Doing Business with Chinese Doing Business with Chinese Aerospace Companies Aerospace Companies 1
Current Role • Vice President / Regional General Manager, Asia Pacific • Co ‐ Chair of the US ‐ China Aviation Cooperation Program (ACP) MAC • Board Member of the 2 China JVs Pui Ho, PhD 2
“China one the most difficult countries to do business with” ex ‐ Boeing President China 3
Source: Boeing Passenger traffic within Asia #1 in the world 20 ‐ year CMO 2014 Air Traffic Added Traffic 2015 ‐ 2034 Annual Growth % Asia Pacific 3.4X 6.2% China 3.3X 6.2% North America 2.4% Europe 3.3% Latin America 6.6% Middle ‐ East & Africa 6.2% CIS 4.3% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 RPKs (Revenue Passenger Kilometers), billions
Source: Boeing Asia fleet size will overtake N. America by 2017 20 ‐ year CMO 2014 Fleet Size Added Fleet 2015 ‐ 2034 2034 Fleet Size Asia Pacific 2.8X 16,180 China 3.1X 7,330 North America 9,350 Europe 7,560 Latin America 3,620 Middle ‐ East & Africa 5,130 CIS 1,720 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Fleet Size (No. of Pax Aircraft)
“….Asia ‐ Pacific market will grow the fastest in the future, as the economic growth here is the fastest in the world” American Airlines CEO Doug Parker 6
Many indigenous aircraft programs… 7
Auto industry JVs are very successful in China 8
… and many OEM JVs in China Embraer ‐ Avic HAFEI Airbus ‐ Avic Legacy Final Assembly A320 Final Assembly Harbin Tianjin Parker ‐ Avic FACRI Eurocopter ‐ Avic HAFEI Existing In Work Just Sold Boeing ‐ Avic Flight Control Sys C919 Helicopter Sub ‐ /Assembly Xi’an Composite Manufacturing Harbin Tianjin UTC ‐ Avic EM Rockwell Collins ‐ Avic Bluesky Electrical Power Sys C919 Diamond Aircraft ‐ Xi’an Cessna ‐ Avic CAIGA Flight Simulation Shandong Bin Ao Aircraft Tianjin Industries Aircraft Final Assembly Honeywell ‐ Avic FACRI Shijiazhuang Aircraft Final Assembly Flight Control Electronics Binzhou Dagao C919 Parker ‐ Avic NEIAS FACC ‐ Avic Xi’an Fuel & Hydraulic Sys C919 Composite Manufacturing GE Aviation ‐ Avic CARERI Nanjing Zhenjiang Aircelle ‐ Avic XAIC Avionics C919 Nacelle Final Assembly C919 Rockwell Collins ‐ Avic Shanghai Honeywell ‐ Avic NEIAS Xi’an LETRI Sikorsky ‐ Changhe Aircraft Environmental Control Sys Surveillance Products C919 Industries Corp ‐ Shanghai Nanjing P&W ‐ Avic Engine XAE Wuxi Xinsheng Aviation Airfoil Manufacturing Rockwell Collins ‐ CETCA UTC ‐ Avic NEIAS Industry Ind. & Dev. Co. Liebherr ‐ Avic Xi’an Helicopters Final Assembly Com. & Nav. Solutions C919 Vapor Cycle Machines Landing Gear C919 Shanghai Chengdu Nanjing Changsha Boeing ‐ China Eastern Safran ‐ Air China Honeywell ‐ Hunan Boyun Airlines ‐ Shanghai Airport P&W ‐ AVIC New Materials ‐ Changsha Authority CFM56 Maintenance Xinhang Wheel & Brake Engine components Chengdu Aircraft MRO Zhuzhou Wheels & Brakes C919 Shanghai Thales ‐ CETCA Changsha Honeywell ‐ Taeco Eaton ‐ Comac SAMC In ‐ Flight Entertainment C919 APU MRO Safran ‐ Xinyi Chengdu Tubing C919 Xiamen Airfoil Manufacturing Shanghai P&W ‐ AVIC ‐ Chengdu Guiyang UTC ‐ Taeco Engine Co. P&W ‐ China Eastern Airlines Engine accessories Engine Sub ‐ systems MRO Chengdu Xiamen Engine MRO Shanghai Hamilton Sundstrand ‐ Cessna ‐ Avic CAIGA Snecma ‐ Avic SAIC Avic Shaanxi Aero Safran ‐ COMAC Electric Aircraft Final Assembly Engine Components Zhuhai Zhuhai Component MRO EWIS Manufacturing C919 Xiamen Shanghai 9
IP concerns IT Security concerns Unfair local competition Language, Culture, Distance Unfamiliar territory, e.g. laws Lack of transparency Export compliance Local costs increase Market & Opportunities Partner’s lack of experience Partner’s poor management U.S. jobs concerns Our hands are full 11
“The difference between Try and Triumph is the Umph” Anoynmous 12
Hit hard at target… Asia Market 13
Parker awarded significant business… New AVIC Aircraft MA700 COMAC LRWB COMAC ARJ21 COMAC C919 Seats: 78 Seats: 300 Seats: 85 Seats: 168 Launch: 2014 Launch: 2015Q4 Launch: 2003 Launch: 2009 Orders: 315 Orders: 507 Status: JDP Status: RFI Status: EIS 2015 Status: Roll ‐ Out 2015 Parker Content: Parker Content: Parker Content: Parker Content (Potential): • Fuel System • Fuel System • Flight Control Actuation • Fuel System • Flight Control Actuation • Flight Control Actuation System • Flight Control Actuation System • Hydraulic System • Hydraulic System System System • Hydraulic System • Inerting System • Fittings & Hoses (potential) • Hydraulic System • Swivel Joint, Fuel QD • Integrated Modular • Inerting System • Fittings & Hoses Cabinet/Electronics • Fuel QD, LG Hoses … only Gold supplier for 9 consecutive years 14
Relationship Based (Not B&W) Sense of Fairness (Give & Take) Strong Gov’t (Understanding & Patience) Stair ‐ Step Progress (Nothing is Impossible) Bridge the Gap 15
“It is not an enormous gap but a gap nonetheless… What’s wrong with a bridge? Have we not done one before” 16
Thank You Thank You 17
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