China can boast record developments in the aerospace sector, as in many other areas.
With over one billion inhabitants, China is on the move, both internally and on international routes. In the coming years the demand for aircraft will be covered by increased purchases—as well as continued development in the Chinese aircraft industry.
Billions on the move
Continued economic growth, increasing internationalization and growing per capita income are having an unmistakable impact on the Chinese airline industry. As World Bank figures show, from 2011 to 2014 passenger volumes on Chinese airlines rose by a third, to 391 million passengers, and the trend continues. This is also reflected in the People’s Republic of China’s 13th Five Year Plan (2016-2020): 50 new airports are planned for construction during this period, most in the central and western regions, and accompanied by expansion at the major hubs in Peking, Shanghai, and Guangzhou. In 2015 the government decided to invest USD 80 billion in passenger and airfreight traffic infrastructure. The logistics divisions of international companies are also profiting from these developments; they include voestalpine with its 24 companies at 27 Chinese locations, eight of which are production sites.
In order to manage growing air traffic volumes, Chinese aircraft companies (the majority state-owned) are drawing up comprehensive procurement programs. As a study by US aircraft manufacturer Boeing has determined, the Asian economic giant plans to increase its fleet from 1,500 aircraft (2015) to over 5,000 by 2029. Contracts agreed last year to purchase 300 Boeing 737s and a hundred A320 from European competitor EADS (Airbus) are just the beginning.
However, the procurement contracts with the dominant market players alone won’t ensure sufficient supplies of aircraft. These contracts also come with agreements to construct final assembly plants in Tianjin, in Eastern China. This is how China intends to remedy its lack of know-how in aircraft construction: this transfer of knowledge is primarily designed to benefit the state-owned Commercial Aircraft Corporation of China (COMAC). In 2015 a financial framework agreement secured USD 8 billion in development, production, and marketing assistance for the company. With its own aircraft program, in future China plans, with protectionist support, to meet its own requirements and to win market share in Africa and South East Asia. The COMAC medium-range aircraft C919 (158 seats, range of around 5,500 km) is scheduled for serial production this year, and a wide-body aircraft, the C929 for 300 passengers, is in planning.
voestalpine in China
voestalpine companies in China are also planning for a significant upwards trend. Having generated revenue of EUR 380 million in the business year 2015/16, the Group’s strategic target for 2020 is EUR 800 million. Of the ten voestalpine plants planned by this date, six are already in operation. The four Group divisions have strengthened their involvement in China over the past years; in the last two business years alone around EUR 70 million has been invested in new construction and expansion, as well as site modernization.