Chinese/Russian consortium: Can it compete with Boeing and Airbus?

[AmericanFlyer]

I'm just a SLF, but I've had a strong interest in aviation and owned a Falcon Jet for a long time, and been a member of this forum for many years.

I'm wondering if this article reflects reality. Yes, the Chinese have test flown their C919 airliner, but like many new developments it was late, and uses western engines, but Boeing and Airbus have been in the business a very long time, and aviation is extremely difficult to break into as a manufacturer. You have to earn the trust of your buyers, prove yourself in the real world, be fuel-efficient, priced right, etc. etc.

I know they have a captive buyer in their own Chinese airlines, but so did Russia, with years of experience building aircraft, yet they buy/lease Boeing and Airbus aircraft.

So my question (which is meant to start a discussion) is does this forum of professionals think they have a reasonable chance of becoming a world-class airliner manufacturer like Boeing or Airbus?

China and Russia are coming for Boeing and Airbus - May. 23, 2017 (http://money.cnn.com/2017/05/23/news/companies/china-russia-airplane-partnership/)

[Heathrow Harry]

Not for years....................

[DaveReidUK]

That's what people were saying about Brazil 25 years ago, life's full of surprises.

[Kewbick]

Perhaps, with American help.

Boeing's first overseas factory to be built in China's Zhoushan. Boeing and Chinese aviation manufacturer Commercial Aircraft Corporation of China Ltd (COMAC) will start to build a Boeing 737 completion center in eastern China's Zhoushan city at the end of March, 2017, and scheduled to make its first delivery in 2018.

China’s New in-house Airliner Will Be Helped Aloft by U.S. Technology. G.E. and Honeywell to name a few suppliers.

Bombardier Canada recently held talks with China's COMAC concerning potential investment..

[oldchina]

Imagine I'm thinking of buying a Chinese plane.
I'd be looking for serious guarantees that customer support will be world-class for 20 years.
No doubt they'll start with good intentions and appoint a qualified person to head it up.
Then he falls out of favour with the Party and is replaced (or disappears - it happens).
The powers that be appoint a low level bureaucrat who just happens to be a relative of the president.
Of course he knows nothing about product support, or planes.
Impossible?

[Piltdown Man]

Oldchina has hit the nail on the head with the support issue. Many years ago IBM decided to enter what was then called the micro computer market place. The market at that time consisted of Zilog Z80 based machined runnng an operating system called CPM80. IBM and its clones stole the market because of improved performance and the support they could offer software developers. Later on, Apple nearly fell at the wayside because they could not offer developer support, despite having a far superior product. The same is true with airliner market. Airlines need the guarantee of (manufacturer) support for as long as they have an aircraft.

The support comes at various levels. The first level is training. Engineers and pilots have to be trained before the aircraft can enter the service. This means manuals, training aids, simulators and training staff. Next you need performance guarantees such as this aircraft can lift X payload from Y runway and fly N miles with such and such reserves. Then pricing and financing has to be arranged. Lastly spares and support will be required in service. The former have to be readily available and support in terms of "How do I fix this hole in the fuselage?"

None of these can be created overnight. And this is the minimum required. But given proper funding this is achievable within a few years. Then it comes down to the price/performance/aircraft disposal/support/etc. ratios that customer airlines are looking for.

Can they do it? Yes of course. But this is a huge undertaking requiring buckets of cash and many teams of well educated and trained staff who are expertly managed. After all, this new kid on the block will be competing against Boeing, Airbus, Bombadier, Embraer and they are well established in their markets.

We live in interesting times.

[peekay4]

I think this is also why the recent talks between Bombardier and COMAC (http://www.pprune.org/canada/594935-bombardier-talks-comac-potential-chinese-investment.html) is very interesting.

Given the CSeries fiasco, Bombardier has very limited options moving forward. One of those few options is to make a CS500 and compete head on against Airbus & Boeing. I believe Boeing's anti-dumping complaint against Bombardier is aimed towards preventing this move.

However, while with a CS500 Bombardier might be able to compete in a three-way market with Airbus & Boeing, the prospect of a four-way market with Comac also in the mix likely makes the CS500 commercially not feasible.

The Chinese government via huge subsidies might tie up not only the Chinese market for Comac, but also make very attractive loans to other players in Asia and elsewhere. Meanwhile Airbus & Boeing will likely continue to dominate orders from incumbent major airlines. Bombardier would be left looking for niche customers.

But a combined Comac / Bombardier offering might be viable, by: 1) removing market competition between the two companies, 2) providing Bombardier with cash infusion needed to survive, and 3) providing the Chinese with Bombardier's more refined technology & intellectual property. At the same time political considerations both in China and in Canada could be placated by structuring the deal as a joint-venture or as a financial investment into the CSeries program.

So we might see a more extensive tie up between the Russians, Chinese and Canadians. Or alternatively just the Russians & the Chinese, leaving Bombardier out in the game of musical chairs.

[ara01jbb]

For a comparison, think of the auto industry. If they're serious* it takes about forty years for a country to become a global player building cars.

Case in point... South Korea. Hyundai started in the late sixties by building a local version of the Ford Cortina for the domestic market. As their expertise grew and the right people were brought on board, their first original models appeared in the 1970s. The first volume exports to major western markets started in the 1980s, and then it was a 20 year project to learn what those overseas markets wanted. Today Hyundai is one of the top selling brands in the USA.

* I say "serious" to distinguish countries like South Korea from countries like Malaysia, where a culture of nepotism has ensured Proton has never really developed beyond making mediocre versions of Mitsubishis...

[racedo]

For a comparison, think of the auto industry. If they're serious* it takes about forty years for a country to become a global player building cars.



That was then, Product Life Cycle changes are dramatic and quick now and would see it as 10-15 years max.

[Barling Magna]

China will become the leading world power by the end of this century, but it takes time. They are building their bluewater navy and their manufacturing industry is progressing. There will be setbacks on the way of course and they need to sort their environmental controls but the future lies with them.

Probably.

[Martin the Martian]

China will play the long game, as they always have. It suits them, and they eventually get the results they wanted when they started.

After all, who was it who said 'the journey of a thousand miles begins with a single step'?

[SWBKCB]

When did Embraer deliver their first jet airliner? Just over 20 years ago...

[DaveReidUK]

When did Embraer deliver their first jet airliner? Just over 20 years ago...

Exactly my point.

Underestimate the Chinese at your peril.

[ratchetring]

The Japanese motorcycle industry is another good example , Honda arrived at the IOM TT in the late fifties where the big European manufactures scoffed at them ..... Rice burners ect ect ..Less than ten years later the Honda CB750 four had arrived and the rest is history

[Heathrow Harry]

Martin - I think it was "ten thousand miles" and remember Chou En Lai (now Zhou Enlai) - when asked what the effects of the French Revoltution had been he commented "too soon to tell......"