Airbus and Boeing are Signing Economic Suicide Pacts with China
Manufacturing airplanes in China will destroy the West's civilian airline industry
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March 24, 2019 - by Marshall Auerback for salon.com
The bottom line is that both Western governments and Western corporations have persistently underestimated the power of China's economic development model, and the corresponding economic threat that it poses to the West's own affluence.
Airbus is considering whether or not to shift the assembly process of its latest generation of A330 planes to China as part of a bid to increase its market share in the world's fastest-growing civil aviation market.
The European multinational is following a trend started by Boeing, which recently opened a new completion plant in China.
On the face of it, the decision by the two companies (which dominate the civilian aviation market) makes sense: build where your biggest customer lives, especially as China does not yet have a fully homegrown civil aviation industry ready to compete globally.
The benefits are many, including the goodwill and esteem of the country that would be buying these planes. In the long term, however, that might prove to be a costly miscalculation.
Based on its recent history (here and here), it won't take long for China to catch up and largely displace both companies domestically in Beijing's home aviation market, as well as seizing a large chunk of the corporate duopoly's global market share.
Airbus and Boeing could therefore be making short-term decisions with negative long-term consequences for their future profitability.
Given China's formidable economic advancement, none of this should come as a surprise to either Airbus or Boeing. Nor should it shock Western governments. The problem is that everybody has historically been guided by the naïve assumption...