Chinese Government Aims for a Piece of the IFC Market

Officials from the Guangzhou government and Bluefocus IFEC at the signing ceremony on Oct. 9. Photo: Bluefocus IFEC.

The government of Guangzhou City in Southern China and BlueFocus IFEC Technology announced in Guangzhou on Oct. 9 that they will jointly establish the “Belt and Road” in-flight internet fund with a capital injection of 10 billion yuan ($1.5 billion), together with China’s first In-Flight Internet Centre for Mass Entrepreneurship and Innovation, and a $1 trillion yuan ($151.1 billion) In-Flight Internet Industrial Park. With this ambitious agenda, the Chinese government intends to become another major competitor in the IFC industry alongside the United States. According to the Chinese government, its goal is to benefit 500 million passengers with non-stop online surfing experience on their in-flight journeys within the next five years.

The Chinese society has undergone enormous changes since its reform and opening-up roughly 40 years ago. The change is particularly conspicuous in the internet industry, as is seen in its 751 million internet users — a fifth of the world’s total. According to the Chinese government, internet penetration rate in the country has reached 54.3 percent, 4.6 percentage points higher than the global average. China has 700 million mobile internet users with an annual growth rate of 5.9 percent, and an overwhelming 95.1 percent of its internet users primarily use their mobile devices. However, unlike the popularity of the internet, the development of China’s IFC began relatively late, thus somewhat lagging behind the United States. The Chinese government recognizes this situation and has begun to actively pursue its newly formed IFC agenda.

The focus of the Chinese government’s initiative lies in satellite. On July 23, 2016, the Shenzhen municipal government began construction of China’s first global high-throughput broadband satellite communications system. The Shenzhen government plans to launch this satellite by the end of 2018 and begin satellite communications operations services in 2019. In April of this year, China also launched its first high-throughput communications satellite, dubbed Zhongxing 16.

According to the plan, the Guangzhou government will provide support in policy, land, capital and other areas. BlueFocus IFEC will bring together leading companies as stakeholders in the whole industry chain to maximize industrial value through commercial operation, as well as to foster a 100 billion yuan ($15.1 billion) industrial cluster in five years.