China's New National Aviation Zone©

Xi'an China - visiting this capital of Shaanxi Province in Western China after a three year absence, I was stunned by the growth of the Xi'an Aeropolis which was designed by CPT, a Singapore architectural firm. The Aeropolis, which is the platform for China's Aviation Industry, is 50 kilometers between Xian and Yanliang. It is much like the Aerospace/Aviation Parks in Moffett Field and Burbank California that began to sprout US aviation start-ups in the early 1960s like Lockheed, McDonald Douglas and Hughes Aircraft. Over 40 square kilometers of land has been dedicated to the ascent of China's new Aviation Industry Manufacturing Complex, which will rival the aviation and aerospace industry in the European Union and the United States.

The Aeropolis is located near Xi'an, a world famous cultural city and international tourist city with a history of more than 8,000 years, which is one of the cradles for human civilization and the Chinese Nation, the starting point of the ancient Silk Road. The city fathers still talk about the visit to this ancient eighth wonder of the world when former President Bill Clinton and Senator Hillary Clinton visited the Terra Cotta Warriors & Horses of Emperor Qinshihuang. Airforce One landed in Yanliang on the runway used by the flight training Institute and the Clinton's limousine traveled on the modern highway constructed between Xi'an and Yanliang.

Xi'an and Yanliang are located in Shaanxi province with the most intensive aviation industry in China. Over sixty percent of China's aerospace and aviation industry is located in the province. There are 41 corporations and state enterprises devoted to the aviation industry, of which 28 are industrial enterprises and five research academies and institutes. There are also the Xi'an Aircraft Industry Group, the producer of Feibao, Y7 and Y8 air transport planes, Xi'an Aero-Engine Group Ltd., the producer of Spey jet engines and the first turbine fan engine produced in China, Qing'an Space Equipment Company that manufactures aviation hydraulic pressure accessories and Yuandong Company that produces mechanical control systems, as well as number of national aviation technology development centers, key labs, plants and institutes for the production of aviation wheels, electric machinery, meters, forge and castings, flight control, control and guides and numerous testing systems.

The city of Yanliang has been given all the capital, labor and land resources by China's Aviation and Aerospace Ministries. The 16th National Congress of the Chinese Party Congress has chosen to promote the implementation of the state strategy for the large-scale development of the western region and to meet the objectives for a 21st Century jump-start of China's Aviation Industry. Over 125,000 people currently live in Yanliang of which is expected to grow to 500 aviation companies with total revenues of $2.5 billion USD. The population is estimated to increase over 100 percent.

The area for the Xi'an Aeropolis has been divided into six zones; namely, manufacturing, research and development, aviation exhibitions, training centers, commercial and residential space. Twenty-five percent of the money to build this new Aviation City will come from the Xi'an High Tech Zone and 75 percent from the Banking Community. By 2005, the current city will be almost unrecognizable. The Stalinist era buildings of the Aircraft Institute (AVIC) Group Co. Ltd., Xi'an Aircraft Industry Group Co., Ltd., - the largest manufacturer of civil and military aircraft in China, and the Flight Test Research Institute that trains China's pilots, will be replaced with ultra modern steel and glass office towers with malls that will feature retail shopping outlets with Western venues like, Pizza Hut, KFC and McDonalds fast food restaurants.

Pride has replaced the ideology of Stalinist era communism. Pride is very apparent in the new aviation technologies of microwave, radar, advanced aircraft design systems, space-related assemblies, semiconductors, imagining, space ports, antennas, components and complete aircraft assembly manufacturing plants. The emphasis will be on advanced wireless related technologies; advanced computer generated process control and design systems and advanced light aircraft designs for business and commercial use.

Global Aviation and Aerospace firms are already working in the Aviation Center such as Boeing. Shanghai Aviation Industrial Corporation (SAIC) and Xi'an Aircraft Company (XAC) delivered the 300th sets of horizontal stabilizer and vertical fins for Boeing's 737. There are now 3,200 Boeing airplanes flying worldwide that include major parts and assemblies by China, equal to over a quarter of all Boeing airplanes in service worldwide. China operates 253 Boeing 737s.

Airbus from the European Union, Boeing and General Electric Engines headquartered in the United States, and Rolls Royce Engines of the UK have become the technology center pieces for the Xi'an Aeropolis. Recently, a Brazilian company has taken the lead by setting up a joint venture to assemble a new civilian jet. Airplane parts and assemblies for business, civil and heavy transport aircraft will soon be launched. The ARJ21, a new jet model by the China Aviation Industry Corporation was rolled out of the production hangars. Boeing has procured over $500 million in aviation hardware from China and is expected to reach US$1.3 billion by 2010.

Airbus and its parent company European Aeronautic Defense and Space Company (EADS), the world's premier aerospace and defense company, will begin operations in the Xi'an Aeropolis. From its current US$10million annual numbers, Airbus procurements will be worth US$60million annually by 2007. Aerospatiale, which is now Airbus France, has partnered with Xi'an Aircraft Company to manufacture and assemble access doors for the Airbus A300/A310 widebody aircraft. In October 2003, Airbus and Xi'an Aircraft Company signed several US$7.5 million contracts to increase the production rate of A320 access doors, A330/A340 brake blades and passenger door skin for the A320 family. China will need 2,400 jet airplanes. By 2022, Chinese carriers will fly more than 2,850 passenger and cargo airplanes.

Companies from around the world have shown increased interests in sourcing from China because of its achievement in quality and cost efficiency. Since its entry into the World Trade Organization a great sense of nationalism has overtaken the Chinese. China is very sensitive to its global image and to local issues. American companies who have lined up to enter the Xi'an Aeropolis must show that they are committed to the China Aviation Market and a willingness to create a win-win situation for both parties. While many CEOs of Aviation multinationals have usually set up an office in Xi'an, the right approach is to first visit the Xi'an Aeropolis to conduct an assessment of the resources and the commitment of the Chinese Government to building a long term relationship. It is important that US and European aviation industry companies work with a management consulting company that has the relationships and knowledge.

China is making a strong commitment to expand the value of its exports by building a strong manufacturing base in Aviation as it moves its 1.4 billion people to a modern 21st Century society. The PRC needs to increase its terms of trade while locating new sources of food, energy and raw materials. The day may come when China will form a United European-like Union in Asia with its own common currency. It is clear that in 20 years China will be stronger than Japan and Korea combined. The stewards of the Xi'an High Tech Zone who have spent over 12 months developing the Xi'an Aeropolis have the vision that the central government leadership must shed their middle kingdom mentality and be integrated into the World's aviation economy. In numerous meetings that I have had with aviation industry executives and key regional and local government officials, it is very clear that they are eager to partner with American aviation and aerospace firms and to work in a spirit of collaboration. The rise of this US$14 billion Xi'an Aeropolis will usher in a new era of trade and self reliance for China. Putting politics aside, it is like Alvin Toffler said, "Without knowledge exchanged, no wealth can be created" between the US and China's transportation, communication and technology sectors.

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