications.” said a CEO for a South Korean drone manufacturer. “It is a huge financial burden as it is even difficult to make $0.89 (1,000 KRW) of profit by selling one drone.” On the other hand, China, which has emerged as a powerhouse in drone industries, has implemented sizeable economy. It has prepared a structure that lowers production cost by purchasing components in bulk and its drones are more than twice cheaper than South Korean drones even when they have similar performance.
In order to sell drones in South Korea, one must receive evaluations on suitability from National Radio Research Agency. These evaluations are done by 43 testing organizations that are designated by National Research Radio Agency. Controllers, which receive and send radio signals, are classified as transmitters and need to receive a certificate of suitability. Cost for testing is about $1,340 (1.5 million KRW).
Drones themselves also have to go through separate evaluations. If they only receive radio signals, they need to have registration of suitability. Cost for testing is about $893 (1 million KRW). However drones that have abilities to send radio signals need a certificate of suitability like controllers. Manufacturers also need to pay testing organizations for registration and licenses.
Overall cost will continue to go up if drones have additional functions such as cameras. It will surpass $8,934 (10 million KRW) if certifications for Wi-Fi, camera, and hovering are included. Also durations of certifications only last up to 3 months maximum. In order to sell drones that can be used by children under 14 years old, one also needs to receive a safety mark for industrial products (Korea Products Safety). If one decides to sell drones for agriculture, it needs to pass qualifications of Foundation of Agri, Tech, Commercialization & Transfer separately.
As financial burden for certifications continues to rise, illegal distributors that sell drones without obtaining certifications are in full swing as some say it is a loss to abide by laws. Eventually South Korean drone manufacturers have no choice but to lower their margins in order to compete with Chinese drone manufacturers and illegal distributors.
70-80% of distribution of non-certified drones comes from China by abusing the fact that personal drones are not obligated to receive certifications. One can avoid certifications if it goes through so-called ‘online peddler’ that imports drones for personal uses. These small companies that are operated by one or two people sell drones through internet shopping malls.
“While costs for certifications drop when industries are vitalized, companies and testing organizations are all going through difficult times as South Korean Government wants to start on certifications for drones before firmly establishing drone industries.” said a representative for a testing organization.
Staff Reporter Choi, Jonghee |choijh@etnews.com

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