Playing With Fire: Airbus in China

By Wieland Wagner in Beijing

The Chinese have long been working as subcontractors for aviation giants including Boeing and Airbus. But as the country picks up know-how from the Americans and Europeans, many fear it may use Western intellectual property to compete on the global market with its own aircraft in the future.

Will Airbus's presence in China unintentionally give Beijing the know-how it needs to build its own jets?
Airbus

Will Airbus's presence in China unintentionally give Beijing the know-how it needs to build its own jets?

It's early afternoon in Beijing. Five young Chinese sit expectantly at their desks. The lesson is about to begin. Everything seems normal for an engineering class in China -- except the instructor, and the subject. Sixty-year-old Spaniard José Cataluña Casanova turns on the projector and the blueprint of an Airbus A320 appears on the wall.

It's not clear the head of the Airbus Technology Center in China and his students see the same thing when they look at the airplane. Airbus veteran Cataluña knows the plane inside out; he's as familiar with the construction process as with the exigencies of customer service. The Chinese engineers, on the other hand, are only learning to construct Airbus components, such as the fuselage or the undercarriage.

Airbus is training 59 young Chinese to help in construction of the A320. In some cases they were sent directly by their employers, China's two major aviation companies. But the People's Republic isn't satisfied with the limited knowledge the Europeans are offering their subcontractors. They're eager to build their own giant airplane, one with as many as 200 passenger seats -- and they want Airbus to help them.

The People's Republic wants to get to work on the construction of its own giant airplane by 2010, Prime Minister Wen Jiabao recently announced. China has long been considered the world's factory, but it doesn't want to produce only for others anymore, whether the products be cars or airplanes. Asia's rising superpower is hungry for Western knowledge on everything from the design to the assembly process.

It still seems a little bizarre that China, of all countries, should want to become an airplane-producing nation. Until now, the country has been known mainly as one of Boeing's and Airbus's best customers. For the leaders of the airplane industry, the Chinese market is the most important one after the United States. According to a Boeing estimate, the nation of 1.3 billion people will need more than 2,600 new airplanes in order to keep up with the needs of private travel and shipping.

But Boeing and Airbus may be wrong to expect booming business deals with the Chinese, who don't want to leave the air travel market to western companies. Now Airbus itself is fostering China's ambitions: In a recent deal, the company agreed to produce the new Airbus A320 in China from 2008 on in return for China's purchase of 150 airplanes. Where exactly the new factory will be located will probably be announced in the next few days.

Working together ... for now

China's strategists are cheering. Han Yichu, the vice chief engineer of the Xi'an Aircraft Manufacturing Company, is counting on Airbus to help him achieve his goals. When Han enters the factory of the company, which is based in northern China, he walks past a sign that reads: "Let's work together to build a world-class airplane."

What the Chinese mean by "working together" is revealed only on closer inspection. On one side of the sign is a proud reference to the Airbus A320, on the other to the Boeing 737. It's here that Han and his workers assemble components for the American and European companies, such as tail-assembly components and doors.

Han says the Chinese have learned a lot by working as subcontractors for Boeing and Airbus -- a credible statement, since China is the only country in the world where embittered competitors like Boeing and Airbus have their sensitive high-tech components produced in the same factory, even on the same assembly line. Airbus plans to produce at least five percent of the new A350 model's components in China, and Boeing subcontracts there already.

What the Asians still lack in their race to catch up with the West's aviation giants is the construction of an entire airplane. Han says that if the Airbus A320 will be produced entirely in China, that will be a major step forward for the national industry. Aviation expert Xue Dexin wants the construction of the A320 to become "a stepping stone on the way to building our own jumbo jet." Airbus has yet to announce where exactly the new A320 will be built. But one thing is clear for experts like Xue: China should begin developing its own giant airplane in the same place where Airbus will be assembling the A320.

Making friends, and looking forward to business

Airbus is certainly making friends in China -- and hoping for new business deals, of course. The European high-tech company, which controls only 30 percent of the international market, is particularly dependent on Beijing's goodwill. Boeing, on the other hand, controls 60 percent of the international market.

