China's national aerospace holding company plans to buy a western general aviation firm to boost its presence in the sector, and to help it acquire the technology to develop indigenous light aircraft and business jets in the coming years.
Negotiations with an unnamed western company are ongoing and an agreement could be reached by the end of the year, says China Aviation Industry Corp (AVIC). It did not reveal further details about deal, which is being led by its subsidiary AVIC General Aviation.
If the deal goes through, it could help AVIC fulfil its aim of getting a foothold in the global general aviation and business aviation sectors. Last year, the company had examined the possibility of buying Dutch firm Stork NV's aerospace division. That was eventually sold to UK-based private equity group Candover Investments.
Tan Weidong, president of AVIC General Aviation, says the company hopes to develop light aircraft, 10- to 30-seat business jets and turboprop amphibious aircraft in the coming years. AVIC could list its general aviation business on the stock market if it proves successful, he adds.
China consolidated its aerospace industries once again in mid-2008 after scrapping plans to foster competition between its various companies over the last few years. That led to the creation of AVIC, which is now responsible for all of the country's aerospace programmes.
The company manufactures the 60-seat MA-60 turboprop passenger aircraft, and its ARJ21 regional jet has just had its first flight. Beijing also hopes to develop a widebody aircraft by the end of the next decade. In the military segment, it is involved in the indigenous design and licence-production of various fixed-wing aircraft. AVIC also jointly produces civil helicopters with several western companies, while military helicopter programmes are being pursued indigenously and with Russian help.
China, however, is also becoming a hub for western aerospace companies that want to cash in on the country's relatively lower production costs and booming aerospace market. This is also true in the general aviation segment, where the country is seen as a potential boom market in the coming years.
Cessna announced last year that it would assemble its SkyCatcher light sport aircraft in Shenyang, with the engine, avionics and raw materials all shipped from the USA to China. Liberty Aerospace also plans to manufacture its two-seat XL2 in China, with the company anticipating a demand for at least 600 of the light aircraft in the country.