Asia may be one of Eurocopter's smallest markets, but the region's fast-growing helicopter market gives the EADS subsidiary a great opportunity to perfect its global business model.
"This region is not just about where it is today. It is all about the projections of where it can be in the future," says Lutz Bertling, Eurocopter's president and chief executive, speaking to Flightglobal at the recent Airshow China.
"Almost half the world lives here [in Asia], but there are only 200 civil helicopters. Industries such as offshore oil and gas exploration, homeland security and search and rescue have a lot of potential for growth. Rising military budgets also mean we must increase our presence in Asia."
Eurocopter has been in Asia for almost 40 years, setting up subsidiaries in China, Japan, Malaysia, the Philippines, Australia, Singapore and, imminently, Indonesia, along with several maintenance and service centres. It also licence-produces helicopters in China, India, Japan and South Korea.
With persistence and an aggressive marketing strategy that even its competitors privately admit has worked, Eurocopter estimates its market share to be 54% of Asia's 1,300 civil and military helicopters.
"Without being close to our customers, we would not have been able to grow as fast as we have. This region is a perfect example of how our business model works, and it is a model for other parts of the world," says Bertling, who adds that Eurocopter aims to have a presence in every major Asian country by 2020.
Much of the lessons it has learnt have come from China, where the company's business has undergone an evolution since it sold its first helicopter in the 1960s.
Eurocopter began the licence-production of the AS365 Dauphin in 1980, which did not involve technology transfer but allowed the company's Chinese partners to learn about its manufacturing methods.
Soon after that Eurocopter established a local office to explore further opportunities for co-operation. That led to the joint development of the EC120/HC120 with Harbin Aircraft, a partnership that continues with the upcoming EC175/Z15. Eurocopter has also sold more than 120 helicopters in China and has over $100 million in sales annually.
"If you take China's growing economic power, and the size of the country and its coastline, the market could rival the USA's. That means that in the second half of the next decade we could see up to 200 helicopter deliveries a year in China," says Bertling.
Bertling: Rival companies admire his aggressive marketing strategy
However, the country faces two major problems: restrictions on the use of low-altitude airspace, and a shortage of pilots, engineers and maintenance workers. "This problem exists everywhere, but steps are being taken to improve the situation. We expect changes in regulations and improvements to the infrastructure to take place by 2011, but the shortage of crew could take a little longer resolve," he says.
In India, where Eurocopter has had a long partnership with state-owned Hindustan Aeronautics and the helicopter market has grown rapidly, the problem is a shortage of proper infrastructure. The first dedicated heliport is set to come online only next year, and Bertling says: "India must invest more in the infrastructure. Nonetheless, we expect the Indian market to double or triple in the next five years."
The military business is also lucrative, with Asian countries spending more money to modernise their ageing helicopter fleets. Eurocopter has replicated the civil model in South Korea, where it is working with Korea Aerospace Industries to develop an army utility helicopter that could also serve as a platform for a combat variant.
Mostly, however, the company is involved in several straightforward tenders. In Japan, it is keen to compete in upcoming transport and light utility helicopter competitions. South Korea is also looking for attack helicopters, while Malaysia has an ongoing tender for utility helicopters.
But India has the biggest potential. Eurocopter is involved in a tender for 197 light utility helicopters for the country's army and air force, and the Tiger is in contention for an attack helicopter requirement. It also hopes to work with HAL to develop another 187 utility helicopters for the country's various services.
There have also been setbacks. Eurocopter won the Malaysian light utility helicopter tender in October, but the government cancelled the contract a month later. In India last year, the company was close to signing a contract for 197 utility helicopters until the government cancelled the tender and called for fresh bids. In both instances the governments acted after accusations from opposition politicians and the competitors that Eurocopter was unfairly favoured in the selection process.
Bertling admits disappointment with these losses, but points out that Eurocopter was exonerated by a Malaysian parliamentary investigation and by the Indian defence minister, so he remains confident about Eurocopter's chances in the new tenders.
"We get this attention because we are the market leader," he says. "This is not about Eurocopter, it is because everyone focuses more on us than on the competition. It does not change the way we do business, and actually makes us even more determined to be ahead in every market."