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Boeing, Airbus trade barbs as China competition heats up
By Benjamin CARLSON
Zhuhai, China (AFP) Nov 2, 2016


China, Russia to invest 'up to $20 bn' in long-haul jet: report
Shanghai (AFP) Nov 3, 2016 - China and Russia will invest up to $20 billion to develop a long-haul wide-bodied jet, reports Thursday and a company statement said, as Beijing seeks to challenge leading Western manufacturers Boeing and Airbus.

The hugely ambitious plan was first agreed between the Commercial Aircraft Corporation of China (COMAC) and Russia's United Aircraft Corporation (UAC), whose products include the Sukhoi Superjet 100, in June when Russian President Vladimir Putin met his Chinese counterpart Xi Jinping in Beijing.

COMAC said in a statement that the joint venture, to be set up in Shanghai this year, will develop a 280-seat wide-body plane with a range of 12,000 kilometres.

That would put it in direct competition with Boeing's 787 and the Airbus A350.

The project is worth between $13 billion and $20 billion, with each side contributing half, China's state-run Global Times newspaper on Thursday quoted UAC president Yury Slyusar as saying.

"COMAC has outstanding technology and designs and we will not only cooperate in technology but also in intellectual property," Slyusar told the newspaper at the China Airshow in the southern city of Zhuhai, adding the plane will be 10 percent cheaper than its competitors.

According to the companies' websites, the list price of a 280-seat Airbus A350 is $272.4 million, while a 290-seat Boeing 787 costs $264.6 million.

Their putative China-Russian rival will make its first flight in seven years' time, COMAC said, with deliveries beginning three years later.

But developing commercial aircraft is an advanced technological challenge and previous Chinese aerospace projects have suffered lengthy delays.

COMAC said it will keep the project open and select global suppliers that are willing to "jointly shoulder risks".

Beijing is looking to build up its domestic aerospace industry, with the sector among those highlighted in its "Made in China 2025" plan.

The country is expected to become the world's largest aviation market, with its travellers taking to the skies in ever-growing numbers.

Airbus estimates China will need nearly 6,000 new planes worth $945 billion in the next two decades, with Boeing's forecast even more optimistic at more than $1 trillion.

COMAC is also developing its own single-aisle jet, the C919. It rolled it out last year and even though it has yet to make its first flight COMAC says it has so far received 570 orders from 23 customers.

The firm's regional jet, the 90-seat ARJ21, flew its first commercial flight in June after years of delays.

Russian Helicopters to sell three helicopters to Chinese company
Moscow (UPI) Nov 2, 2016 - Russian Helicopters announced Wednesday it will sell three helicopters to China's Jiangsu Baoli Aviation Equipment Co.

The Rostec subsidiary will deliver Mi-171A, Ansat and a Ka-32 helicopters to the company in a deal revealed during the Airshow China 2016, Russian Helicopters said in a statement.

Jiangsu Baoli will receive an Ansat light helicopter in a medevac configuration, along with the other two, next year.

Russian Helicopters has established partnerships with the company.

A contract for four Ka-32s was signed in 2015, with all deliveries slated to be completed by mid-2017.

The aircraft will be used for firefighting, while the Ka-32s can also maneuver in the wilderness and land at unprepared zones.

China already operates more than 350 Mi-8/Mi-17 helicopters.

Ka-32s of various configurations are already in use in Spain, Portugal, Colombia, Switzerland, Canada, South Korea, Taiwan, Japan and others.

Aerospace giants Boeing and Airbus took potshots at one another at the Zhuhai air show, as the US and European rivals seek to capture more of China's booming aircraft market.

China is one of the Western manufacturers' key battlegrounds, with its travellers taking to the skies in ever-growing numbers.

The country's airlines will need nearly 6,000 new planes worth $945 billion over the next two decades, Airbus said in its 2016-2035 Global Market Forecast.

Boeing's expectations are even more optimistic, for 6,800 aircraft costing $1 trillion.

To win favour locally both have built partnerships with Chinese firms.

Airbus has a completion and delivery centre in Tianjin, where workers install furnishings and apply paint to aircraft for the domestic market. It also buys parts such as exit doors, brake blades and wing sections from Chinese suppliers.

Boeing is planning to open a facility with the state-owned Commercial Aircraft Corp. of China (COMAC) to paint and install cabins for 737-model planes, the Chinese firm said.

Eric Chen, president of Airbus China, dismissed the Seattle firm's plan as "close to one generation" behind his own firm, saying it was following Airbus's strategy "with a lot of reluctance".

"I got two impressions," he said at a briefing at the China Airshow in Zhuhai, the industry's biggest event in the country. "First one, the decision we made 10 years ago was right. The second impression is that we are well in advance of our competitor."

Darren Hulst, managing director for Northeast Asia marketing at Boeing, earlier told reporters that the Airbus A350 fell short of the 787 widebody plane in range, capacity, carbon emissions, window size and aerodynamics.

"The 787 is capable and has technology and features built into it that are not available on the A350, which was obviously introduced later into the market," he said.

He added the company had 14 China deliveries of 787-9s in 2016 and had secured orders and commitments for 46 more.

- Future rivals -

While the two megafirms see a sunny future in China, homegrown competitors backed by Beijing aim to beat them at home -- and ultimately abroad.

Chinese authorities have urged companies to acquire technology and skills in a range of high-value sectors including aerospace in the "Made in China 2025" plan.

At the same time as it is working with both Boeing and Airbus, COMAC is developing single-aisle jets to compete with them. Its C919 narrow-body is going up against the Boeing 737 and Airbus A320 in the 160-seat segment, which the Chinese company predicts will have more than 17,000 deliveries over the next 20 years.

In Zhuhai COMAC announced that state-owned China Eastern Airlines had committed to buy 20 C919s.

In the summer COMAC's regional jet, the 90-seat ARJ21, flew its first commercial flight after years of delays.

Boeing, Airbus and Canadian regional builder Bombardier all played down the threat of Chinese competition.

But the business climate has darkened for US and European firms in the country, with the American Chamber of Commerce in China reporting this year that more than three-quarters of survey respondents felt "less welcome" there.

Pessimism among European companies hit an all-time high in the summer, according to a European Chamber of Commerce in China report on the "increasingly hostile" business climate.

Chinese-built planes are sure to secure market share in the country, Eric Lin, Hong Kong-based director of Asia transport research with UBS Securities, told AFP.

In the short term, he added, foreign firms have little to fear from Chinese rivals in the developed countries that are their home market.

"But after 10 years, it's hard to say," he noted.

China has a history of adapting foreign technology with remarkable swiftness, turning from a buyer of Russian military aircraft to a producer of advanced stealth jets in 20 years. Its high speed rail and clean energy industries went from collaborators to competitors faster than global rivals anticipated.

Like all foreign firms with valuable intellectual property operating in China, the aerospace giants understand the risks of training their future rivals, said Christopher Balding, professor of economics at Peking University's HSBC Business School.

But they are stuck between a rock and a hard place, he added, because shareholders want them to fight for Chinese market share.

"Even if they don't come to China, there's a good chance that if they are doing anything innovative it's going to get stolen anyway, so the only thing they are doing is harming their revenue."

bfc/slb/sm

BOEING

AIRBUS GROUP

HSBC

UBS GROUP AG

BOMBARDIER


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