A trial Vesper delivery drone in Guangzhou, capital of South China's Guangdong Province Photo: Courtesy of XAG

Thanks to the large growth potential of China's drone logistics industry, an increased number of foreign players will pursue cooperation with Chinese companies despite some challenges which need to be addressed in the sector, analysts said on Wednesday.

The comments come after Chinese agricultural drone maker XAG and Airbus on Monday announced their joint development of a drone cargo service with the project codename Vesper, and conducted a delivery trial in Guangzhou, capital of South China's Guangdong Province. 

During the trial, a select group of customers in Guangzhou could order food from a nearby shop through a mini-application on WeChat. It took the drone three minutes to travel 1.6 kilometers and deliver four bowls of noodles, according to information XAG sent to the Global Times on Wednesday.

Justin Gong, vice president and co-founder of XAG, said that "partnering with Airbus to explore drone-delivery service enables us to learn from its 50 years' experience of flying and air safety management." 

The two companies signed an agreement for the joint development of the project in July.

The cooperation marks the beginning of the two firms' expansion into the domestic drone logistics industry.

As Chinese companies lead the industry globally in research and development, the cooperation shows that Airbus is optimistic and aims to explore new business in the Chinese market, Qi Qi, a Guangzhou-based industry market-watcher, told the Global Times on Wednesday.

Large growth potential persists in China's instant-delivery market, with an average annual growth rate of 48 percent over the past five years, media reports showed, citing industry data.

The Chinese catering and distribution industry is expected to continue to grow at a rate of 10.9 percent over the next five years, and the industrial market size in China is about $40 billion, which is twice the size of the US market and 20 times the size of the German market, according to the same data.

With sound prospects, the logistics drone industry has grown steadily in the Chinese market in recent years with the participation of an increased number of players.

In June 2017, SF Express launched the first drone logistics distribution pilot project approved by the Civil Aviation Administration of China in Ganzhou, East China's Jiangxi Province. Other companies such as JD.com Inc and Alibaba are also developing drone cargo-delivery services.

The logistics drone industry is in its growth phase, and is an application scenario expanded from the fields of aerial photography, surveillance and plant protection, said Qi, noting that there is a large application value in the sector, particularly in the middle and western regions of the country where there are inconvenient ground transportation systems and low populations.

Qi said that there are some issues which need to be tackled, such as the level of control in flight safety, airspace use and the amortization of operation costs.