Engine giant MTU Shanghai set up representative office to speed up China's layout

As China's "big-aircraft" industry chain has gradually taken shape, the international giants have begun to accelerate the layout of the Chinese market.

On the afternoon of February 8, MTU Aero Engines ("MTU"), the world's leading German engine manufacturer, announced that it has officially established a representative office in Shanghai.

On the same day, Klaus Müller, Senior Vice President of Planning and Strategy at MTU Group, said in an interview: “China’s aviation industry will thrive and we hope to play an important role in the future development.”

A month ago, the company had just signed a memorandum of understanding with China Aviation Industry Commercial Aircraft Co., Ltd., the responsible body and general contractor of large passenger aircraft engine projects in China (hereinafter referred to as “AVIC Commercial”). China's independent intellectual property rights of domestic engines.

Klaus Müller said that the details of the progress of the two parties can not be disclosed, but he told reporters that after the signing of the memorandum, the teams of the two sides will have a weekly conference call to communicate and meet more frequently.

“We look forward to the establishment of a concrete cooperation relationship by the end of 2010. The first step is to finalize the specific content of the contract and establish a cooperation framework that meets the needs of both us and the AVIC Corporation; and the next step The work is to discuss and negotiate the establishment of a joint venture company. We do not have a timetable for this, and we need to look at the situation in the negotiations. So far, our two parties have had very good relations with each other. I am sure this will be negotiated and established in the future. The joint venture will play a significant role in the process," he said.

As the engine of the "core" component of domestic large aircraft, China's cooperation with any international partner has attracted much attention. On December 21, 2009, under the watchful eyes of the Chinese and French prime ministers, China National Aviation Corporation issued a memorandum of understanding with CFM International, which plans to assemble and manufacture LEAP-X1C aircraft engines in China.

According to the reporter’s understanding, according to the conventions of the international aviation market, airlines can often specify engine brands while placing orders with aircraft manufacturers. Therefore, the LEAP-X1C "movement" selected by domestically-made large aircrafts is only one of them. The domestically-made Chinese engines that MTU will participate in the development will also be important market competitors.

Cooperation between the two parties is an opportunity for China to base itself on independent innovation and the use of global resources. How to finalize the details of cooperation with AVIC, including the shareholding ratio of future joint venture companies, will have a direct impact on MTU's future market performance in China.

On the 8th, Liu Leqi, chief representative of MTU China, also told reporters: “The most important task after the establishment of the representative office is to establish a joint venture with the Chinese company step by step.”

The MTU's new affiliate, who previously worked for GE, another well-known engine brand, served as regional sales manager. “She has rich experience in this industry, knows the engine, and understands how to deal with people in this industry. This is one of our core strengths.” Klaus Muller told this reporter.

Talking about MTU's specific market goals in China, he cautiously stated: “We are not considering earnings targets for the time being. We just want to be an important supplier of Chinese engines. In the 1920s, there was a large Chinese aircraft that could have MTU engines involved. Can fly to the sky."

"China's aviation industry will grow rapidly in the next 10 years. We believe that no one can now estimate how many aircraft and engines China will need in the future," he said.