SHANGHAI—Space is corporate China’s newest frontier, as Chinese startups prepare to boldly go head-to-head with the likes of Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin LLC for a slice of the space market.

It is still a risky business that must overcome complex technical challenges, as a high-profile rocket-launch failure over northwest China showed in late October. But with about 80 commercial Chinese space-technology startups now operating and competition heating up, the breakthroughs are likely to soon outnumber the...