China Aviation Industry Strategy? Why Build When You Can Buy!
Chinese Aviation has been one of the industries that has benefited from when President Nixon first opened the doors for trade in 1972. Since then we’ve seen a myriad of Chinese-made products enter mainstream American life – everything from pooper-scoopers to iPads. The Chinese now make so many things we use daily, we hardly even notice. However, the latest items bearing the “Made in China” label might not be so easy to ignore – and they’re coming to an airport near you!
The “Made in China” Label is Already at Your Airport!
If you’re an aviation enthusiast, you’ve probably seen a Nanchang CJ-6 at an air show. Made in China, it’s a favorite of Western aerobatic pilots on a budget and an admitted rip-off of the Russian Yak 52. In the last few years, the Chinese have added a more names to their aerospace portfolio and they’re far less exotic sounding or Russian inspired than the Nanchang CJ-6. In fact, they are familiar names like Continental Aircraft Engines, Cirrus Aircraft, Diamond Aircraft, Enstrom Helicopter and Mooney Aircraft – all purchased by Chinese Aviation companies and now under Chinese ownership. Is this the result of a slow U.S. aviation economy or the future of U.S. aviation?
Aviation has been growing in China for the past 25 years, which includes commercial, military and recently the general aviation as well. China expects homemade commercial aircraft to supply more than 10% of the domestic market by 2025, while regional jetliners should reach 10 to 20% of the global market by 2025. It also aims for global market shares of 40% of light general aviation aircraft and 15% for helicopters.
Chinese Aviation — Poised for 20% Annual Growth.
China currently has around 235 airports, but many lack the capacity to meet the coming increase in passenger numbers and flights. Government officials estimate 450 airports will be needed across the country by 2035. According to a study done by Booz Allen, Chinese policy makers have been lifting restrictions on Chinese air space and aviation-related industries to create a more favorable operating environment for the aviation industry so as to expand aviation’s public service, encourage economic growth and boost transportation across China.
By many estimates aviation in China is poised for a 20% annual growth rate for at least the next decade. The question is who will benefit most — Western aerospace companies or state-run Chinese aviation companies?
There is no doubt there is pent up demand throughout Asia for an increase in aviation services. American and European aerospace giants like Boeing and Airbus have embraced the Chinese market in order to take advantage of growing sales opportunities in the Far East, as well as the low labor costs in China. The result is a series of joint ventures between China’s Aviation Consortium and the Western manufacturers — what Forbes refers to as the ABCs of Chinese Aviation – Airbus, Boeing and Commercial Aircraft Corporation of China (COMAC). Airbus and Boeing have both set up shop in China for assembly of some of their planes. Meanwhile GE’s jet engine division now supplies engines for western designed aircraft made in Chinese, as well as Chinese designed and manufactured aircraft like COMAC’s C919 (a Jetliner that could eventually compete with the Boeing 737 and the Airbus 320).
Are We Giving Away Too Much Aviation Intellectual Capital
General Aviation manufacturers like Cessna have also entered into production with the Chinese. Cessna originally contracted with the Chinese to produce most of the components of the now defunct Skycatcher light sport aircraft and is going ahead with the production of the Cessna Citation XLS+ in China.
While the list of East-West aviation initiatives in China grows, the question still remains who comes out ahead in the end. Critics complain that opening manufacturing plants in China gives away too much aviation intellectual capital – teaching the Chinese how to make better aircraft much faster than they would have been able to without this knowledge. If this sounds xenophobic, it probably is. But if we’re eventually going to be flying in Chinese aircraft or relying on Chinese systems and parts, then maybe bringing them up to speed in quality and safety is the prudent thing to do.
The Chinese Economy is Fueling Change.
The fact of the matter is, the Chinese economy is flush with money and the Chinese government is committed to growing its aerospace industry by buying American and European aircraft companies. In addition, the Chinese government has relaxed rules and regulations to encourage western aerospace companies to invest in China. As this occurs, the transfer of intellectual technology capital is going to happen no matter what.
No one is betting that Chinese made airliners will surpass Western airliner designs just yet, but some of our aircraft, or parts of them, are being made in China. Judging from the number of our GA companies the Chinese are either buying out right or becoming silent partners in (i.e. the Chinese now hold a share in the ICON LSA), we should pay attention to matters like specifications, certifications and quality control.
The Chinese Aviation industry has a lot of catching up to do if it wants to compete with Western aerospace companies. However, they are learning fast and what they produce and how they produce it should be on our radar. For now, China’s desire to expand their aviation market is opening a huge market for both Western commercial and general aviation manufacturers. Because aviation is a business where lives are at stake, we should make sure both they and we get it right.