Despite the boom that the drone industry seems to be enjoying at the moment, drone makers in China may soon face a market crisis, according to analysts.

over 3,600 spectators from more than 150 countries around the world, Chinese drone makers took advantage of the recent Consumer Electronic Show in Las Vegas and displayed their latest inventions. 

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FLYPRO Aerospace Tech Co Ltd. unveiled its XEagle drone that cater people with high interest in sports. This drone has a voice-control feature and can be connected to a smartwatch. According to the company's chief executive officer Lin Hai, smart sporting devices that connect with intelligent drones have a big opportunity as people have become more health conscious and are interested on physical activities.

Another Chinese company that was present at the CES is DJI. The comsumer-level drone manufacturer, who has 70 percent of the local market, launched its Phantom 3-4K, the successor of Phantom 3 series. Its new product is capable of shooting 4K video.

Another drone that captured the attention of many is Ehang's first-of-a-kind passenger drone. The Guangzhou-based drone maker created the prime battery-powered, auto-pilot drone that could carry one passenger. The destination of the onboard passenger can be pre-set via a mobile app.

Other than these cutting-edge drones, hundreds of companies in the country are also creating drones for civilian purposes such as fast food delivery, land surveys, traffic management and police surveillance among others. 

According to Analysys International, a big data analysis and rating firm, the market for civil drones in China is anticipated to grow by more than 180 percent. In a June 2015 report, the firm revealed that in 2 years time, the market will grow from 3.95 billion yuan ($600.4 million) to 11.09 billion yuan.

A majority of this growth is expected to be accounted for by consumer-level drones, according to Jean Xiao, IDC research manager. But even if there is a boost in the shipment of consumer-level drones, Xiao revealed that industrial drones will still top in market value.

Experts claim that while the industry's expansion is bringing in large capital and attracting more investors, in two to three years time, the industry might experience deflation, forcing several drone makers to pull out.

Gui Xiaoyan, Skye Intelligence founder, revealed that currently most drone makers are already in the stage B of financing and funds are becoming tough. He further revealed that if emerging companies fail to sport an advantage or uniqueness in their products, "they may soon be weeded out."

Nevertheless, according to Xiao, market analysts are not so concerned, saying that it is too early to tackle an industry adjustment and there are still only a handful of drone makers in the market. This view is supported by Wu Xiuqian, a researcher at Qianzhan Industry Research Unit, who explained that a period of adjustment in the short term is unlikely.

While the industry is growing rapidly, there are still other matters that need to be attended to before it can boast of substantial development. One of these issues is the capacity of drone makers to engage in mass production. Xiao claims that the supply chain is still at in an early phase. "Factories are still making efforts to boost the rate of production of qualified products," he explained.

Aside from that, a lack of firm regulatory system is also of a concern, according to Wu, as there is currently no existing government policies in the drone industry. 

Last year, the Civil Aviation Administration of China proposed a regulation for civil drones running under the general aviation business. The legislation, which requires civil drones to obtain operational approval before entering the general aviation business, was opened for public scrutiny on Jan. 8 and will be implemented next month.

Some do not agree with the proposed law and have signed a petition against its implementation. Despite sparking a heated debate, Xiao sees this as a positive effort of the government to regulate the industry. Under the new legislation, those manufacturers who fail to meet the standards can be potentially pulled out from the market.

With the industry becoming more coordinated, experts believe that technological developments will decide the fate of the drone industry. "Adjustment and knock-out are the natural laws in any industry... only those with core technologies and a precise positioning can survive," Shenzhen Art-Tech R/C Hobby Co Ltd. president Lin Weidong said. 

Tagsdrone, china, aviation industry, XEagle, EHang