We have learned a few things from our experiences of looking for and negotiating partnerships of various kinds between Chinese and foreign aviation technology enterprises.
Here are four things the Chinese side is typically looking for:
1. Something they can make themselves
Airports and aviation-based industrial parks are going up all over China, most of them with aspirations for significant aviation manufacturing to be part of the mix of industries they host. Ultimately, the Chinese side will be looking to have some or all of production moved to China, along with the training and set up assistance that will be required.
2. Minimum unit sales practically guaranteed
Typically, a Chinese aviation enterprise is a relatively new startup, perhaps the subsidiary of a larger company seeking to diversify. There is a lack of confidence in their own ability to evaluate sales potential and to market an aviation product themselves. Of course, large Chinese companies can and have bought into iconic brands that are already successful (think Continental, Cirrus and so on). However, if the foreign partner is a smaller company or lesser known brand, the Chinese side may seek to hedge part of the deal on the foreign partner’s commitment to winning a minimum number of sales.
3. Technology and skills transfer
Sure, any enterprise can have its eye on profiting from intellectual property and designs that someone else sweated over. This plays into the stereotype of the Chinese with a penchant for knocking off other peoples’ designs.
But the Chinese companies with long-term vision realize that, in the long run, it is not much use gaining a piece of technology when they lack the basic skills and experience required to actually understand the design, much less create it the first place. As the executive of one Chinese company said to his foreign counterpart: “Your product design and drawings are not so important to us as what is inside your head.” In other words, he recognized that it was essential that his business acquire the accumulated skills and know-how that are bound up in the people who were capable of designing, building and certifying the product.
4. Plans for product development and new products
Sharp Chinese enterprises are not satisfied with “one hit wonders.” They like to partner with enterprises that have a plan to innovate and develop their product line.
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