Aerospace and helicopters in China

Aerospace and helicopters in China

Aerospace and helicopters in China

China’s aerospace and aviation market

With growing opportunities for foreign investment in the Aerospace and Aviation industry, China is already the second largest air travel in the market. According to PIM Ltd., China will increase the size of its general aviation fleet by roughly 30 per cent over the next 5 to 10 years. That’s a total of $159 billion.

From 2012 to 2032, it is expected that a total of US$647 billion will be spent to purchase 5,357 aircraft of at least 50 seats apiece—and 75 per cent of these are single-aisle jet airliners.

Co-venture mandate

For the production of planes to be possible, the Civil Aviation Administration of China mandates that foreign companies must co-venture with AVIC (Aviation Industry Corporation of China, owner of the XAC/Xi’an Aircraft Corporation) and COMAC (Commercial Aircraft Corporation of China). The country is currently on the final stage of the versions of the Airbus A320 and produces the Embraer ERJ-145 regional jet under license.

Investment challenges

Prospective investors will be required to deal with the rising costs in China, which requires a commensurate rise in quality. Investment opportunities continue to increase despite the fall of global aerospace component to $400 million, mainly due to a $100 million drop off in business with the US.

The participation of GE Aviation, Pratt & Whitney, Rolls-Royce and MTU Aero Engines GmbH in the upcoming forums with AVIC and COMAC proves that demand may increase in areas of engine design and development—with AVIC and COMAC setting the priorities for the market.

Despite the challenges and longstanding concerns, China remains a very attractive market to the US. According to the U.S.-China Business Council survey, China operations are reportedly profitable, with 90 per cent of the member countries of the council responding.

Investment opportunities in China’s aerospace and aviation

In the civil aviation industry, China is offering international and foreign investors along with tier one and final assembly suppliers, airport design, airport construction and manufacturers of small niche parts among other offerings.

While the number of airports increase according to China’s plan to add airports, relocate some and expand others, their commercial air fleet will grow in the period of 2011 to 2020, from 2,888 units to 4,500 units. The number of airports are estimated to increase by 40 additional ones, amounting to 240 in total by 2020.

China is a vital player in the booming global aviation supply chain. With its presence in the wide aviation products and services market, the nation is working towards entering the large commercial aircraft sector.

With the increase in the number of airports and aircraft, China offers a variety of business opportunities in new infrastructure, aircraft engines and parts, pilots, controllers, communication/navigation/surveillance systems and other equipment.

China’s aerospace and aviation industry provides opportunities to foreign investors through component systems such as engines, hydraulics, and electronics. They can also find opportunities in services such as design engineering, precision machining, and training. The investments are expected to amount to at least $8 billion over the next five to ten years, or more than $32 billion over the next 20 years.

Major developments in Tianjin

Oxford Economic Research Institute and Airbus stated that the Chinese aviation industry will have created 20 million employment opportunities and shown a turnover of 3500 billion USD in the next 20 years. It is predicted that by 2025, China will be the second largest aviation market after America.

Airbus and Boeing also estimated China will purchase more than 2,000 aircraft by 2025. With Airbus building its first final assembly in Tianjin, Tianjin has experienced a fast growth in the aerospace and aviation industry. Boeing also has a joint venture for composites in Tianjin.

The Municipality of Tianjin is located in the northeast of North China Plain, with a population of more than 11 million. Tianjin Municipality is situated 120 kilometers southeast of Beijing. It is one of the four municipalities under direct administration of the central government.

Key players in the aerospace and aviation industry are Aviation Industry Corporation of China (AVIC), China Aerospace Science and Technology Corporation (CASC) and China Aerospace Science and Industry Corporation (CASIC)—all have their research and industrialization bases in Tianjin.

There are 4 focus of the industry in Tianjin, including Airbus A320 Family final assembly line, helicopters industrial base, carrier rockets production base and aerocraft and unpiloted aircrafts industrial bases.

Tianjin port free trade zone

Tianjin Airport Industrial Park is under the administration of Tianjin Port Free Trade Zone. The main focuses of Park are aerospace and aviation manufacturing, IT, precision machinery, research and development of high and new technology.

Sichuan Haite Group, China’s largest independent third-party aviation repair company, and Tianjin Port Free Trade Zone agreed to build an aviation repair base in Tianjin Aviation Town. The primary business of the new base will be the heavy repair of helicopters, general winged aircrafts, main line/sub line aircrafts and onboard equipment.

At the onset of Airbus project Tianjin, local supply cannot meet the big demand for qualified workers, engineers and management staff. To address the need, more and more higher education institutions have been set up in Tianjin. The move is expected to satisfy the growing demand for talents in the aerospace and aviation industry.

This entry in Asia was updated on February 29, 2016 by specialist.