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Chengdu's aerospace industry takes flight
By Ding Yining |
May 7, 2013, Tuesday
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Print Edition
Print Edition
EDITOR'S note:
Chengdu, capital of China's southwestern Sichuan Province, is a city going places. In June it will host the prestigious Fortune Global Forum, acknowledgement of Chengdu's growing reputation as a major business center. Much of this success can be attributed to the city's dynamic "can-do" attitude, helping create an environment where industry can prosper and where leading multinationals are choosing to set up headquarters.
Chengdu's Aviation Industry Corporation of China Chengfei Commercial Aircraft Co is expected to start making and assembling the noses for China's home-made C191 combo jet and regional carrier ARJ21 this year, adding momentum to the city's plans to become the southwestern hub of China's aerospace manufacturing industry.
Last year, Chengdu's aerospace industry accounted for less than 3 percent of the city's industrial output. Municipal leaders are planning to transform the industry into a pillar of the local economy, and Chengfei Commercial Aircraft Co is well poised to capitalize on that development strategy.
The company now employs more than 500 operation staff and 400 technical staff. Local media reported earlier that the company's annual sales could reach 2 billion yuan (US$3,226 million) by 2015.
Orders have been rising up to 30 percent annually in the past few years, said Liu Daoyuan, vice chief economist at the company. He said he expects orders from Commercial Aircraft Corporation of China, the manufacturer of domestically made jumbo jets, to increase substantially between 2015 and 2020.
Currently, the majority of its revenue comes from overseas airplane makers, including Boeing and Airbus.
Supporting suppliers and long-term partners is the core strategy of the company, Liu told Shanghai Daily. A large inventory of parts used to build aircraft doors and other body parts will need to be built up, he said.
By 2020, delivery capacity will be valued at about 10 billion yuan, and orders will be split 50-50 between domestic and overseas customers, Liu added.
"Sichuan Province has a long history of strength in electronics and a rich talent pool, giving it a technical advantage in the development of the aerospace industry," Liu noted.
The company said it hopes to expand its services into design and maintenance for overseas buyers.
Chengdu's aerospace hopes are reflected in plans for a major commercial aircraft industry park which was put into use in the city's Qingyang District in 2011.
Major spare parts production lines have been moved to the industry park, and downstream suppliers are expected to follow.
According to Liu, every 100 million yuan worth of orders will create up to 70 million yuan of business for downstream suppliers and sub-contractors.
From a logistics standpoint, Chengdu doesn't have the advantages of coastal cities like Shanghai, so it has to rely on external service providers. Chengfei is working with government institutions to introduce third-party service providers locally to improve the industry chain.
AVIC said in a forecast last November that China's commercial aircraft demand, especially for regional jets, will rise fourfold in the next 20 years amid strong passenger transport demand.
Apart from manufacturing and assembling aircraft spare parts, the city is hoping to promote development of plane repair and maintenance.
In that realm, Sichuan Haite High-Tech Co Group is one of the leaders.
Since it was set up in the early 1990s, Haite has extended its business operations to include pilot training, manufacturing of testing facilities and maintenance machinery.
Li Biao, chairman of Haite Group, said the company sees strong demand for airplane maintenance and related sectors once China opens its lower airspace.
"The past 10 years has been a golden age for the aviation-related industry as China's commercial aircraft market boomed," said Li.
The city's aircraft maintenance businesses could also support nearby provinces because Chengdu is a major regional transport hub in the southwest.
Chengdu has targeted aerospace as one of the city's prime industries of the future. The strategy is gaining momentum.
In 2010, Pratt & Whitney Aerotech Manufacturing (Chengdu) Co upgraded its factory site in Chengdu to double its capacity. Staff has mushroomed to more than 600 from the initial 20 when the company first began operations there in 1996.
Last March, Cessna Aircraft Co, the world's biggest business jet maker, signed a framework agreement with AVIC and the Chengdu government to set up a joint venture for production of mid-sized business jets.
The agreement also calls for research and development of new business jet models and the creation of an aircraft services network.
The city is expected to act as a business jet production base under the blueprint for AVIC that handles research and development as well as overall assembly.
"In the next five to 10 years, Chengdu is set to become a world-class business jet development and manufacturing site," said Bin Ge, director of the major equipment division under the city's economic and information commission.
