Does China still rock?
Published 9:00 pm Monday, March 19, 2007
When Chinese President Hu Jintao visited the Boeing Co.’s Everett factory last April, he predicted a bright future for the relationship between his country and the plane maker.
Since the early 1970s, Chinese airlines have bought about 700 Boeing jets. And the country likely will need at least 2,000 more in the next 20 years. That statistic alone explains the enthusiasm shown during Hu’s visit by Alan Mulally, the then-CEO of Commercial Airplanes, when he proclaimed “China rocks!” (To read more about Hu’s Everett http://www.heraldnet.com/stories/06/04/20/100loc_a1boeing001.cfm and http://www.heraldnet.com/stories/06/04/19/100bus_corliss001.cfm.)
With the news that China intends to launch its own large commercial aircraft program (http://www.heraldnet.com/stories/07/03/20/100bus_e1china001.cfm), I wonder whether anyone at Boeing still thinks China rocks.
In a conference call with reporters and analysts Monday, Mulally’s successor, Scott Carson, welcomed China to the commercial airplane industry, acknowledging the country’s “appetite” for and interest in the industry.
“Competition tends to make the industry better,” Carson said.
Local analyst Scott Hamilton, of Leeham Co. (www.leeham.net), found Carson’s comments a bit hard to digest.
The reason? On Tuesday, Boeing, via the United States, lodged unfair trade complaints against the Airbus (through the European Union) at the World Trade Organization. Among other things, Boeing alleges that European countries have made illegal contributions to Airbus — including “launch aid” to get the company going in 1970. These subsidies eliminate the risk the European plane maker would take if not for government aid, creating an unfair playing field, Boeing says. (For more about the WTO dispute, see Reuters’ fact box http://www.reuters.com/article/companyNewsAndPR/idUSL208331020070320).
China reportedly will provide $10 billion as “seed money” for its new jet program, which could produce its first 200-seat airplane by 2020 (http://www.theaustralian.news.com.au/story/0,20867,21416679-36375,00.html).
The WTO dispute is a complicated one — as is China’s relationship with Boeing, considering the country is still a good customer, Hamilton notes. But Carson’s comments about China don’t seem to add up with its complaints against Airbus.
“The inconsistency is glaring to say the least,” Hamilton wrote, in his weekly report.
Post your thoughts: Is Boeing’s take on China inconsistent? Does China still rock?
