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Venture to boost plane systems bid

By Lu Haoting (China Daily)
Updated: 2009-11-16 07:36

A 50-50 major venture will be set up between China and the United States to develop and sell Chinese-made equipment for commercial aircraft, it was revealed yesterday.

The project between China Aviation Industry Corp (AVIC), a manufacturing conglomerate, and US-based General Electric will begin operation in the middle of next year.

Work will first be focused on bidding to supply the avionics system for the C919, the Chinese-built single-aisle aircraft that will compete with the best-selling Boeing B737 and Airbus A320.

The partnership will be based in China but targeted at the US and global markets, according to a framework agreement signed by the companies yesterday. No financial details were available.

"The joint venture will be a strategic move to get AVIC more involved in the global aviation manufacturing industry," said Lin Zuomin, president of AVIC.

The project will also allow the conglomerate to streamline its diversified interests and focus on its core aviation manufacturing business, he said.

AVIC has more than 200 subsidiaries and companies across China, and last week obtained a 23-percent stake in the restructured Chang'an Automobile Group by injecting its auto making assets into the company.

"The joint venture creates approximately 200 jobs in the US, in addition to creating bilateral industrial cooperation with China," said Lorraine Bolsinger, president and CEO for General Electric's aviation systems division.

Commercial Aviation Corp in Shanghai has been sourcing parts and components globally for the C919 airliner, which is expected to take off in 2014 and enter into service in 2016.

"Foreign suppliers are encouraged to form partnerships with Chinese manufacturers, and our priority will go to these companies," said Wu Guanghui, chief designer of the C919 program and deputy general manager of Commercial Aviation Corp.

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Overseas aviation suppliers are competing for a host of opportunities arising from the project.

CFM International, General Electric's joint venture with Safran SA of France, is bidding to supply engines for the C919, with other bidders including Pratt & Whitney, and Goodrich Corp. The winning bid is expected to be announced by the end of this year, said Wu.

General Electric is the sole engine supplier for the ARJ21, a China-made, 90-seat airliner jet expected to enter service next year.

Goodrich and Xi'an Aircraft International, part of AVIC, signed agreements in August to form two joint ventures to produce landing gear and housing components for the C919 project.

China will require 3,770 new aircraft worth $400 billion over the next 20 years and will remain the world's largest commercial airplane market outside the US, said a report released by Boeing in September.

Single-aisle airplanes will account for 70 percent of new purchases, driven by China's fast-growing domestic market, the report added.