With the opening of Airbus's first plane completion centre for large aircraft in China on September 20, the heated competition with its arch American rival Boeing has reached new height. The new facility for the European aircraft manufacturer was formally opened in the northeastern port city of Tianjin with the delivery of the first of A330 aircraft to the local airliner Tianjin Airways.
It was, indeed, a big event for the European aircraft manufacturer Airbus and the French government which prompted the presence of the French state minister of finance at the event. According to a French news agency report from Tianjin, the French junior minister Benjamin Griveaux said: "This is the perfect illustration of mutual trust" and "our willingness to embark on a new stage in the Franco-Chinese relationship." He was the first member of President Emmanuel Macron's government to visit China.
This underlines the eagerness of the French government to cement closer bilateral ties with China, especially in its 'ever-growing' aviation market which has proved itself to be a 'key battleground' for the Western aircraft manufacturers.
The new Airbus facility is actually in addition to the assembly line the company has already set up - also in Tieanjin - for the single aisle aircraft A319 and A320 which is the first of its kind that has been established outside Europe. Reports say, the 200-million euro ($240 million) new facility will finish the A330s assembled in France and will prepare the cabins and apply exterior painting. Two A330s would be delivered each month or 24 annually.
BOEING IN HOT PURSUIT DESPITE TRUMP THREATS: This does not, however, means that by taking the initiative, Airbus has been able to outbid Boeing in maintaining its footprint in China; at least not yet. As a Financial Times' report from Beijing in mid September pointed out, "all of Being's planes have China-made parts in them… Chinese aviation executives also crave US technology and know-how". However, the Chinese are interested to upgrade its high-tech knowledge in the state of art manufacturing from anywhere.
Earlier in April this year when Donald Trump held the second and the last meeting of his business advisory council and asked more than a dozen top US chief executives whether the US should impose 'punitive tariffs on Chinese imports', a report quoting a person who attended the meeting said, "none of them thought it was a good idea." Trump backtracked on his threats to start a trade war with China.
Little over four months after Trump's fateful meeting with the business executives, Boeing released a forecast saying in the next 20 years, Chinese airlines will spend $1.1 trillion to buy 7,200 new aircrafts accounting for a fifth of the world demand. This proves how big China's market potential is going to be and how hollow Trump's trade war threats would have been considering America's broader economic interests.
The potential of the Chinese aviation market is immense. For example, four of the world's nine biggest narrow-body aeroplane fleets are operated by all of the nine Chinese carriers. Boeing has confessed that the Chinese market is looming even larger and since 2013, one of every four Boeing deliveries has gone to a Chinese airline - far bigger share than any single region.
Earlier in September, Boeing Vice President for global sales strategies Randy Tinseth was in china and he told a briefing meeting in Beijing: "When you think of growth, you think of China". This speaks volumes.
AIRBUS ATTEMPTS TO GET A BIGGER STAKE: Decisions by both Airbus and Boeing manufacturers were always influenced and dominated by global political trends and America's negative policies about doing business with China. Restrictions on exporting high-tech manufacturing goods to China have blunted earlier advances made by both aircraft and high-tech manufacturers of America and Europe. However, the lure of the fast growing larger Chinese aviation market seems to have prompted them to compete with each other to have a stake in it and grudgingly establish joint ventures in China and this obviously suited the recipient.
The A330 aircrafts of Airbus are being used by all nine Chinese airlines and is perhaps the most popular wide-body aircraft in China. Besides, the slow expansion of the aviation sector elsewhere in the world including Europe and America has clearly prompted the Airbus manufacturer to take the decision to invest in the completion centre in China to have a larger share of the fast moving Chinese aviation market.
Airbus' Chief operating officer Fabrice Bregier said in Tianjin: "The inauguration of our (centre) in Tianjin, together with the first of many deliveries, make a new milestone for Airbus' international footprint." He was speaking at one of the manufacturer's sites in presence of the leaders of aviation manufacturer Avic, the Chinese partner of Airbus.
Interestingly, almost like that of Boeing, the majority of A320 of Airbus orders for its single-aisle jetliner come from China. However, with about 200 of A330s in the country's skies, Airbus controls 61 per cent of China's long-haul market. Industry sources say, the new Airbus facility in China is likely to help it at least maintain its market share in China if not exceed it.
Airbus' decision to have the completion centre in China has been underlined by Boeing's global sales strategist when he observed recently: "If you are going to be in this (Chinese) market, you are going to have partners here." Both Boeing and Airbus have Chinese partners in their increasing ground facilities located in China.
LOOMING TRADE WAR AND ITS IMPACT: While gross domestic product (GDP) growth rate in China has slowed down lately but the significance of China's slower growth is that no other country, not even the United States, is able to match its accumulation of total wealth annually. The GDP growth in the world's first and third largest economies, the US and Japan respectively, is practically insignificant and even slower growth in China is catching up with the US economy at a faster rate that not many thought possible in recent years.
Yet another of Boeing's prediction is that by 2020 there will be more middle-class consumers in China than there are people in the United States.
Recently, Financial Times' Tom Mitchell, writing from Beijing made an interesting observation: "The real prize is not China's economy overtaking that of the US economy in size, but ultimately becoming four times larger assuming that 1.4 billion Chinese eventually enjoy individual wealth levels equal to 325 million people in the US. That is the ultimate goal of President Xi Jinping's 'Chinese dream'".
Meanwhile, with the unpredictability of President Donald Trump's temper and brain waves and the rising Sino-US tension on trade issues, in any trade war between the two, the huge prospects of Boeing's booming China business will surely be a casualty.
As a recent article quoted how succinctly one aviation expert has put it that in the event of a Sino-US trade war, "Boeing would be the meat in the sandwich."
