Are large layoffs by Chinese drone maker ZEROTECH a sign of an overheated market?

Yang Jianjun, founder and CEO of Beijing-based drone maker ZEROTECH, confirmed that the company has laid off 134 employees, about one-fourth of its total staff, on December 30.

Yang cited three factors as reasons for this round of layoffs: explosive headcount growth over the past year, shortage of core members and mid-level managers, and high operation costs. He also promised that there will be no more layoffs in 2017.

Among staff that were laid off, some were still serving probation and others who had worked at the startup for more than two years. The current layoff was not targeted at any specific company division, said Yang.

Starting as a smart drone manufacturer in 2007, the company offers corporate and consumer products. In September, the company announced its RMB 150 million (USD 22 million) financing, from Qualcomm Ventures and a handful of other investors.

ZEROTECH and Tencent jointly launched pocket-sized DOBBY drones in May, which became ZEROTECH’s most successful consumer product and arguably one of the most well-known drones in the year of 2016. However, in an unusual move, Yang released the total number of times DOBBY drones were activated for take-off, which was not an indication of how well the sales of DOBBY drones were in the market.

DOBBY drone


“DOBBY’s sales and revenue are better than drones from any other drone maker, except for DJI,” wrote Yang on China’s Quora-like Q&A website Zhihu.

But the following product was not so lucky. The Ying drone, produced by Tencent and ZEROTECH, with preorders starting in October, postponed its date of shipment.

ZEROTECH’s current layoff is a significant indicator of an overheated drone industry. Too many players are competing in the market, and many of them have landed too much funding too fast. Xiaomi released its first drone and had its first trial flight in May. HoverCamera, an industry pioneer which launched a selfie drone in April raised USD 25 million financing. Shanghai-based drone company Yuneec in August 2015 received USD 60 million investment from Intel.

However, the overall global drone market is emerging. The global consumer drone market size is expected to reach USD 4.19 billion by 2024, according to a report by US based market research company Grand View Research.

(All photos from Baidu Images)

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