China attracts more US small aircraft makers

(Ecns.cn)--More and more US makers of small aircraft are cooperating with Chinese companies, deciding that the need to develop the large potential of this market outweighs the risk that these Chinese partners will become rivals, according to reports Thursday.

In the last few months, business-plane makers Cessna Aircraft Co. and Hawker Beechcraft Corp. have discussed joint ventures in China. Industry supplier Honeywell International Inc. signed several initial agreements last year.

Companies from other countries are also moving in to the Chinese market: Brazil's Embraer SA said last month that it would consider transforming a Chinese joint-venture plant for small commercial jets to turn out executive planes.

China has grown more attractive even as the industry otherwise has shrunk. Cessna last month signed an agreement with a unit of the State-controlled Aviation Industry Corp. of China to establish a joint venture in the western city of Chengdu, where Cessna plans to build midsize business jets and collaborate on a larger jet.

The Wichita, Kan., company also reached an agreement with AVIC, as the Chinese company is known, for broader cooperation on general aviation, a category that excludes military and commercial aircraft.

"If you have the ability to produce local content in the market, it gives you the ability to understand your customers better, to react quicker," says Cessna Chief Executive Scott Ernest.

Besides new markets, labor costs are also part of China's allure. "Our competitors in Brazil or in Switzerland can charge lower labor rates than we can in the U.S. and labor is a big component of building an airplane," says Sean McGeough, Hawker Beechcraft's president for Europe, the Mideast, Africa and Asia-Pacific.