More importantly, the US government would never allow Boeing to produce an entire airplane in China; the risk of losing intellectual property is too high. "Airbus is playing with fire," says a Boeing engineer responsible for overseeing the work of Boeing's Chinese subcontractors.

And yet the Chinese have never tried to keep their high-flying plans a secret. Seventy-six-year-old Cheng Bushi can remember Chairman Mao ordering the development of the Y-10 passenger plane in 1970. Sitting in a Shanghai café, the former vice chief engineer tells the story of how he kept the project going during the turmoil of the Cultural Revolution.

Components for some Airbus jets are already produced in China and shipped to the company's assembly plants in Europe.
Airbus

Components for some Airbus jets are already produced in China and shipped to the company's assembly plants in Europe.

Many an honorary guest dressed in a blue Mao uniform applauded the Y-10's first test flight in 1980. Only half a decade later, China's decision to open its market to international trade put an end to the national effort to build the country's very own airliner. The reformers who took power in Beijing thought it more economical to purchase airplanes abroad -- along with the modern technology contained in them.

At first, the Chinese built airplanes in cooperation with the US aviation company McDonnell Douglas. When Boeing bought McDonnell Douglas, the Americans terminated the project. But the Communist strategists didn't give up. As a first step towards building their own passenger plane, they focused on the construction of small jets.

In the Xi'an factory, where the Chinese assemble components for Airbus and Boeing, they're also constructing their first -- ostensibly self-developed -- 60-seat passenger plane, with turboprop engines, called the Xinzhou 60. Factory workers are hammering away to assemble fuselages for their customers in Nepal, Laos, Zambia and the Congo. The first Xinzhou 60 were shipped to Zimbabwe last year.

Small beginnings

It may sound like a small beginning. In fact, the Chinese have been planning for three years to introduce a larger regional airplane, the ARJ-21, which will have between 70 and 100 seats. The airplane is also being built in Xi'an, but the project is being controlled from Beijing, the seat of the China Aviation Industry Corporation I (AVIC I).

The headquarters of AVIC I are guarded like a government ministry. Sixteen armed soldiers march lockstep around the building. The spirit here is still that of the industrial conglomerate that was split into the two corporations AVIC I and AVIC II in 1999. More than half a million people work for the two corporations, which share the same goal: allowing China to build its own giant airplane.

Vice President Yang Yuzhong serves his country on the seventh floor of AVIC I. He says he's welcomed many representatives of European aviation companies to the white leather seats in his office during the past few days. They were all interested in the ARJ-21.

The regional airplane and the patents associated with it are the firm's intellectual property, he says. Sure, General Electric will build the engines, but the airplane's design is Chinese. And the price, Yang says, will be competitive. That China can produce cheaply hardly needs to be stressed, but he smiles and cites two of many examples: textiles and furniture.

But China may not conquer the world market quite as easily as it hopes. As Airbus instructor Cataluña says, "Airplanes don't just have to fly." Confidence in the safety of the technology is important, too. So is maintenance. And when it comes to those areas the Chinese still depend on Western expertise. That's why they're so eager to break out of the role of subcontractor.

If Airbus were interested in genuine friendship, AVIC manager Yan says, then it would have to allow China to participate in the design and assembly processes. He says leading Airbus managers already agree with him on this point.

Much of what is happening at Airbus's Beijing headquarters suggests the future will indeed bring even closer collaboration with the company's Chinese hosts. People there say it would be naïve to think China can be excluded from the field of airplane technology. Chief instructor Cataluña plans to train 200 Chinese by the end of 2007. The European company plans to construct a new building next to its headquarters especially for this purpose.

Cataluña has been in China for about a year. Asked whether he'll make the trip in ten years' time from Europe to the Far East in an Airbus or a Chinese jumbo jet, he laughs and replies: "It will be an airplane we've built together." He wants to sound diplomatic, and maybe he's right. But his answer may amount to nothing but a pretty wish.

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