Recently I attended a big aviation trade show in Hong Kong, and saw China unveil its latest attempt to move into high-tech markets — the C919 passenger jetliner it hopes will challenge the two global giants in the industry, America's Boeing Co. and Europe's Airbus.
China wants the plane to start operating by 2016, an ambitious timetable. With the country's drive, it may very well be able to do that.
But that same trade show also brought home some of the real shortcomings China has in going into these technologically intensive markets.
For starters, press reports said that many of the key suppliers for the C919 will likely be foreign companies, as China currently lacks the supply base to do some of the very sophisticated work required in aerospace manufacturing.
A walk around the Asian International Aerospace Expo and Congress, which billed itself as the world's largest trade show strictly for civil aviation, showed a real lack of Chinese suppliers. Trade shows I go to in other technologically demanding industries, such as medical, have a lot of up-and-coming domestic Chinese firms, but they were largely absent from this one.
You could see the same thing among the plastics suppliers.
One key plastics application is supplying materials for the interiors of jetliners, from seats to wall panels, where there are strict performance requirements for things like flame resistance.
As one Western plastics executive at the show put it: “To put a part on an airplane, it has to be FAA approved. Nobody in China … has pulled it off yet, making plastic parts that can go onto a seat interchangeably.”
Also, no Chinese supplier can make an entire airplane seat to the strict crash standards of world markets, according to the Hong Kong Productivity Council, a government agency that is working closely with Hong Kong plastic molder Vigor Precision Ltd. to try to start a local seat-making company.
The lack of top Chinese suppliers is a topic among airline officials responsible for sourcing cabin interiors. “It's a huge void,” one longtime executive with an American carrier told me. “We are wondering today in the industry when China will step up and start filling the void.”
An executive with the C919 program, Wang Wenbin, seemed to acknowledge that when he told a conference at the expo that China still has a long way to go in civil aviation to equal companies like Boeing and Airbus.
China is clearly working hard to develop that supply base, and if history is any guide, it will make progress.
But there's another area where China faces shortcomings in grabbing these high-tech markets. I'm referring to its current regulatory system, which is weak and responds too slowly, such as when melamine was found in Chinese milk products.
Selling high-tech products like airplanes and medical devices requires a lot of transparency and openness on the part of companies to win trust. Part of that transparency comes from a strong regulatory system.
Boeing, for example, has made many announcements about problems with the plastic composites in its new 787 Dreamliner. It's hard for me to imagine a Chinese company being that open about issues it would be having.
I could be wrong, and cost could in the end overrule trust. There were signs at the air show that the tough economy is forcing airlines to demand more cost cutting in plane manufacturing, and that could give China an opening.
But without that trust, it's harder for me to see how China conquers these high-tech markets.
Steve Toloken is a Plastics News staff reporter and Asia bureau chief, based in Guangzhou, China.
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