Going local

Airbus names a former Party official to head its China unit


More A320s to be made in China

China is home to plenty of maverick manufacturers, including WiC’s favourite robotmaker Wu Yulu (see WiC59). Wu’s backyard efforts are hard to beat but earlier this year there was news of another incredibly ambitious amateur – a farmer from Liaoning who is part way through the construction of a full-size model of an Airbus A320. Reportedly, he has already utilised more than 40 tonnes of steel on his personal production line.

It sounds like the kind of story to cheer executives at the European manufacturer, who have been wrestling with how to boost Chinese orders for the different aircraft in their fleet. In particular, speculation has been growing about the future of the largest Airbus jet, the A380. Although passengers seem to like flying on the superjumbo, airlines aren’t as keen on operating it, preferring smaller jets. That sentiment is reflected in the order book – The Economist reported last month that there hasn’t been a new sale of the A380 for three years.

That was followed by suggestions last month that the French have been trying to get the Chinese interested in a deal for co-production of the superjumbo, with the proviso that the country’s airlines buy more of the A380s.

A production pact would seem to be in both parties’ interests. The fast-growing market for air travel in China is expected to overtake the United States in passenger numbers by 2022, according to trade association IATA. But the Chinese already have a huge problem with aviation congestion. In principle, larger aircraft should help to reduce some of the pressure on airports and in the skies. The A380 is also best suited for serving hub-and-spoke flight networks from airports in Beijing, Shanghai and Guangzhou, which are establishing themselves as super-hubs.

Unfortunately the Chinese airlines have been cautious about committing to the A380 and only Guangzhou-based China Southern has purchased them (see WiC168). Demand for Airbus’ smaller, single-aisle A320s has been more consistent, helped by local assembly at a plant in Tianjin. Weekly output at the factory is just four aircraft (about a tenth of the global total) although Emmanuel Macron, the French leader, announced during a visit to China last month that two more are going to be added to the production line each week.

At least Airbus is ahead of Boeing in establishing local assembly lines – Bloomberg reports that the American giant is only now about to open a finishing plant on Chinese soil. Yet the problem for an aircraft like the A320 is that it could start to run into direct competition with the C919, a (much delayed) Chinese jet that’s supposed to take share from Airbus and Boeing. In the meantime Airbus will be hoping for a sales boost from the appointment of Xu Gang as its chief executive for the Chinese market, the first Chinese citizen to be given the job. Xu’s predecessor, Eric Chen, is also Chinese but according to 21CN Business Herald, Chen had already become a French national when he was made Airbus’ China boss. Chen will now replace Laurence Barron as the chairman of Airbus China, the company said on its official weibo account on January 11.

What is so special about Xu’s appointment? Before joining Airbus, the 46 year-old was the Party boss of the Communist Youth League’s Tianjin branch (the political group has produced many senior Chinese politicians such as Li Keqiang, now Chinese premier).

The former government official’s connection with Airbus started in 2005 when Xu played a key role in setting up the Airbus A320 assembly line while working as the director of Tianjin Pilot Free Trade Zone’s investment promotion bureau. Since then he has taken up various positions in Airbus China but only as a representative of the Chinese government (without taking on active management duties).

“The localisation strategy of Airbus is now more complete,” explained Lin Zhijie, an aviation expert, in a WeChat post. “The whole team is more local. It will make it easier to deal with Chinese enterprises and to adapt to China’s national conditions.”

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