Satellite operator is rolling out its SpaceSail low Earth orbit constellation, underscoring Beijing’s determination to build a state-controlled alternative to Starlink.
By Hu Minghe
State-backed Shanghai Spacecom Satellite Technology (Spacecom) is seeking to raise up to 15 billion yuan ($2.2 billion) to accelerate construction of its SpaceSail low Earth orbit satellite constellation, as China steps up efforts to develop a domestic alternative to Elon Musk’s Starlink.
The fundraising comes as Beijing treats satellite internet as strategic communications infrastructure, with the latest capital raising structured to preserve state control and exclude foreign investors. The proceeds will be used to expand the satellite constellation, develop technology, broaden market reach and support operations.
The constellation, known as Qianfan (Thousand Sails) in Chinese and marketed internationally as SpaceSail, aims to deploy hundreds, and eventually thousands, of low Earth orbit satellites to provide broadband connectivity and communications services.
While Spacecom has made rapid progress in deploying satellites and signing overseas cooperation agreements, it remains far behind Starlink in scale and commercial development. The Shanghai-based company, known in Chinese as Shanghai Yuanxin Satellite Technology, has placed 200 satellites in the Qianfan constellation into orbit but generated little revenue, highlighting the challenge of translating state-backed investment into a profitable telecommunications business.
The financing reflects China’s broader push to establish sovereign satellite communications capabilities as demand for low Earth orbit broadband services grows globally and competition intensifies between Chinese and Western operators.
It plans to introduce up to three new investors or investor groups, with new shareholders collectively holding no more than 20% of the business, according to Chinese media reports citing a public company disclosure. The fundraising excludes foreign investors, including those indirectly backed by overseas capital.
That restriction reflects Beijing’s view of satellite internet as part of the country’s critical communications infrastructure. China’s telecommunications networks are overwhelmingly state-controlled, with private and foreign participation tightly restricted. The Ministry of Industry and Information Technology has said China aims to have more than 10 million satellite communications users by 2030, with direct satellite-to-smartphone services becoming more widely available.
State-backed expansion
Spacecom’s shareholder base underscores its close links to state capital. Its 6.7 billion yuan Series A fundraising in 2024 was led by the CDB Manufacturing Transformation and Upgrading Fund, a national industrial fund linked to China Development Bank and backed by the Ministry of Finance.
Other investors include Shanghai Alliance Investment, the Shanghai municipal government’s investment arm, and CAS Capital, which is affiliated with the Chinese Academy of Sciences.
The company’s leadership also reflects those ties. Chairman Zhang Qi has extensive experience in Shanghai state capital operations, while Chief Executive Shen Hongbo previously held senior positions at Shanghai Telecom, China Netcom and China Unicom Shanghai, giving the company experience in both government-backed investment and telecommunications operations.
Operationally, Spacecom has continued to expand its network. Following a June launch, the company said it had deployed 200 SpaceSail satellites and completed initial networking for an automatic identification system used for maritime vessel tracking. It also launched its first direct-to-smartphone test satellite during the month.
The company plans to have 324 satellites in orbit by the end of 2026 to establish its initial commercial service capability. The first phase of the project will comprise 648 satellites, with more than 15,000 satellites ultimately planned for the full constellation.
Despite that progress, Spacecom remains at an early stage commercially. The company reported revenue of just 49,300 yuan in 2023, rising to 1.15 million yuan in 2024 before falling to 188,700 yuan in 2025. It recorded no revenue in the first quarter of 2026, while its net loss widened to 890 million yuan last year.
Crowded field
The scale of the potential market continues to attract investment despite the financial losses.
China’s commercial space industry was worth an estimated 2.3 trillion yuan in 2024 and was expected to reach 2.8 trillion yuan in 2025, according to the official Xinhua news agency. The satellite internet sector alone was worth 45.4 billion yuan in 2025, while globally, the market for satellite internet applications is forecast to exceed $30 billion by 2030.
Spacecom is one of several Chinese groups seeking to establish large low Earth orbit constellations. The state-owned China Satellite Network Group (China SatNet), established in 2021, is developing the Guowang (National Network) constellation, which is planned to include nearly 13,000 satellites.
Private companies are also entering the market. Geely-backed Geespace has completed the first phase of its internet of things satellite network with 64 satellites in orbit, while Hongqing Technology, which has links to rocket manufacturer LandSpace, has proposed the Honghu-3 constellation comprising about 10,000 satellites.
Even collectively, however, China’s satellite fleets remain significantly smaller than Starlink’s network of about 9,600 satellites. Chinese operators also lag well behind in subscriber numbers and commercial revenue.
Rather than competing directly with Starlink in North America and Europe, Spacecom is likely to focus on countries seeking an alternative satellite broadband provider or where Chinese infrastructure financing already has a strong presence. The company has expanded into Brazil and Kazakhstan and has signed aviation-related cooperation agreements with Airbus.
Whether that strategy can produce a commercially sustainable business remains uncertain. While state backing can finance launches and support expansion, the longer-term challenge will be building a large customer base and generating meaningful telecommunications revenue.
Source:
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