K.K. Chadha

China has long toured the international airshow circuit heralding its ambitions to become a major player in the aerospace sector. The China National Aero Technology Import and Export agency is at Singapore Airshow this week (Stand V67) and seems to have made some tangible steps toward establishing its role in the industry. 
The successful flight in 2008 of the 90-seat ARJ21 regional jet being developed by the Avic I Commercial Aircraft Co. (ACAC) has, for the first time, indicated that China can take its place alongside countries such as Canada and Brazil that have led this field. In addition, at September’s Asian Aerospace show in Hong Kong, Commercial Aircraft Corp. of China (Comac) displayed the model of an even more ambitious venture–the C919 airliner.
The ARJ21 was developed to satisfy a domestic need for technologically advanced, short-haul jets and to put China on the map as a commercial aircraft manufacturer. Voracious demand is driving China’s air transport industry– growth that appears to be no more than temporarily slowed by the worldwide economic downturn. Boeing predicts China will need 3,400 more airliners over the next two decades, nearly quadrupling its present fleet.
The C919 is a markedly more ambitious proposition than the ARJ21. The single-aisle aircraft is scheduled for entry into service in 2016 and could carry up to 190 passengers, putting it in direct competition with Airbus and Boeing–companies that have sought to establish their own production footprints in China. 
The People’s Republic tried to enter the global civil aircraft market four decades ago and failed, finally abandoning the venture in the 1980s. Considerably greater success has been had with military jets, although that, too, has not always been a smooth process.
The country knows it lacks the research-and-development capabilities needed to develop top-notch military and civil aviation products. That was one reason why the Chinese government consolidated and stream- lined the far-flung units of the Aviation Corp. of China (Avic), the flagship national aircraft maker last year.
China’s grand plan is not only to build a world-class passenger jet but, in the process, to create a modern aerospace industry from the ground up. The country hopes to create a ripple effect that will benefit ancillary industries such as machinery, electronics, electrics and material makers.
However, if a country’s industrial achievements are measured by the technology used in its defense products, China may still be found lacking. “The aerodynamics of the most advanced Chinese fighter–the J-10–are still using 1990s technology,” said Eric Shih, chief convener of Defence International Magazine. “The more advanced a nation’s civil aviation, the more sophisticated its defense technology,” he said.
Before Avic’s restructuring, the four major aircraft manufacturing plants mentioned above were owned and operated by Avic I and Avic II, which jostled for the leading market position. Avic will have a Herculean task over the next three years to consolidate those far-flung operations into a modern aircraft producer.
The company, which has more than $34 billion worth of assets, has unveiled plans to list about half of its capital value on the stock market. The aim is to improve corporate governance and make Avic more market-focused. Currently, its four key plants do not have a clear focus on the types of products they make.
As a result, say industry analysts, many overlapping production lines and redundant resources have been used in research and development. For example, Harbin Aircraft, formerly owned by Avic II, was meant to produce military aircraft, including helicopters, but it diversified into civil aircraft in 2002 when it formed a joint venture with Brazil’s Embraer. It also got involved in making regional jets and cars.
“Chinese aircraft manufacturers will lose out if they continue to go their own way while other global players are consolidating to become more competitive,” said EADS China manager Wang Dadong. 
Li Ping, the head of capital operations at Avic, said his company and EADS will continue to deepen their cooperation with joint venture projects. “The military and civil aviation industry has been controlled and solely owned by the central government for a long time,” said Li. “It is time to improve the corporate governance by floating these companies. Aviation products are competing on a global basis and we have to increase the visibility of our management to lure more international partners to cooperate with us.”
And that is happening. For instance, the new engine servicing joint venture between China Eastern Airlines and Pratt &amp; Whitney in Shanghai hopes to generate annual revenue of approximately $346 million in three years as it cashes in on the country’s fast-growing fleet of aircraft. Shanghai Pratt &amp; Whitney Engine Repair has set up hat could be China’s largest maintenance, repair and overhaul center and the company aims to service 300 engines a year, said chairman Li Yangmin. It also will provide services for third-party customers across the Asia-Pacific region.
Li added that because of lower labor costs and savings on transport maintenance fees could be cut by $500,000 per engine. The joint venture is 51 percent owned by China Eastern.
Similarly, Germany’s MTU Aero Engines has formed a joint venture with China Southern Airlines to operate an engine service center in Zhuhai; Goodrich Corp. opened one in Tianjin in July; and Singapore Technologies Aerospace is involved in a joint venture in Xiamen.&nbsp;&nbsp; &nbsp;

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