Airbus, Boeing in new battle for China market share

Airbus will begin building its second plant in China on Wednesday, as the country aspiring to break Airbus and Boeing’s duopoly in aircraft manufacturing becomes the place they are competing to build planes in.

The new completion and delivery centre in Tianjin for the A330 wide-body plane is to be built next to Airbus’s A320 final assembly plant , which has been putting together four out of 42 of the Airbus’ best-selling narrow-body model each month, a rate that Airbus China president Eric Chen said go rise. The completion and delivery centre, which does the final work of cabin installation, aircraft painting and flight tests for planes flown in from Airbus’ Toulouse and Hamburg factories, would start to deliver a jet a month next year, Chen said.

The two Tianjin factories – joint ventures with the Tianjin government and the Aviation Industry Corporation of China (Avic) – make the port city near Beijing the biggest production centre outside Europe for Airbus, which hopes to garner more big cheques from the world’s largest market for new aircraft. Letting China in on the production value chain has proven to be key to Airbus’ quick success in a market where commercial aircraft purchase is controlled by a government keen to develop its own aircraft manufacturing capability. “You can’t win market share without being in the market,” said Olga Razzhivina, a director at London-based aircraft appraiser Oriel Aviation.

Boeing, which long resisted following in the footsteps of its younger competitor, is now setting up its first offshore factory in China. Boeing China vice-president of communications Wang Yukui said it had not made any decision regarding the location or the time frame for a B737 completion centre in China announced during President Xi Jinping’s US visit in September with a landmark US$38 billion order for 300 Boeing planes.

“Both Airbus and Boeing have identified China as their largest single market which makes it crucial to each manufacturer’s market share. Placing final assembly lines in China, therefore, becomes a useful tool in convincing the Chinese government to place orders,” Razzhivina said.

Production joint ventures are welcomed by the Chinese government because of its eagerness to upgrade its aviation workforce and eventually compete with Western aircraft makers with its own Comac and Avic. US light aircraft maker Cessna and Brazilian business jet maker Embraer have both enjoyed leading positions in China in their market segment after starting to build planes in China with Avic units.