Aero International (Regional) and China Xian Aircraft Industry (Group) Company are ironing out differences over formation of a joint venture to assemble aircraft in the mainland before a meeting next month.
A memorandum of understanding signed in June provides for building an assembly line for Aero's ATR 72 turboprop light airliners, marketing and product support, to be established through one or two joint ventures in the mainland.
Xian Aircraft official Zeng Changgeng said a difference had arisen as Aero - a consortium of British, French and Italian aerospace companies - had demanded Xian stop producing its Y7 series of light aircraft.
He described Aero's demand as impossible and unhealthy and said it was against Beijing's policy of offering a wider product choice as it opens the small aircraft market.
The size and shareholding structure of the joint venture have yet to be worked out but Aero is expected to take a minority interest.
Xian Aircraft is the mainland's leading plane-maker and produces the Y7 with old Russian technology.