It comes blaring through in headlines and newscasts every day: China is the future, it's the next economic superpower, its market is too big to ignore. Recent developments indicate that Airbus is heeding those headlines and taking aggressive measures to court Chinese customers. And since the European airplane maker is locked in a global struggle with Boeing
The New York Times reports today that Airbus is planning to set up an assembly line in China to manufacture its A320 aircraft. The move is widely seen as a means of currying favor with the Chinese government. Since state-owned carriers in China control 90% of all flights in the country, getting in the good graces of government officials is a wise sales policy, especially since the payoff is potentially enormous. Airbus estimates Chinese state-owned airlines may buy 1,790 planes worth an estimated $230 billion by 2023.
While the investment may translate into a short-term gain, there's little doubt that Airbus is helping to create a new competitor. Admittedly, the European outfit's new plant will be relatively low-tech. The A320 is a single-aisle plane and thus less sophisticated than a jumbo jet. In addition, the Chinese facility will only cobble together premade parts rather than make sophisticated components.
But Airbus is already on a slippery slope. The company reportedly has discussed providing Chinese companies with a 5% stake in its newest plane, the A350. Airbus has already opened an engineering center in China to work on the aircraft.
As for China, it has made no secret of its desire to make its own jumbo jets. Chinese Premier Wen Jiabao indicated earlier this month that China will start making jumbo aircraft sometime in the next four years. Coincidently, this is the first time the idea of building a Chinese jumbo jet has been floated since the 1980s.
The race between Boeing and Airbus for global supremacy rages on, and Airbus may win more sales with the China investment. But those sales probably won't last -- American carmakers like General Motors
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
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