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Drones In China Case Study

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Our objective is to focus on commercial drones in China because “China’s commercial sector is well-positioned for drone use, as the country is increasingly adopting advanced technology and automation to counter rising labor costs.” The advantage of this product in the delivery industry is lower long-term costs, which will reduce labor and transportation costs. Specifically, drone is a normal good, or an luxury good.
This product that we investigate is sold by a manufacturer business. As a manufacturer, it uses no intermediaries channel in the distribution, so it sells directly to the end consumer. DJI is our example to understand the possibility of success of drones in the delivery market because this company is an already mature delivery …show more content…

In terms of PED, factors that we need to consider are the range and attractiveness of substitutes, the relative expense of the product, and time. To explain those factors in more details, labor is the only substitute for drones when they are used for delivery purposes. Since labor costs are high, the price competitiveness of drones is high. However, if we consider delivery companies that utilise drones, there are many companies including JD, SF Express, and YTO, many of them have their own drones delivery. Besides, the price range of DJI’s drone is from $300 to more than $1000, so there are many available choices for delivery companies to choose. Additionally, 3D Robotics has released a type of drone at a price of $1500, which is much higher than the price of DJI’s drones.(https://www.reuters.com/article/us-usa-drones-consumer-analysis/consumer-drone-business-stumbles-but-commercial-markets-beckon-idUSKBN13701Z) Based on the evidence given, DJI is very likely to stand out if it tries to make contracts with delivery companies by being price competitive. Time is unlikely to be a significant factor because DJI directly provides delivery services for its consumers, which are some delivery companies.
Government regulations play a significant role in the drone market, so there are more barriers for DJI to enter the delivery market. Reasons for the existence of government

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