Opportunities in china s aero industry
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“Opportunities in China’s Aero Industry.”. A Dezan Shira China Group Company. Italian Conference July 5-6, 2002. Jamie Gwynn General Manager. China. Logistics. China Logistics: Logistics consulting and market research in China’s mainland.

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Opportunities in china s aero industry

“Opportunities in China’s Aero Industry.”

A Dezan Shira China Group Company

Italian Conference

July 5-6, 2002

Jamie Gwynn

General Manager


Opportunities in china s aero industry

China

Logistics

China Logistics: Logistics consulting and market research in China’s mainland

  • A specialized consulting firm in China offering supply chain consulting and logistical market research.

  • 8 consultants with a variety of logistical backgrounds: telecom, automotive, fast moving consumer goods

  • Part of the Dezan Shira China Group, China’s leading professional advisory firm

2


Opportunities in china s aero industry

China

Logistics

Dezan Shira China Group: The Leading advisory organization for the China market

  • Local presence in the China market since 1987

  • 12 offices with over 70 staff in the mainland

  • Practical solutions not classroom theory from our experienced staff

  • A reputation for project excellence from our diverse client base

3


Opportunities in china s aero industry

Dezan Shira & Associates

Network analysis

Structuring

China- Briefing

DSMR

Market Research

China Logistics

China

Logistics

Dezan Shira China Group: Affiliate companies

Dezan Shira & Associates

DSMR

China-Briefing

4


Opportunities in china s aero industry

Some of our customers:

Examples

Identified and qualified distribution partners as well as provided specific market research

Devised a complete market penetration strategy which allowed Perdue to market to China

Product sourcing and market research for a large shoe retailer.

Qualified appropriate factories for technology transfer assistance

Product sourcing and market research for glove retailer

Conducted market research on the cosmetic industry in China and assisted with the importation of goods

5


Discussion items

China

Logistics

Discussion items

History of China’s aero industry

The current environment

Approach to the marketplace

Key contacts & resources


History of china s aero industry

History of China’s aero industry

CJ-5 Trainer

  • 1950 – 12 Aircraft for civilian use

  • 1951 – 16 Aircraft factories (milt to civil)

  • 1954 – First construction


History of china s aero industry1

China

Logistics

History of China’s aero industry

  • 1970’s production of various “Y” class modules.

Y-12 Model

(120 units exported to date)


Discussion items1

China

Logistics

Discussion items

History of China’s aero industry

The current environment

Approach to the marketplace

Key contacts & resources


Merging china s airlines

China

Logistics

Merging China’s Airlines

  • In the 1980’s the CAAC allowed startup carriers to increase competition

  • Status for local governments

  • By the late 1990’s over 36 different airlines


Merging china s airlines the reason

China

Logistics

Merging China’s Airlines: The reason?

  • Due to late 80’s policy result is overcapacity

  • Irregular flight patterns

  • Discounted tickets


Merging china s airlines the vision

China

Logistics

Merging China’s airlines: The vision:

  • Orderly consolidation

  • But also must: Let airlines run their own business

    • Profit allocation

    • Allow market demand to determine pricing

    • Minimize regulation of jet fuel and procurement


Merging china s airlines the obstacles

China

Logistics

Merging China’s Airlines: The obstacles

  • Recent plane crashes

  • CAAC has control over their 11 airlines representing 81% of the market, but 14 others


Infrastructure

China

Logistics

Infrastructure

  • Currently 142 airports

  • CAAC has over 400 aircraft

  • But the overall total fleet is less than that of British Airways


Market growth

China

Logistics

Market Growth

  • 1970’s & 80’s 17% per year

  • Last year 10%

  • Predicted to grow at 7% per year through 2005

  • Airbus & Boeing: “China will need over 1,500 aircraft by 2015.”


