GA: Doing Business In China

The U.S. general aviation aircraft industry is knocking on China's door.  In March of this year, Cessna signed a  joint venture agreement with Aviation Industry of China (AVIC).  The agreement paves the way for Cessna aircraft to be manufactured and assembled in China.  Cessna announced in May that the Cessna Caravan will be the first aircraft marketed through this agreement.  The Caravans will be manufactured in Kansas and then assembled at AVIC's facilities in Shijiazhuang.  Shijiazhuang is approximately 200 miles southwest of Beijing.

The GA industry wants into China.  According to the U.S. Consulate General Shanghai, consumer aviation has been growing at a rate of 21% since 1996 on construction and public service needs.  This does not include personal and corporate travel.  This growth is posed to explode given that China's transportation infrastructure is mainly rail, followed by commercial air service.  

The GA industry cannot easily sell their aircraft in China.  The Chinese government levies high import duties on these aircraft.  The duties can be avoided if the aircraft are manufactured or assembled in China.  The barrier here is that the industry cannot organize alone in China.  The Chinese government requires that foreign corporations partner with a corporation owned by Chinese stockholders or government agency.  The Chinese government caps the foreign investment to maintain Chinese control of the venture.  The demand for the Chinese market is so great that many foreign corporations are willing to take the risk to gain the reward.

As with any industry growth, people are needed to drive that growth.  The U.S. Consulate report states that pilot training in China is more expensive than in the U.S.  This is based on the limited infrastructure for flying and training.  According to Bloomberg, the Chinese airliners are already recruiting here.  This type of recruiting will increase as new G.A. flying increases within China.  There will also be a tremendous need for factory and product support both in the U.S. and China to support this growth.