Airbus Admits China Quid Pro Quo
In an interview with the Financial Times (London), Laurence Barron, president of the Chinese division of the Airbus consortium (Toulouse, France), recently stated that giving China a piece of the manufacturing action is an explicit condition of Airbus sales to that country.
In an interview with the Financial Times (London), Laurence Barron, president of the Chinese division of the Airbus consortium (Toulouse, France), recently stated that giving China a piece of the manufacturing action is an explicit condition of Airbus sales to that country.
Quote: “China cannot just be a sales operation. You cannot expect the Chinese to buy hundreds of planes and there be no spin-off for China.”
Oh, really? I thought the idea was supposed to be that in a free market China buys hundreds of planes because it needs them. It decides which airplanes to buy based on things like cost and performance. China then benefits by having the use of quality airplanes at a reasonable price. By what twisted logic do spins-offs enter this equation?
Of course, it’s long been patently obvious that Airbus was created specifically to be in the giveaway business. The organization has yet to record any kind of real profit and over the years has been the beneficiary of billions in development subsidies from the governments of France, Germany, Britain and Spain. The European market is almost entirely closed to non-Airbus commercial jets-i.e. Boeing Co. (Chicago)-and the consortium has cut all kinds of sweetheart deals in an effort to penetrate markets outside of Europe.
Still, it comes as a bit of a shock to hear Barron candidly admit that giving away business is an implicit part of doing business in China. In that same interview Barron claims that sucking up to China is a “win-win situation born out of no bullying tactics or ultimatums.” Oh, really? If you believe that, then I have a couple of bridges and some choice tracts of swampland I’d be happy to sell you.
Not there’s anything wrong with the Chinese building airplanes. On the contrary, the sooner the Chinese climb up the technology ladder the better. Globalization works best when as many players as possible compete on equal terms.
Nonetheless, giving away the farm for the sake of easy sales and short-term political gain simply doesn’t make sense. Imagine if Toyota and Honda were required to provide the Big Three regular reports on their manufacturing processes as a condition of building or even selling cars in the United States. Absurd? Absolutely. And yet that’s essentially what is happening with Airbus in its ongoing effort to build an A320 final aircraft assembly plant in China. (You can bet that plant is going to be swarming with individuals reporting to outsiders on how Airbus gets the job done.)
Again, there’s nothing wrong with the Chinese building their own aircraft. Nor is there anything wrong with outsourcing component production if it makes sense financially. But, can we please allow the Chinese to figure out how to build airplanes on their own-kind of like Boeing and Airbus had to? The Chinese are smart people. I’m sure they’re up to the task. The idea that airplane manufacturers need to give away the very trade secrets that make them competitive in order to sell airplanes is the height of foolishness.
In an interview with the Financial Times (London), Laurence Barron, president of the Chinese division of the Airbus consortium (Toulouse, France), recently stated that giving China a piece of the manufacturing action is an explicit condition of Airbus sales to that country.
Quote: “China cannot just be a sales operation. You cannot expect the Chinese to buy hundreds of planes and there be no spin-off for China.”
Oh, really? I thought the idea was supposed to be that in a free market China buys hundreds of planes because it needs them. It decides which airplanes to buy based on things like cost and performance. China then benefits by having the use of quality airplanes at a reasonable price. By what twisted logic do spins-offs enter this equation?
Of course, it’s long been patently obvious that Airbus was created specifically to be in the giveaway business. The organization has yet to record any kind of real profit and over the years has been the beneficiary of billions in development subsidies from the governments of France, Germany, Britain and Spain. The European market is almost entirely closed to non-Airbus commercial jets-i.e. Boeing Co. (Chicago)-and the consortium has cut all kinds of sweetheart deals in an effort to penetrate markets outside of Europe.
Still, it comes as a bit of a shock to hear Barron candidly admit that giving away business is an implicit part of doing business in China. In that same interview Barron claims that sucking up to China is a “win-win situation born out of no bullying tactics or ultimatums.” Oh, really? If you believe that, then I have a couple of bridges and some choice tracts of swampland I’d be happy to sell you.
Not there’s anything wrong with the Chinese building airplanes. On the contrary, the sooner the Chinese climb up the technology ladder the better. Globalization works best when as many players as possible compete on equal terms.
Nonetheless, giving away the farm for the sake of easy sales and short-term political gain simply doesn’t make sense. Imagine if Toyota and Honda were required to provide the Big Three regular reports on their manufacturing processes as a condition of building or even selling cars in the United States. Absurd? Absolutely. And yet that’s essentially what is happening with Airbus in its ongoing effort to build an A320 final aircraft assembly plant in China. (You can bet that plant is going to be swarming with individuals reporting to outsiders on how Airbus gets the job done.)
Again, there’s nothing wrong with the Chinese building their own aircraft. Nor is there anything wrong with outsourcing component production if it makes sense financially. But, can we please allow the Chinese to figure out how to build airplanes on their own-kind of like Boeing and Airbus had to? The Chinese are smart people. I’m sure they’re up to the task. The idea that airplane manufacturers need to give away the very trade secrets that make them competitive in order to sell airplanes is the height of foolishness.