When Will China Be Able to Stop ‘Copying’ Western (or Russian) Aircraft?
For the past few decades, China (along with many other countries) has attempted to build up new industries by either directly copying Western and Russian products, creating arrangements for technology transfers or acquiring needed information to do so illicitly. The aviation/aerospace industry (including space-focused and military products) has been on one of the key ten areas of focus in the “Made in China 2025” industrial plan. This plan was announced in 2015 with the goal of lifting China up the food chain with higher-value products designed and manufactured domestically and gaining global market share from Western companies. The intention here is to move their country away from dependency upon Western aircraft and create internal capabilities in highly-engineered product design and manufacturing.
Not surprisingly, this plan has also made the rest of the world wary over how China will achieve these goals. China’s history in ‘obtaining’ some of the needed key technologies has not been appreciated, to be most polite.
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A Checkered Past in Copying Aircraft Designs
China was well behind both the USA and the Soviet Union in the 1960s, partly due to the Cultural Revolution which set it back for years, and partly due to being less industrialized than its competition. Due to this, it resorted to acquiring needed aviation technology any way it could. Table 1 illustrates a number of examples of Chinese-built aircraft that we are eerily similar to Western or Russian designs, or, some which were licensed.
Table 1: Examples of Notable Chinese-Built Aircraft and Aircraft They Seem to be Similar To:
There are many other instances besides those listed in Table 1, and such efforts have allowed China to build its design and manufacturing capabilities. Some of these are based on technology transfer agreements, attempts to directly copy technology, and others on outright theft of intellectual property.
The Long and Winding Road to Creating Highly-Engineered Products
For many years it was feared that China would eventually accumulate enough expertise in design and manufacturing from Western companies who were short-sighted enough to offshore there. This applied especially to those in high-value, highly-complex industries such as electronics, aviation, automotive, industrial equipment, alternative energy, and transportation. China has been rather successful in attracting such companies with promises of access to its large and growing market or in reducing manufacturing costs for greater profit to all. Many of these situations involved having such firms provide some degree of transferring technology and training to Chinese firms (some of which are government-controlled), thus providing China with a quick boost to its ambitions.
China and Russia/Soviet Union have a long on-and-off history of joint aviation projects, as well as some bad blood when China broke the terms of some of these arrangements. In the early days of Communist China, the Soviets provided assistance as China was not a threat. This soon changed, as did the official pipeline of technical assistance, which prompted some of the early copying of Soviet aircraft. When the Soviet Union fell apart, China threw it a lifeline and either purchased technology, participated in joint arrangements, or, continued in obtaining information otherwise. Such efforts continue today with the joint development of several new Russian-Chinese commercial aircraft (such as the CRAIC CR929 wide-body twinjet).
China has also sent its students to be educated abroad and to gain experience working at Western companies. Few such situations involve espionage, but when some of these trained people come back to China with their new job skills, it does further the agenda in their industrial plan.
Major advancements have been made, and it can be argued that China is nearly matching the USA and Russia with space technology. Not only did they put a rover on the Moon, but they currently have an unmanned mission to the dark side of the Moon, a first for mankind. All of this takes great technical skill, and they have seemingly been successful in developing launch vehicles and payloads, as well as the communications infrastructure to handle such missions.
China has also nearly matched Western capabilities in regards to high-speed trains by using technology obtained from Japan’s Kawasaki Heavy Industries (KHI), which developed the renowned Shinkansen bullet trains.KHI had agreed to a technology transfer agreement with the Chinese firm CSR Sifang, which has built high-speed rail within China. It was reported that KHI stated that it deeply regretted its now-dissolved partnership since it was intended that CRS Sifang would only use the acquired knowledge within China, but this was not honored. Kawasaki is now competing with much cheaper Chinese-made bullet trains on the world market, which are based on its technology.
We will not touch on solar panel and equipment technology, as well as wind turbines, all of which China has come to dominate thru technology transfers, outright theft of intellectual property and now thru its low-cost manufacturing capacity.
All of this supports the “Made in China 2025” industrial plan, and in some market segments, they may have already achieved their goals. They have transitioned from build-to-print and copying products to actually displaying some degree of innovation. This has not been even across all of the product areas China engages in, but, clearly, they have begun to move up the proverbial food chain.
In-Roads into Aviation Products and Services
And this brings us around to aviation. As previously mentioned, this is one of the key industries for China to concentrate on and they have invested heavily here. In the early 1980s, when China first convinced McDonnell Douglas, followed by Airbus and then Embraer, into setting up plants to assemble jetliners in-country (and now Boeing is doing so). Aircraft equipment and engine manufacturers outsourced some of the manufacturing operations to China to reduce costs as well.
This was followed by Chinese companies buying out a number of general aviation and aftermarket companies (Cirrus, Eclipse, Enstrom Helicopter, Mooney, and Teledyne Continental Motors, among others), aftermarket (SR Technics, Magnetic MRO), cabin interiors (Acro, AIM Altitude, Thompson Aero Seating) among other aviation niches. A Chinese investment firm has even bought a minority stake in Boom Aerospace, which is developing a supersonic jet. Chinese banks have also moved into aircraft and engine leasing. Basically, as a nation, they are building out a presence in nearly every niche of aviation.
