Advanced Engineering, Manufacturing and Transport
Manufacturing and transport are broad sectors covering a wide range of markets, industries and technologies. The highest-profile sub-sectors, which embrace both advanced manufacturing and transport, are: aerospace, marine and rail.
Below these are listed in approximate order of foreign participation in the Chinese market. These areas, as well as the advanced manufacturing field in general, are closely related to the allied sectors of infrastructure (e.g. roads, airports) and energy (e.g. carbon footprint, new-energy vehicles), so they should not be considered in isolation.
China has ambitious programmes for developing its aerospace market, from initiatives in space to the development of regional jets and turbo-prop aircraft, to the growing development and production of light aircraft and helicopters.
The development and manufacture of large aircraft is the domain of state-invested enterprises, coming under COMAC (overseeing the development of regional jet aircraft) and AVIC (aircraft production and the development of smaller aircraft). Spearheading regional jet development is the ARJ21, a 90-seater airplane which made its flying debut in 2014 at the Zhuhai Airshow. It is expected to be certified airworthy by the Chinese aviation authorities by the end of 2015. The larger C919 is currently undergoing a similarly delayed programme for Chinese approval, and initial plans for both jets to have FAA approval are on indefinite programmes. Superficially, supplier selection for both jet programmes is complete, but there are clearly areas where COMAC is facing challenges and external technology would be beneficial.
The greatest development focus is currently on the 70-seat turboprop MA700, a comparatively less ambitious programme led by AVIC Xian. It is viewed as being relatively open to (new) external involvement and there are periodic initiatives to seek cooperation in areas such as the design of composites.
There is also a wide variety of programmes for smaller aircraft, ranging from AVIC initiatives to joint ventures and private projects.
A very positive trend is the deregulation of the low-level airspace and operator approval procedures for general aviation flights. Currently a business jet flight needs advance notification of one day. According to the national ATC Committee, airspace below 1,000 metres will be made open by 2016, and that below 3000 metres, by 2020.
The Chinese aircraft industry is clustered, with traditional centres in Xian, Shenyang and Chengdu and newer locations in Tianjin (around the Airbus assembly plant) and Shanghai. The industry requires persistence, and often a demonstration of local commitment through an in-market presence.
There are several aircraft exhibitions/shows in China, but the major event is the biannual Zhuhai Airshow, where COMAC and AVIC engineers look for ideas.
China has over 1,600 shipyards in coastal locations such as Dalian, Guangzhou/South China and Qingdao, and is capable of building ships of 50,000 DWT as far inland as Wuhan. The industry is a mixture of state and private ownership, and much of the output is focused on value. This may not seem the most obvious target for the UK marine industry, but opportunities for sales or cooperation exist in areas such as:
- Special-purpose vessels
- Luxury/recreational vessels
Relevant exhibitions are: The China International Boat Show (April, Shanghai) and Shiptec China (October, Dalian).
Chinese railways and investment are dominated by the state-owned enterprises, China South Locomotive & Rolling Stock Corporation and China North Locomotive and Rolling Stock Industry (Group) Corporation being the major players. They are in the process of merging to prepare for international expansion. The Chinese railway system, both in manufacture and operation, is particularly vertically integrated, which makes it challenging for non-Chinese companies to enter the market.
Urban mass transit, or the "metro", is a rapidly expanding market in China. Between 2009 and 2015, Chinese plans list 87 mass-transit rail lines, totalling 2,495km, in 25 cities. This sector is comparatively open to non-Chinese involvement; for example, Bombardier's JV in Changchun has built rolling stock for Guangzhou, Shanghai and Tianjin.
The above sub-sectors often take the limelight, but advanced manufacturing covers many industries. It can be applying the latest technologies such as nano-coatings to improve efficiency, or improving quality and cost-effectiveness in traditional industries. The drivers may be external, to enable engagement on equal terms in European and North American markets, or internal, with an increasingly demanding UK market. Opportunities exist for all kinds of UK companies, and there are some generic needs, but the detail varies with the market requirements in each sector.
In China, lean techniques are well understood in sophisticated east-coast manufacturing centres, but less so in developing inland locations. In terms of technology, opportunities may be highly industry-specific or more generic - for instance, robotic assembly may be easier to sell to automotive manufacturers seeking to achieve international-level standards than to those manufacturing for unsophisticated local markets.
There is a growing trend for machine tooling/equipment manufacturing, which involves the increasing use and integration of computer control, data-collection and analysis with connection via the internet. In China this is known as "being smart", and it represents a significant shift from the traditional focus on volume to more sophisticated operations.
China is not immune to cost, quality and efficiency pressures in manufacturing. This, together with the move towards sophistication, drives the need for more advanced techniques and technologies. Sometimes these have to be imported, or obtained by partnership, investment or acquisition - all of which represent areas of opportunity for UK companies.