Bas van Oosterhout’s Business Innovation Blog

Back from the Austrian slopes there was the news that China has introduced its first commercial passenger jet, the ARJ21 (Advanced Regional Jet). Not really strange; China is evolving its industrial capababilities is almost every business segment so why not commercial jets. China Aviation Industry Corporation start in the 70-90 passenger segment, in which demand is expected to reach 3,700 jet of which China’’s contribution will be 330.
First jet is expected to take of end of 2009.
What is the new in this news? China Aviation Industry Corp (AVIC). is not just one company; it is a large conglomerate of 100 companies, Chinese as well as European and US based.

Bloomberg mentions the necessity of a strong network for maintenance and parts. “Even certification from overseas regulatory bodies is unlikely to guarantee sales for the ARJ21, which will need an extensive network of maintenance and spare-parts providers, industry officials have said.”
“The challenge would be bigger because the network doesn’t exist,” Robert Laird, senior vice president of greater China sales for commercial airplanes at Boeing, said in September. “They’d have to establish it through partnerships.’” (Source: Bloomberg)

AVIC already does business with GE and Rockwell for parts, so the basis for the network is there. If all goes well AVIC will create a new type of Ecosystem in which it will collaborate with its partners to develop new jet, also for other segments. And with development costs just above 1.1 billion dollars (8 billion Yuan at the current rate), compared to 20 billion which would be needed in the west there future will probably bring more news about Chinese commercial jets.