But with all of this, only a small degree of success in aviation can be claimed so far. Yes, the Chinese are developing single and twin-aisle aircraft together with Russia. And yes, they have been able to create some other aircraft based upon others designs or trying to copy them. But there have been no major advancements in any area of aviation as so far by Chinese firms. In fact, for the most part, the aircraft is of a dated design and heavily dependent upon imported engines, avionics, landing gear, and other critical components. These ‘one-generation-behind’ new aircraft will help China gain needed capabilities, but, they have not been able to overcome the commercial aircraft market as easily as they have other industries.
Will Chinese companies be able to design and manufacture such critical products in the future? Of course. But when? Will it worth the cost and resource drain to do so, while their Western competitors do not stand still and forge ahead with new advances? Only time will tell.
Most of the commercial aircraft produced so far have been primarily for domestic use, due to certification issues. For example, the ARJ21 regional jet has not been certified by any Western regulatory agencies, and the few aircraft delivered to Chinese airlines have only been used in-country. There are many other articles on this, so these details are not worth repeating here. Suffice it so that that commercial success has not quite happened. Managing factories which assemble other companies commercial aviation parts (and using Western firms processes and management oversight) into a final product is much different than creating your own from scratch. And according to a report from Rand Corporation, Chinese factories assembling Airbus and Embraer licensed regional jets domestically are not even price competitive with the home production plants in France and Brazil. So much for the lower labor cost being a major advantage.
While the announced pricing of the new Chinese commercial aircraft (ARJ21, C292) greatly undercuts the Western aircraft they are competing with, the lack of aftermarket support, training, and spare parts greatly limit their ability to penetrate the global market. China will need to use the lessons learned in these current-development projects to better innovate in the next-generation of aircraft apparently.
Based upon all of this, it can be concluded that China will slowly advance, but is not going to break the Boeing — Airbus duopoly in commercial aircraft any time soon. With the constant pace of innovation in materials, electronics, propulsion systems, and software, China will need to innovate faster than its competition to enjoy any degree of success in the global market outside of its sphere of influence.
Their best chance to overcome the commercial aircraft duopoly is via a major technological or evolutionary change in the market, such as the slow move to electric/hybrid aircraft, or supersonic travel. Incumbents may be challenged to move off of their cash cow legacy aircraft, so if there are significant breakthroughs in either of these technologies, a market shift may occur.
General Aviation May Be China’s Better Bet
As noted earlier, Chinese investors and the government had been snapping up various types of companies involved in the GA market. While this may be a slight cause for alarm, it should be noted that many of the purchased firms were either not commercially-viable, or their competition had surpassed them in some manner. None of these takeovers could be considered a significant deal.
Collectively the in-roads into the smaller aircraft market will provide Chinese firms with a needed infusion of technology and a better understanding of how aviation manufacturing processes need to be handled. The other significant take away is that some of these situations will help them understand how to set up and manage aftermarket support networks.
Chinese firms will have an easier time penetrating the fragmented GA market space rather than the commercial aircraft duopoly. For this reason, you can envision how Chinese-owned firms (located in the USA and Europe, probably with some new manufacturing operations in China) will be able to experience a greater degree of success producing smaller aircraft or their associated parts.
This will be especially true is China is able to create a domestic market for general aviation, which is quite small at the moment. Such an expansion would be due to the recent industrialization and nominal upper middle class in their country, but also due to China’s military controlling most of the airspace at this time. While this is expected to change, the need for many more GA airports and facilities is something they need as well. This is being addressed, as private investors are being courted to build out this needed infrastructure.
So the main question here is, how successful can China be in small aircraft development and manufacturing with such a small domestic market? Will Chinese-owned firms in the West be able to reach profitability without having a ‘friendly’ home market to procure their GA products? How much knowledge can they gain by participating in this market area to use in the larger commercial aircraft market (if much of any)? Are any GA aircraft worth copying (besides business jets, which have not suffered much from having any Chinese clones enter the market)?
One reason why Chinese firms may upend the GA market is via the new people-carrying (or personal) drones or flying cars. Aircraft such as those from EHang (they are in nearing the end of flight-testing their 2-person drone taxi in Dubai) may cause a significant shift away from old turboprops to modern copters which may or may not be controlled autonomously (or perhaps if air traffic control can take over from a disabled pilot in emergencies). This niche is just starting to form and will have broad implications for the short-haul, small aircraft industry. Stay tuned as dozens of companies from around the world finalize their products in the coming years.
The other major questions swirl around how Chinese aftermarket firms will fare due to the lack of trained technicians. In the US and other Western countries, there is not only a civilian pool of talent to draw from (although, aviation is not drawing enough new talent in recent years) but also a pipeline of trained talent from the military to draw upon. China does not have a significant pool of kids who tinker with their cars or hung around dad when he worked on his old propeller aircraft on the weekends, and this puts them at a slight disadvantage in regards to having people who have more exposure to such activities. This can be overcome in time, but, it seems that the aviation aftermarket, especially in the general aviation market belongs to the West.
Perhaps China will be able to own some of the design and manufacture of these smaller aircraft, but, maintenance will be an issue until this build up an internal market and have local Chinese people get hooked on having the proverbial $100 hamburger (or their local equivalent). We are still more than a few years away from having any significant takeover of any niche in the aviation market outside of the forthcoming personal drones arena. Chinese firms will have much less incentive to copy smaller aircraft due to the fragmented market, and may simply own a small part of it for the time being.