US aviation firm takes off in China

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Last updated at: (Beijing Time) Tuesday, January 06, 2004

US aviation firm takes off in China

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Rockwell Collins, a major US-based aviation electronics and communications firm, expects a bright future in the world's most populous market and will invest heavily in it, said a senior company executive yesterday.

"My sense is China will lead the worldwide aviation industry this year and in the future,'' said Clayton Jones, chairman, president and chief executive officer of the New York Stock Exchange-listed business.

He believed the robust economic growth of China, vibrant economic activities with strong inflows of outsourcing orders and investment, as well as its vast land mass all point to huge demands for airplanes, which will also create great opportunities for aviation electronics firms like Rockwell Collins.

While it met its profit target with a 9 per cent profit growth and a 2 per cent sales growth year-on-year in its 2003 fiscal year ending September 30, the company's growth in China was even higher with US$55 million of sales in its 2003 fiscal year from US$45 million in 2002.

However, that amount was still quite low compared with Rockwell Collins' worldwide total of US$2.54 billion, which also suggests great potentials for the US firm, Jones believed.

"We have a very good start in almost all areas and our plan for the future is to grow on past successes,'' said Jones in an interview with China Daily in Beijing.

He said the future focus of Rockwell Collins' development will be on three areas: value-added services, regional jet business and the helicopter-related market.

The company, which formed a maintenance and service joint venture last year with China Eastern Airlines, one of the nation's big three airlines, will continue to invest in infrastructure.

It will also allocate more resources to the joint venture, including capital, technical supports and staffs to provide better and richer after-sales and other help to its customers in the world's most robust major economy.

Rockwell Collins will invest as much as US$60 million into the regional jet business in China.

The US firm was selected as the sole avionics supplier for the domestic regional jet ARJ21, which will have 79 to 99 seats, to be produced by the State-owned aviation giant China Aviation Industry Corporation (AVIC) I.

Part of the research on the ARJ21 jets will be conducted in China, with the rest being in the United States.

It was reported that Rockwell Collins will be responsible for the equipment of 500 ARJ21 planes in the coming 20 years with its aviation electronics devices worth US$230 million.

Jones predicted that with the development of the ARJ21 jet, more regional jets will be used in China, which will bring more opportunities for Rockwell Collins.

Although government systems business, whose customers are mainly the US Government and foreign militaries, only accounted for about 10 per cent of Rockwell Collins' revenues in China, Jones believed that area will have a lot of potential.

"We have a desire to do business on military programmes, where it is appropriate and where we can get approval from the US Government,'' he said.

Jones' company has been working with AVIC II, a sister company of AVIC I, on the first home-made helicopter, H425, which made its maiden flight on December 30.

Rockwell Collins will spend US$1.5 million to develop electronics solutions for the helicopters.

Besides these three areas, Rockwell Collins will also procure more local components and services from last year's US$2.5 million.

The US company has also been very active in co-operation with Chinese partners on research and development.

It already set up two software development and verification centres with the Chinese Aeronautical Radio Electronics Research Institute in the past 10 years.

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