Boeing appears to be in deep discussions with the Chinese government about the possible establishment of some degree of 737 production in China.
The parties have apparently been in talks for a number of years, but it appears that a decision on whether to set up a completions and delivery centre for the 737 narrowbody in China could, finally, be close, according to sources.
It is unclear where the facility, which will likely not do any final assembly work, would be located, or which parties Boeing will partner with for the venture. Any decision also depends on China-US relations, especially at a time when there are concerns about China's increasing assertiveness in regional territorial disputes, as well as the inexorable improvement of its military.
Boeing, for its part, has distanced itself from the prospect of setting up a line in China. When contacted, Boeing would only say that it “does not comment on speculation.”
Still, it has left tantalising clues about its intentions in the Middle Kingdom. Last year, Boeing senior vice-president of sales and marketing for Northeast Asia Ihssane Mounir told Flightglobal that the airframer was looking at ways to “add value to the system”, and that it will have to go beyond what Airbus has done with its A320 final assembly line.
“We’re in discussions with our Chinese partners to see what we can do with them from an industry standpoint beyond what we are doing today. I will never say never to an assembly line, but it has to be a product that makes sense. It has to add value,” said Mounir.
“It was interesting when it (Airbus’ final assembly line) was done. But today if I went to China and said I want to do the same thing, it’s a joke. They would say I already know how to do that. So you've got to go a step further, it has to add value.”
Boeing China president Ian Thomas has also said that the airframer had made a “strategic decision” not to set an assembly line in China. He was also quick to point out, however, that every Boeing aircraft has Chinese content and that it is “important not to judge a partnership by one building”.
Despite Boeing's reactions about China assembly, it cannot be denied that Airbus’s A320 final assembly line in Tianjin has helped the European manufacturer increase its market share in the country. The line was originally requested by the Chinese government. Boeing declined, but Airbus decided to make a go for it, and the lined started up in 2008.
Flightglobal’s Ascend Fleets database shows that there are currently 1,137 Airbus aircraft operating in China, a far cry from just 200 aircraft in 2004.
Airbus today has a 49.2% share of in-service aircraft in China compared with Boeing. Ascend shows that Boeing has 1,172 in-service aircraft in China.
On the widebody front, Airbus has a 56.9% market share. Its A330 is the dominant twin-aisle jet in the country.
Airbus is also moving to increase its widebody market share, having mooted tentative plans to set up an A330 completions centre in Tianjin. The rough plan is for some A330s to be flown to the Chinese centre, which would then perform cabin installation, painting and engine runs.
A widebody final assembly line would definitely be of strong interest to Beijing, especially since it has plans to develop an indigenous widebody with Moscow. It is far from clear whether either of the big two would invest in a major local widebody enterprise, as it would risk technology leakage. Such an undertaking is also heavily dependent on additional businesses the investment would bring. It is also far from clear whether widebody production volumes are sufficient to justify such a move.
Those familiar with the Chinese market add that the country is also looking at projects “higher up the value chain” when it comes to discussions with the foreign manufacturers. While assembly or completions may be high profile, greater involvement in new generation jets is also highly coveted.
Against this backdrop, China is building its own C919 narrowbody, which has garnered over 275 firm orders, 125 letters of intent, and 45 options largely from Chinese airlines and lessors. Comac is putting the final touches on the type's final assembly centre, which sits on 4,000 acres plot of land, roughly the size of 400 football fields.
One thing is clear: as the country moves to take over the US as the world's largest aviation market, and as Comac becomes more of a threat, Boeing and Airbus will go all out to grow or at least retain their share of the pie. Irrespective of what Boeing ends up doing in regard to China production, competition for aircraft sales will only get hotter.
Source: Cirium Dashboard
