Embraer and AVIC will phase out their joint venture in Harbin after 13 years of operations.

Harbin Embraer Aircraft Industry (HEAI) rolled out its last aircraft, a Legacy 650 business jet, in March, says the Brazilian airframer in a statement.

“The establishment of HEAI was fundamental to solidify the south-south cooperation between China and Brazil in high technology projects and to provide the backbone of the regional aviation system in China,” says Embraer.

“The ERJ145s and Legacy 650s produced in Harbin have the exact same quality and standards of their siblings manufactured by Embraer in Brazil and provide its operators with high levels of dispatch reliability, superior performance and low operating costs. “

Industry sources have questioned the viability of the factory since it transitioned to producing private jets from ERJ145s in 2012. Since then, the factory has produced only a handful of new aircraft, although in 2012 Embraer forecast that it would produce six Legacy 650s annually.

A key element in Embraer’s decision was probably costs. In September 2015, Embraer China president Guan Donguan told Flightglobal that the manufacturer has to pay an average of 3% import duty on components brought into China. On top of that, it was also slapped with an additional 17% in value-added tax.

"So there's a 20% cost associated to tax on our components that makes our production costs here higher than our Brazilian line,” he said. “This is something very strange. How can you justify local production here in China then? It's a big challenge."

Apart from the challenges of local production, China’s business jet market has slowed in recent years owing to an anti-corruption drive, which has affected conspicuous consumption, as well as a slowing economy on the Mainland.

From 2002 to 2011, HEAI produced ERJ145s at the factory. Embraer had proposed to build E190s at the factory, but this met government opposition on the grounds that the Embrear type would compete directly with the locally-produced Comac ARJ21.

Source: Cirium Dashboard