Though the success of China’s home-grown narrowbody passenger jet is clearing the runway for the world’s top transport equipment firms to enter its market, there may be turbulence along the way, as some foreign investors have expressed concern over intellectual property rights and domestic competition is on the rise.
The C919, which completed its maiden commercial flight in May with China Eastern Airlines, is a symbol of the country’s aim to carve out a share of the billion-dollar passenger jet market presently dominated by Boeing and Airbus.
The two manufacturing giants have estimated China would take at least 20 per cent of global plane deliveries in the next two decades.
Stakes are thus high for Commercial Aircraft Corporation of China (Comac), the C919’s manufacturer. To keep ahead of industrial and geopolitical changes, the company is ramping up production and driving further investment in China’s aviation supply chain through overseas partnerships.
This need has become all the more urgent given the heated competition between Beijing and Washington in advanced technology.
The US government has tightened exports to China of dual-use items, products which by its definitions have both commercial and military applications. China, meanwhile, has focused on self-reliance and made hefty investments in aviation, in part to offset those controls.
But autarky in an industry like aviation, which is highly technological and almost inextricably globalised, appears a functional impossibility.
As the sector struggles to recover from the coronavirus pandemic and the loss of most business with Russia following its invasion of Ukraine last year, China’s market size is too large to be ignored.
Last week, French maintenance tooling company Dedienne Aerospace opened a new factory in Shanghai, a clear vote of confidence in the country’s prospects.
Guillaume Justamon, Dedienne’s sales and marketing director, was quoted by the official Xinhua news service as saying China’s market for aviation maintenance services will grow at an annual rate of 6.9 per cent over the next 10 years.
Manager Carrie Qi of Zhengzhou Constant Holy Kay Trade, which imports and distributes aerospace cable products from companies such as Prysmian Group, said competition is becoming more intense.
We are hoping C919 can ramp up production, then we can go to our suppliers and discuss pricing
Carrie Qi
“Chinese companies are building up their capacity to develop products,” Qi said at the Shanghai International Commercial Airshow last week, adding that local firms are particularly competitive when it comes to pricing and delivery.
“They also want to match the quality of multinationals, although it’s difficult when it comes to switching brands.
“We are hoping C919 can ramp up production, then we can go to our suppliers and discuss pricing. Now that the pandemic is behind us, logistics costs are also coming down a bit and we can count on delivery time a bit better.”
For some overseas players, however, impediments to expansion continue to exist. Another foreign supplier to Comac who did not want to be named said intellectual property protection is still weak in China.
“We have seen some suppliers producing cheaper and lower quality products that are similar to ours,” one manager of aviation equipment said at the air show.
“Of course it’s a competitive market here, now that the C919 is operating commercially. We hope that China will improve its intellectual property protection, but in practice there are some instances that still concern us. It’s always a risk here.”
Wang Feng, a technical aerospace adviser for the Greater China region at French software maker Dassault Systemes – a supplier to the C919 – said the company is also facing issues relating to pirated software.
“It is something we have had to spend resources on,” Wang said, adding that improving transparency in company registration in China has helped the identification of software piracy in the open market.
Alex Vlielander, chief customer officer at Liebherr-Aerospace, said the Chinese aerospace market is huge and will increase considerably during the coming years.
Despite uncertainty surrounding China-US relations, the German equipment maker – which has been operating in China since 1978 and served as supplier to the C919 and Comac’s regional ARJ21 jet – continues to invest.
In September, Liebherr-Aerospace signed a letter of intent covering customer service and spare parts for the air management and landing gear systems on Comac’s two vessels.
We will be engaged in China for as long as it makes sense for us
Alex Vlielander, Liebherr-Aerospace
Per a press release announcing the deal, the German company will provide life-cycle support for its onboard systems and train maintenance personnel.
For Liebherr, China is a particularly relevant production location, Vlielander said, but the company has always sought to “counteract dependencies” in individual markets.
“We do know that as China industrialises and develops, it is going to be less reliant on foreign companies. The Chinese have proven time and time again that they are very capable in developing businesses,” he added.
“We will be engaged in China for as long as it makes sense for us.”
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