Boeing in China: Creating Their Own Competitor?

BoeingA corporate strategy article by Thunderbird students  Amanda Bhatia, David Freeman, David Wilson, Geoffrey Christanday, Jennifer Mousseau and Matthew Larson

As China’s economy develops, so do the prospective opportunities for foreign firms eager to sell their goods and services to these new Chinese customers.  However, many multinational corporations have already tried and failed – and yet – what makes these MNC’s keep coming back?

On March 6, 2012, Boeing and COMAC (Commercial Aircraft Corp. of China) announced[i] to the world that they will be joining forces for the first time ever, in creating a “collaboration agreement to partner in areas that will enable commercial aviation industry growth in China and potentially around the world”.  This partnership sounds well intentioned, but could make Boeing, and even Airbus (their current main competitor) nervous as to their future prospects in China and the future global market.  Will Boeing’s partnership with COMAC provide Boeing with an opportunity to meet strong aircraft demand forecasts in China in coming years, or instead mean the creation of their own competitor?

Analyzing the Boeing/COMAC Partnership in China

Boeing/COMACA corporate strategy article by Thunderbird students Jack Coulter, Rob Pangborn, Matt Richards, Todd Young and Scott Yuska

China’s aviation market is booming.  Aircraft manufacturers predict China will need 5,000 new airplanes by 2030, catapulting China into the world’s second largest market for commercial aircraft.  With the demand for aircrafts growing in China, The Boeing Company has started keeping the Chinese market in mind when designing new planes.  Features, such as seating arrangement, size, and fuel efficiency, are some of the items the Seattle-based aircraft company is evaluating.

The world’s largest aerospace company, Boeing is the largest provider of commercial jets to the airline industry.  It makes aircraft that seat from 50 to more than 500 passengers.  Models include the 737, 777, and the 787 Dreamliner.  Currently, Boeing holds almost 60 percent of the Chinese market, while Airbus, a European-based aircraft manufacturer, holds about 40 percent the Chinese market.

The ABC’s of Aviation: Airbus, Boeing, China

COMACA corporate strategy article by Thunderbird students Brett Davis, Don Dennis, Tras Obsuwan, Kyungwhan Park and Ryan Wegner

How comfortable would you feel if you boarded an aircraft that was entirely developed, manufactured, and assembled in China by a wholly-owned Chinese company?  That reality may occur in the near future. With global industry revenue projected to increase to $4 trillion by 2029[i], of which approximately 12% [ii] is expected to occur in the Chinese market, new competitors are quickly strengthening their positions in the historically duopolistic airline industry. Amongst these players is Commercial Aircraft Corporation of China (COMAC), a Chinese state-owned aircraft manufacturing company, which is focused on fiercely competing with industry leaders Boeing and Airbus. COMAC’s aspirations are to obtain market share and at the behest of the Chinese government reduce the country’s reliance on foreign airline manufacturers.

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