The sky is the limit for China

         We recently talked about the rapid grow of Chinas airlines and the promise that it holds. Chinese airlines are not the only things that are a growing interest but aviation in general throughout China has risen recently. I alluded in my blog, Aviation Global Expansion the reason behind Chinas rapid growth is because much of it economy has remained underdeveloped or unchanged for decades. Countries that have been the leaders for economy grow and production have seem to have reached a steady point with less grow, whereas, countries that were lagging behind are now catching up and surpassing systems that have been instilled for years. China is finding new and inventive ways to grow a hungry economy lead by political leaders, owners, managers, and entrepreneurs. With Chinas economy developing in a day and age that it is, it is easier for them to adapt to the world's economy today and have a growing effect on the economical landscape throughout the world, whereas countries that have been the leaders are having trouble adapting and changing systems they have set years ago. This allows Chinese companies to learn from the mistakes and the successes from others.

            With this inability to change and adapt, countries look to others that can help develop and grow their product and still remain profitable. Many US companies are looking to foreign countries with lower taxes and lower working wages, to optimize the profitability of their business. Companies that use these foreign countries could also utilize the economy and become a more competitive global brand. For the last 5 years or so we have seen a rising number of corporations looking to options overseas to maintain afloat and competitive. Aviation Industry Corporation of China (AVIC), which is mostly government owned, and its subsidiaries have bought Cirrus Aircraft, Continental Engines, and Epic Aircraft (King, 2012). Cessna plans on moving towards full scale production in china as well, having already began with the Cessna Skycatcher 162. Organizations such as AVIC and China Aviation Industry General Aircraft Company (CAIGAC), are making it fairly easy and appealing to a transition to production in China (General Aviation News, 2013). These organizations have the space, people, and facilities for mass production of these aircrafts, with the government only taxing the companies a fraction of what the US is collecting from company taxes. Asian Business Aviation Conference & Exhibition (ABACE), is a several day conference that provide companies from all over the world a chance to see what opportunity is available within the Asian countries and just how much the industry is growing there. Many American aviation companies are 'excited, curious, and compelled' by what Asia has to offer and how willing they are to invest in the success of these companies (General Aviation News, 2013).

            There is still much work before general aviation is fully integrated in China's airspace. The airspace system is somewhat reverse of how the US airspace was created. The US started its airspace system based off of general aviation traffic and use. China's airspace on the other hand, was built to handle commercial airlines traffic and use. While the Chinese airspace system is safe and efficient it is outfitted for airline use and is having difficulty accommodating any general aviation. In China, pilots cannot leave a defined local area without permission. The dimensions of this “birdcage” vary, but usually it is a radius of 5 statute miles up to an altitude of 984 feet to 3,281 feet depending on local circumstances. To leave these “birdcage" areas and fly between airports pilots must have specific permission, arranged with considerable notice and a very significant fee, flying along defined pre-approved routes. Not only does leaving these areas come with a penalties, any operator of any aircraft, even as small as a Piper Cub, is required to have an operators certificate. With the operators certificate an operations manual, operating specifications, a maintenance program, and more is required just in operating your own aircraft. This requirement makes it impractical if not impossible for an individual to operate an aircraft on his own (King, 2012). Booz & Company published a report about the development of aviation and general aviation within China, stating that there is 4 areas that have lead to the underdevelopment of the GA sector in China: 1) Infrastructure and resource constraints; Lack of pilots and development of pilots and few airports with low use of the airports being used. 2) Restrictive airspace; Very restrictive airspace, with limited accessibility, not reaching its fullest potential and ability. 3) Restricted regulatory environment; Lack of regulatory framework, lack or coordination between regulations and policies, GA approval lengthy, time consuming, and costly to the owners and operators. 4) Underdeveloped supply ecosystem; Technology and engineering is limited, many aftermarket services underdeveloped with heavy reliance on repairs overseas, Market is still in the early years of major development and growth (MacCorkle & Wong, 2009). Although there is much work to be done before GA becomes active on a wider scale, the framework and desire is in place to greatly improve what has been established. There will be a great effort in integrating a more GA friendly system and airspace, seeing how politicians and entrepreneurs are seeking opportunity in this undeveloped industry in China.

            The most obvious side effect of these aviation companies looking overseas is the loss of jobs and its negative effects on the economy. Less jobs available leads to less revenue for the country leads to less opportunity leading to higher unemployment leading to less income for the government causing higher taxes... and the cycle continues effecting many areas of the economy. These companies are producing millions if not billions of dollars in revenue. Although the effects on the US may be easy to identify, one must put themselves in the shoes of an owner, president, or CEO of a company and see the situation in their eyes before making judgments on their decisions. If placed in a situation to control the direction and outcome of a company, you have to look at all options without a bias opinion and must be willing and open to what might be the best option available. Companies producing overseas could be saving them millions of dollars in operations and still produce the same quality of product. If companies are able to produce a product overseas and import the new items and be costing them a significant less amount of money this does not fall back on the companies making these decisions but the state of this country and government. More should be done to obtain the production within the country instead of finding more ways to apply a heavy tax on businesses to cover the governments deficits. Maybe the only way to achieve this is... reconstruction?

           

 

 

 

 

 

 

 

 

 

References

 

 

 

 

Spence, Charles (2013, September 24). General Aviation News: Exporting GA. Retrieved October 18, 2013, from http://www.generalaviationnews.com/2013/09/exporting-ga/#more-83216

 

 

MacCorkle, Jef & Wong, Timothy (2009). General Aviation in China: Seizing Growth Opportunities. Booz & Company. Retrieved October 18, 2013, from http://www.booz.com/media/file/General_Aviation_in_China.pdf

 

 

Lysen, Luke (2012, June 1). GA in China. Aircraft Owners and Pilots Association. Retrieved October 18, 2013, from http://www.aopa.org/News-and-Video/All-News/2012/June/1/GA-in-China.aspx

 

 

King, John (2012, March 12). The inscrutable future of GA in China. Aircraft Owners and Pilots Association. Retrieved October 19, 2013, from http://www.aopa.org/News-and-Video/All-News/2012/March/27/The-inscrutable-future-of-GA-in-China.aspx

 

 

General Aviation New Staff (2013, April 16). Cessna and CAIGA joint ventures gear up. General Aviation News. Retrieved October 19, 2013, from http://www.generalaviationnews.com/2013/04/cessna-and-caiga-joint-ventures-gear-up/#more-77631