"We hope to attract more overseas investment and boost partnerships between domestic companies and foreign counterparts," he added.
Chengdu, capital of China's southwestern Sichuan Province, is a city going places. In June it will host the prestigious Fortune Global Forum, acknowledgement of Chengdu's growing reputation as a major business center. Much of this success can be attributed to the city's dynamic "can-do" attitude, helping create an environment where industry can prosper and where leading multinationals are choosing to set up headquarters.
Chengdu's Aviation Industry Corporation of China Chengfei Commercial Aircraft Co is expected to start making and assembling the noses for China's home-made C191 combo jet and regional carrier ARJ21 this year, adding momentum to the city's plans to become the southwestern hub of China's aerospace manufacturing industry.
Last year, Chengdu's aerospace industry accounted for less than 3 percent of the city's industrial output. Municipal leaders are planning to transform the industry into a pillar of the local economy, and Chengfei Commercial Aircraft Co is well poised to capitalize on that development strategy.
The company now employs more than 500 operation staff and 400 technical staff. Local media reported earlier that the company's annual sales could reach 2 billion yuan (US$3,226 million) by 2015.
Orders have been rising up to 30 percent annually in the past few years, said Liu Daoyuan, vice chief economist at the company. He said he expects orders from Commercial Aircraft Corporation of China, the manufacturer of domestically made jumbo jets, to increase substantially between 2015 and 2020.
Currently, the majority of its revenue comes from overseas airplane makers, including Boeing and Airbus.
Supporting suppliers and long-term partners is the core strategy of the company, Liu told Shanghai Daily. A large inventory of parts used to build aircraft doors and other body parts will need to be built up, he said.
By 2020, delivery capacity will be valued at about 10 billion yuan, and orders will be split 50-50 between domestic and overseas customers, Liu added.
"Sichuan Province has a long history of strength in electronics and a rich talent pool, giving it a technical advantage in the development of the aerospace industry," Liu noted.
The company said it hopes to expand its services into design and maintenance for overseas buyers.
Chengdu's aerospace hopes are reflected in plans for a major commercial aircraft industry park which was put into use in the city's Qingyang District in 2011.
Major spare parts production lines have been moved to the industry park, and downstream suppliers are expected to follow.
According to Liu, every 100 million yuan worth of orders will create up to 70 million yuan of business for downstream suppliers and sub-contractors.
From a logistics standpoint, Chengdu doesn't have the advantages of coastal cities like Shanghai, so it has to rely on external service providers. Chengfei is working with government institutions to introduce third-party service providers locally to improve the industry chain.
AVIC said in a forecast last November that China's commercial aircraft demand, especially for regional jets, will rise fourfold in the next 20 years amid strong passenger transport demand.
Apart from manufacturing and assembling aircraft spare parts, the city is hoping to promote development of plane repair and maintenance.
In that realm, Sichuan Haite High-Tech Co Group is one of the leaders.
Since it was set up in the early 1990s, Haite has extended its business operations to include pilot training, manufacturing of testing facilities and maintenance machinery.
Li Biao, chairman of Haite Group, said the company sees strong demand for airplane maintenance and related sectors once China opens its lower airspace.
"The past 10 years has been a golden age for the aviation-related industry as China's commercial aircraft market boomed," said Li.
The city's aircraft maintenance businesses could also support nearby provinces because Chengdu is a major regional transport hub in the southwest.
Chengdu has targeted aerospace as one of the city's prime industries of the future. The strategy is gaining momentum.
In 2010, Pratt & Whitney Aerotech Manufacturing (Chengdu) Co upgraded its factory site in Chengdu to double its capacity. Staff has mushroomed to more than 600 from the initial 20 when the company first began operations there in 1996.
Last March, Cessna Aircraft Co, the world's biggest business jet maker, signed a framework agreement with AVIC and the Chengdu government to set up a joint venture for production of mid-sized business jets.
The agreement also calls for research and development of new business jet models and the creation of an aircraft services network.
The city is expected to act as a business jet production base under the blueprint for AVIC that handles research and development as well as overall assembly.
"In the next five to 10 years, Chengdu is set to become a world-class business jet development and manufacturing site," said Bin Ge, director of the major equipment division under the city's economic and information commission.
"We hope to attract more overseas investment and boost partnerships between domestic companies and foreign counterparts," he added.
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