The birth of a "giant" in China's aero-engine manufacturing industry

OFweek Industrial Control Network News: at present, there are ten major military industrial groups in China, and those related to aviation and aerospace are mainly China Aerospace Science and Technology Corporation (hereinafter referred to as Aerospace Science and Technology), AVIC and AVIC. Aerospace science and technology mainly deals with aerospace systems and missile systems, while AVIC is mainly engaged in aerospace defense and information technology, both of which are called "aerospace departments", while AVIC is mainly engaged in military aviation and civil aviation, which is called "China Aviation Department".

The news of the formation of China Aeroengine Group Co., Ltd. (hereinafter referred to as China Aviation Development), which has been expected for a long time, has been officially implemented.

Wang Jingqing, deputy director of the Organization Department of the CPC Central Committee, announced the decision to serve as the main leader of AVIC, according to a message posted on the official website of the Aviation Industry Corporation of China (AVIC) on March 3. Cao Jianguo was appointed chairman and secretary of the party group of AVIC, and was relieved from the post of director, general manager and member of the party group of the China Aerospace Science and Industry Corporation (hereinafter referred to as AVIC), while Li Fangyong was appointed director, general manager and deputy secretary of the party group of AVIC. He was removed from the post of deputy general manager and party group member of AVIC.

On the evening of March 2, AVIC's three A-share listed companies, known as "engine three Musketeers", AVIC dynamic Control, AVIC Power and Chengfa Technology simultaneously issued a notice saying that the establishment of AVIC has entered a substantive stage. The newly established China Aviation Development will become the actual controller of the above three listed companies.

The establishment of China Aviation Development will become another major move in the reform of central enterprises after the merger of CNR and COSCO and the merger of China Shipping Group.

Cao Jianguo, from the Department of Astronautics, was born in 1963 and went to work in March 1988. He graduated from Beijing University of Aeronautics and Astronautics majoring in automatic Control, and graduated from the third Academy of the Ministry of Aeronautics and Astronautics with a master's degree in engineering and a researcher. He served as director of the third department of the third Academy of Aerospace Science and Industry, vice president, assistant to the general manager, president of the third academy and secretary of the party group; deputy general manager and member of the party group in February 2005; director, general manager and member of the party group in April 2013.

Li Fangyong, both born in 1963 and working in August 1985, graduated from Beijing University of Aeronautics and Astronautics majoring in aircraft manufacturing. He was deputy general manager, chairman, general manager and deputy secretary of the party committee of Shenyang aircraft Industry Co., Ltd., assistant general manager of AVIC I; deputy general manager of AVIC I in September 2007, and deputy general manager and party member of AVIC I in November 2008.

The news that China plans to build an aero-engine "giant" has already spread at the beginning of the year. Bloomberg reported on January 19 that the asset integration involved more than 40 units, including almost all aero-engine-related research units in China. The total assets of the newly formed China Aviation Development Corporation will reach 145 billion yuan. In addition to the existing total assets of 110 billion yuan, the Chinese government and a number of state-owned enterprises, including AVIC, will invest a total of about 35 billion yuan in the new group.

After the establishment of AVIC, all AVIC's business related to aircraft engines will be spun off, "it has nothing to do with us", a middle AVIC executive told the Interface News.

The Chinese government's determination to break up engine manufacturing into a new platform stems from dissatisfaction with the current state of aero-engine manufacturing in the country.

The aero-engine is known as the "pearl in the industrial crown". Due to the high technical threshold, high risk, high investment and long cycle, only a few countries in the world have exclusive R & D and production products. Compared with Britain, France, the United States, Russia and other developed countries, China's aero-engine independent research and development capability is relatively backward.

Haitong Securities Analysis report said that in the next 20 years, China's total demand for aero-engines and gas turbines will exceed 3 trillion yuan. But at present, almost all civil aircraft engines rely on imports, in the field of aero-engines, it is urgent to break the monopoly of engine production in Europe and the United States.

The development of domestic aero-engines has risen to the national strategic level. In early 2015, the aero-engine and gas turbine project was first included in the 2015 government work report. The report pointed out that it is necessary to implement major projects such as aero-engines and gas turbines, and intensify the scientific research of national defense and the construction of high-tech weapons and equipment. Subsequently, the "made in China 2025" plan also takes aero-engines as a key area of development.

Zhang Jinghua, an analyst at Bohai Securities, believes that compared with the experience of developed countries, the separation of aircraft manufacturing and aero-engine manufacturing is in line with international practice, and the merger will help China to further integrate aero-engine R & D and manufacturing resources in order to maximize efficiency and finally catch up with aero-engines in developed countries.

However, after the news, the capital markets did not show much enthusiasm. In early trading on March 3, the "engine three Musketeers" fell back quickly after a short surge and maintained a weak shock. By the midday close, AVIC Power was up 2.69%, AVIC Motor Control was up 0.92%, and Chengfa Technology was down 0.37%.

"the subject matter is too old, and the good news has long been digested." Lu Zhou, a military analyst at Ping an Securities Research Institute, told Interface News that AVIC Power, AVIC Mobile Control and Chengfa Technology had announced the reorganization and integration as early as October last year, and the establishment work would take a long time. "with so many assets involved, it is difficult to integrate, and it remains to be seen how the final synergy benefits will be." Lu Zhou said.