Airbus takes risks to secure Chinese market

2nd December 2005, Comments 0 comments

PARIS, Dec 2 (AFP) - The European aircraft manufacturer Airbus, which expects a big order from China any day, is increasingly working with Chinese companies in a drive to penetrate the Chinese market.

PARIS, Dec 2 (AFP) - The European aircraft manufacturer Airbus, which expects a big order from China any day, is increasingly working with Chinese companies in a drive to penetrate the Chinese market.

Airbus, which expects the order during a visit to France by Chinese Prime Minister Wen Jiabo, is pursuing this strategy even at the risk of seeing some of its technological expertise slip through its fingers.

Wen is to begin his visit on Sunday with a tour of the Airbus headquarters at Toulouse, southern France, leaving France on Wednesday.

The stakes are high: the European Airbus consortium claims to account for 34 percent of the Chinese market compared with 60 percent held by the main rival, Boeing of the United States, and intends to raise its share to 50 percent by 2013.

Air traffic in China is growing at nearly twice the average rate in the world and China is set to become the second-biggest market in the world after the United States, absorbing 1,600-2,600 new airliners in the next 20 years, according to estimates by manufacturers.

China, which is recognised as being highly successful in acquiring the technologies it lacks, has imposed clear rules: penetration of its market depends on investment which is likely to develop the Chinese aerospace industry.

Airbus president Gustav Humbert said at the Dubai air show: "We have to be in China and find a way to increase international cooperation with China and through this, increase our market share over there.

"However, if you decide to close yourself to international cooperation or technology transfer, this market will be closed to you."

He added: "In a case of industrial cooperation, you have to have technology transfer. The question is, how much of the latest technology are you able to transfer?

"The most difficult issue, in particular in China, is the matter of intellectual property rights. You have to make sure that you are the master of the newest technology and not give away technology which might work against you tomorrow, with competitors copying you later.

"This is a crucial point, which is the main point in our discussions with the Chinese."

Boeing has signed sub-contracting agreements for Chinese companies to do work for its 787, 777 amd 737 airliners worth US $600 million (EUR 598 million).

Airbus has decided to go along with the Chinese requirements by increasing the involvement of Chinese suppliers in the construction of its aircraft. This approach carries with it a benefit in that production costs are reduced since the cost of labour in China is far lower than in Europe.

Airbus has allocated Chinese industrialists five percent of its programme for the long-distance A350 airliner on a basis of shared risks.

And in line with this, Airbus plans to employ 200 engineers in a research centre in Beijing by 2008.

Airbus has also undertaken to transfer to China the technology for the total production of the wings for the A320, work which until now has been carried out in Britain.

Already five Chinese companies are involved in making parts for Airbus aircraft. This work includes parts of the front landing gear for the new superjumbo A380, as well as doors for the A320 and A330 models.

Noël Forgeard, a co-president of the European Aeronautic Defence and Space Company (EADS) which controls 80 percent of Airbus, said recently that EADS did not rule out building an assembly line in China.

However, some experts warn that Airbus should remain cautious about sub-contracting in China in case its technology is misused. China has made clear that it has big ambitions in the field of civil aviation with a programme for an airliner capable of carrying 105 passengers called ARJ-21.

Copyright AFP

Subject: French news

0 Comments To This Article