Opportunities of the Global Commercial Aircraft Manufacturers in China

Abstract

China’s aviation industry has attracted the attention of many major international investors, but limited research to this topic has been found in the literature. The complexity of the Chinese market, worsened by the government's inconsistent policies and unique cultural background, can be difficult for foreign economists and investors to comprehend. This paper will document and describe events and developments in the last decade in China's commercial aircraft manufacture industry. This paper will start with an overview of aircraft demand in China (Chapter 2). It follows with an introduction to the structured financing and leasing methods that the airline industry has traditionally used in the industry practice where provide an opportunity to penetrate China’s commercial aircraft market. In addition, I will discuss the implementation of asset securitization in the structured finance arrangement, as a possible way to minimize the risk. To understand the commercial aircraft industry in China, a case study of two joint ventures-McDonnell Douglas Shanghai and Embraer Harbin-¬will be discussed (Chapter 3). A special chapter will be dedicated to a synopsis of comparisons of previous cases to understand key indicators to sustain the business in China (Chapter 4). The final chapter includes recommendations to new entrants and a concluding remark by the author (Chapter 5).