The People's Liberation Bizjet
In China, another revolution is about to begin.
- By William Triplett
- Air & Space magazine, November 2001
(Page 2 of 6)
Broad quickly established itself as the country’s leading supplier of industrial AC. (The company now claims 3,000 clients, or roughly 80 percent of the Chinese market.) But China’s sheer size—at 3.7 million square miles, about the same size as the United States—and the fact that many more potential clients were located in remote locations posed a challenge to the Zhangs’ expansion. Since the bosses themselves—the people who could say yes to buying an air conditioning unit—were too busy running their own businesses, they often sent assistants on the laborious journey to Changsha to scout out the product and report back. Working against the Zhangs were time, distance, and a certain lack of purchasing authority.
“In China there are not very many airline flights to some of the smaller cities,” says Yue. So the brothers wanted an airplane to shrink the country and cut out the middlemen: Fly the bosses up, wow ’em with a sales pitch, fly ’em back. A pretty good idea, except that at the time, around 1996, only the Chinese military, government, and airlines were permitted to own aircraft and fly them in Chinese airspace.
Throngs of people are milling around the roughly 90 aircraft displayed at China Airshow 2000, which spreads across the airport ramp and through three enormous warehouses, in which aerospace and aviation manufacturers from around the world are hawking their goods. China is the world’s fastest growing aviation market, according to Elizabeth Keck, the U.S. Federal Aviation Administration’s senior representative in Beijing. In an article she published recently in The China Business Review, Keck quoted Randolph Baseler, vice president of marketing for Boeing Commercial Airplanes, predicting that over the next 20 years, China will be the largest commercial jet market outside the United States, requiring 1,780 aircraft valued at $137 billion. That’s the demand for airliners. The bizjet market will be much tougher to crack. But at China Airshow 2000 there’s a sense that something is awakening—not least because of the Zhangs’ jet sitting on display—and the bizjet makers too are poised to sell.
Near the center of the middle warehouse, three U.S. manufacturers of private aircraft—Gulfstream, Raytheon, and Boeing Business Jets—have glitzy pavilions close to one another. Of the three, only Raytheon has made a jet sale in China to date—three Hawker 800XPs, operated as a charter service by Hainan Airlines. Cessna is at the far end of the building and has sold nine jets in China so far. Besides the Zhangs, Cessna’s clients have been the Chinese government, which uses Citations for official travel, and the airlines, which offer them for charter.
The bizjet sales reps are talking to a steady stream of Chinese entrepreneurs and government officials and taking potential buyers outside for a little show-and-tell. Raytheon has a Hawker 800XP on display; Gulfstream has a GIV-SP. For the moment, Cessna is using the Zhangs’ Excel.
“So much of what we’re trying to do is basically just get people exposed to the product,” Roger D. Sperry, Gulfstream’s vice president of worldwide sales, said later. People are definitely interested, he said, “but we’ve known all along that you can’t rush this market.” After 12 years of making contacts and developing relationships in China, Sperry reports that Gulfstream is close to making sales here.
One reason it’s taken so long is that identifying potential clients is a struggle: Unlike Western businesses, Chinese companies don’t make public their revenues, expenditures, and activities in formats like quarterly reports that reveal who’s doing the kind of business that would benefit from a private jet and who’s got the money to afford one. Attending the airshows has certainly helped, but this is only the third that China has mounted. Gulfstream and other dealers have sometimes relied on items in the news for indications of likely clients.
Sales are also impeded by legal restrictions that make it difficult to buy and operate private aircraft in China. The country has no equivalent, for example, of U.S. Federal Aviation Regulation (FAR) 91, which provides basic safety standards and flight rules for individuals and corporations operating general aviation aircraft. The General Administration of Civil Aviation of China—the CAAC—requires all aircraft to be placed “under the supervision and management of an organization, such as an airline or a flight training school that has been authorized with air traffic rights,” according to an FAA report on the policy. For such organizations, regulations are already in place.