Airport passenger traffic

Airport passenger traffic

Year 2000 from CAAC Journal 2 March 2000


Airport cargo traffic

Airport cargo traffic


Discussion items2

China

Logistics

Discussion items

History of China’s aero industry

The current environment

Approach to the marketplace

Key contacts & resources


Approach to the marketplace

China

Logistics

Approach to the marketplace

  • CAAC has further liberalized the industry allowing foreign companies to take a 49% share in Chinese airlines from a previous 35% share

June 24, 2002


Foreign investment best sectors

China

Logistics

Foreign investment: Best sectors

  • Airport design

  • Technical construction

  • Technical equipment (Radar systems, engines)

  • Commercialization of space

  • Avionics

  • Consulting


Joint ventures in china

China

Logistics

Joint ventures in China

  • Lufthansa – JV at Shanghai’s Pudong airport

  • Rolls Royce – Engine research & production

  • Airbus – Production (100 deliveries)

  • Bae Systems – Aircraft sales

  • Dowty & Druck Ltd. – Various projects in Xi’an


Projects underway

China

Logistics

Projects underway

  • Guangzhou, Changchun, Lhasa, Qingdao, Chongqing, Datong, Daqing


Approval necessary for airport projects

China

Logistics

Approval necessary for airport projects

  • Central approval

    • State development and planning commission (SDPC)

    • CAAC

  • Provincial/ local approval

    • Appropriate contacts

    • Consider a local Chinese partner


Where to get funding

China

Logistics

Where to get funding?

  • Central government

  • Local government

  • Commercial market


Go west young man

China

Logistics

Go West young man

  • Strategy is a spoke and hub network

    • Beijing, Guangzhou, Shanghai

    • Chengdu, Xi’an, Wuhan, Kunming

  • 19 Airports in the West are currently slotted for improvements


Go west

Harbin

Urumqi

Shenyang

Hchhot

Beijing

Zhongwei

Datong

Qinhuangdao

Taiyuan

Jinan

Lianyungang

Lanzhou

Xian

Xuzhou

Hanjing

Zheng-zhou

Suzhou

Baoji

Shanghai

Wuhan

Chengdu

Ningbo

Hangzhou

Zhuzhou

NanChang

Xiamen

Liuzhou

Kunming

Guangzhou

Nanning

Shenzhen

Go West


Sme opportunities

China

Logistics

SME Opportunities

  • Subcontractor operations

  • Trading through Hong Kong or other direct mainland contacts


Freight forwarding

China

Logistics

Freight forwarding

  • Class A

    • Restricted industry

    • Foreign company cannot own more than 50% of the JV

    • Volume must exceed USD 50 Million per year

    • > 3 years experience with no incidents

    • > USD 1 Million in registered capital


Freight forwarding1

China

Logistics

Freight forwarding

  • Class B

    • Regional

    • Cannot handle international activities

    • Registered capital requirement of USD 60,000


Doing business in china the requirements

China

Logistics

Doing business in China: The requirements

  • Must have more than a good product

  • Know the market – Do your Due Diligence

  • Proper budget planning (Trips back and forth,you and govt.)

  • Long term Strategy

  • Be aggressive ( don’t wait for tenders to go out)


The first steps

China

Logistics

The first steps…

  • Attend an air show in Zhuhai or Beijing

  • Visits to the manufacturing basis

  • Establish contacts with appropriate Beijing bodies

  • CoC’s, Embassy’s & Consulates

  • 3rd party consultants

  • Set up a representative office


Discussion items3

China

Logistics

Discussion items

History of China’s aero industry

The current environment

Approach to the marketplace

Key contacts & resources


Key government bodies

Key Government Bodies

  • Civil Aviation Authority of China (CAAC) - the overall governing body

  • China Aviation Industry Corporations – Deals mainly with the manufacturing sectors & is divided into 2 components

    • AVIC I for larger aircrafts

    • AVIC II for smaller aircrafts

  • China National Aero Technology Import and Export Corporation (CATIC) – main procurement organization

  • China Aviation Supplies Import & Export Corporation (CASC) – A trading company of aviation products

  • Ministry of Foreign Trade and Economic Cooperation (MOFTEC) – Regulates foreign business licensing and business structures


Dezan shira group contacts

Dezan Shira Group Contacts

Jamie Gwynn

General Manager, DSMR/ China Logistics Ltd.

Tel: +86 21 6279 7330

Fax: +86 21 6279 8659

E-mail: [email protected]

Web: www.PRCLogistics.com

Alberto

General Manager, Dezan Shira & Associates.

Tel: +86 755 329 3940

Fax: +86 755 366 4122

E-mail: [email protected]

Web: www.dezshira.com


Opportunities in china s aero industry

  • Credits

    • British Embassy – Beijing

    • China Hand

    • Local resources

    • CAAC information database


Cold supply chain logistics in china

Cold Supply Chain Logistics in China

A Dezan Shira China Group Company

Thanks for your

Attention

Jamie Gwynn

General Manager


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