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China is still playing catch up to Silicon Valley, says drone maker co-founder

There's plenty of room to grow for the start-up environment in China, according to the head of Chinese drone maker EHang, who told CNBC on Wednesday that the U.S. is still ahead in most areas of innovation and technology.

"The U.S. is a more mature market, people spend more time working on fundamental technologies, while in China it's more about application level or working on business models that you can see results within maybe five to six years. I think this is the area that China still needs to catch up," EHang co-founder Derrick Xiong told CNBC's "Street Signs."

Xiong said one reason for this is the strong ties between universities and start-up companies in the U.S.

"In China it seems like the collaboration between the academics side with the start-up side is still not as strong as (in) the U.S.," he said.

It's an honest assessment from a company that claimed the title of world's first flying taxi: The EHang 184 is an autonomous passenger drone that has already passed test flights in the skies of Dubai.

Xiong aims to hold a public demonstration of the drone in the next few months.

Derrick Xiong, co-founder of EHang, at the RISE Conference on July 12, 2017 in Hong Kong.
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Derrick Xiong, co-founder of EHang, at the RISE Conference on July 12, 2017 in Hong Kong.

Yet, when it came to the broader drone industry, Xiong acknowledged that China was a market he could not ignore, "On the regulatory side, we're seeing this clear trend that the Chinese government is being more and more supportive for new kinds of applications or new waves of innovation. So clearly China is still our biggest market here."

EHang's co-founder also pointed out that China was leading in some areas of innovation, including the bike sharing economy and knowledge subscription services.

And when it came to artificial intelligence, it was more of a tie, he said.

"China is definitely going to be one of the most important players in the AI field because China does have the biggest database. China has the biggest consumer base as well. While the U.S. is still having its own advantage of academic research. U.S. is very strong in theoretical studies as well," he said. "Well, I believe China and U.S. will be both leading the way in the AI field."