China has experienced tremendous growth in the Aviation industry driven by an economic boom. As a result, the Chinese government made a strategic decision to address the shortage of aircraft, airports, skilled resources (pilots, technicians, air-traffic controllers, etc.) and manufacturing capability within China. One of the cornerstone projects is the Airbus China JV located within the Tianjin Aviation Industrial Park. The official contract signing occurred on June 28, 2007 between Airbus and the Chinese Consortium for a new Airbus A320 Final Assembly Line plant to be located in Tianjin, China.

According to government projections, the growth rate in China’s Aviation Industry is expected to lead the world at 9%, making China the largest commercial aircraft market in the world next to the US over the next 20 years. This provides a tremendous opportunity for North American manufacturers to sell US manufactured aviation products and related services to China thereby creating jobs and driving profits in the US.

Ø      Highest Growth Rate in the World @ 9%

Ø      Largest commercial aircraft market behind U.S.A. over next 20 years

Ø      2006 Aviation Key Performance Indicators (Source: China’s Industrial Base of Civil Aviation -IBCA)

Ø     Aviation Transportation Turnover grew 15.3% to 30.2 billion tons/km

Ø      Passenger Traffic grew 15.5% to 160 million

Ø      Cargo Traffic grew 13.8% to 3.42 million tons

Ø      Air traffic grew at 1.8 x GDP

Ø      From 2000 to 2006, number of commercial aircraft grew by 480 to over 1000

Ø      “About 4100 planes, one third of the Boeing planes in service in the world, use China-made components” according to Scott Carson, CEO of Boeing Commercial Airplanes.

Ø     Aviation maintenance market was RMB 11.5 billion, RMB 11.3 billion, and RMB 11.6 billion during 2000—2002 respectively. Technical service cost accounts for 25% while 75% goes to equipment repair, with most equipment imported.

Drivers of China's Air Transportation Growth

Ø      Strong economic growth (8% over next 10 years)

Ø      Progressive market liberalization in China

Ø      Rapid growth in household spending on transportation

Ø      Addressable market for air traffic to reach 650 million consumers by 2015

Ø      Large Chinese outbound tourism wave coming

Ø      China becoming a major tourism/business destination

Ø      Increased export of high value manufacturing goods and emergence of a domestic express market

Ø      China’s aviation industry is pre-mature:

Ø      The aviation industry in China is not developed as aircraft and its service parts imports account for over 90% of the total volume

Ø      China Aviation Industry Corporation (“AVIC”) I and AVIC II control China’s commercial aircraft and defense industry.

Opportunities – High Market Demand

Ø     China will need more than 3,000 passenger aircraft and freighters from 2006 to 2025, including 2,050 single aisle aircraft, 600 small twin-aisle aircraft, over 200 intermediate twin-aisle aircraft and 180 very large aircraft

Ø     Some 2,650 passenger aircraft will be required on the Chinese Mainland with a total value of $289 billion USD

Ø     The Chinese passenger fleet will triple over the next 20 years, from 760 at the end of 2005, to 2,700 in 2025

Ø     Freighter traffic in China is expected to grow six-fold and will need close to 400 freighter aircraft over the next 20 years

Ø     China's freighter traffic will remain at a high level with an average annual domestic market growth rate of 10.9% and an average international market growth rate of 8.9%

If you are in the Aviation Industry and have products or services which would benefit Commercial Aviation in China, please Click Here to Contact Nautilus Asia Pacific Management, LLC to learn more about how we could assist your company to participate in the world's fastest growing Aviation Marketplace.

v     China Strategy

o Assist aviation industry clients to develop strategic plan for China market

v    China Establishment Services

o Establishment Documentation: Assist in completing necessary approval documents including Letter of Intent, Feasibility Study,  Articles of Association, and others

o Financing: Source of Private Equity, local financial facilities (eg. loans), preferential rates (e.g. interest rebate for loans during construction period), and availability of funds for leasing buildings and equipment

o Government Consulting: Work towards preferential policies on taxation (obtain tax incentives), discount price on land, expedited government approvals, and foster a positive corporate image between client and local governments

o Joint Venture: Advise on JV strategy, identify JV partner, assist client in handling all procedures for examination of land, buildings, and equipment that China counterpart contributes to proposed JV

o Human Resources: help locate quality personnel for China operations including management

o Administration: Make arrangements for client’s travel visa, hotel, airline tickets, and other logistics.

v     CAAC License Consulting & Sales

o Assist clients with FAA and EASA to obtain CAAC License

o Sales Agent: Assist clients to secure purchase orders (CKD/SKD) from Airbus JV, China domestic market (e.g. ARJ 21) and other customers in China (MRO – Airlines)

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NAPM Strategic Value 

v     Vice Chairman on the Tianjin Supply Chain Development Committee.

v    Relationships with key members of Airbus JV.
 

v    Relationships with major Chinese airlines.

v    Complete understanding of how to establish in China including approval process and Government regulations.

v     Existing working relationships with several private equity firms and local banks for financing.

v    Know-how regarding how to establish facilities in China (including: land, building, logistics, customs, etc.).

v     Experienced in global supply chain and how to work in China.

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