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China is accelerating reform of its military aircraft sector by bringing forward the establishment of a company that will be its national defense champion.

 

Government and industry leaders have dropped plans to initially restrict the new business — a maker of fighters, trainers, drones and missiles — to the status of a division of national aeronautics conglomerate Avic.

 

Instead, the organization has now been set up as a company under the name Avic Defence.

 

The change is more important than it may seem, because it implies greater autonomy from the head office and a faster rate of reform.

 

Avic Defence has almost 60,000 employees. Capital amounts to almost 50 billion yuan and sales are 30 billion a year, only a small fraction of the target of 160 billion for 2017 that has been set for General Manager Wang Yawei.

 

The company chairman is Li Yuhai, deputy general manager of Avic, who warns that it will not be easy for Avic Defence to meet the requirements placed on it.

 

“Challenges for Avic Defence are raised by demands for network-centric and integrated air-surface warfare, and by the development of stealth, high-mobility and autonomous technologies,” he says.

 

The three previously unidentified maintenance businesses that Avic Defence is absorbing have also been named. They are Jilin Aircraft Maintenance Co. Ltd., Changsha No. 5712 Aircraft Industry Co. Ltd. and Tianshui Aircraft Industry Co. Ltd., each named after the cities in which they are based.

 

Unlike the subsidiary units of Avic Aircraft, which are to be dissolved, the companies under Avic Defence are supposed to remain as separate entities — probably because the Chinese armed forces are used to dealing directly with the factories, such as Shenyang Aircraft and Chengdu Aircraft, and want to keep doing so.

 

But in view of the unexpected acceleration of Avic Defence’s corporate status, it would not be surprising to see top management eventually win a battle for elimination of subsidiary structure, which would likely stand in the way of full rationalization of the business.

 

Avic Defence has extensive ambitions for nonmilitary and nonaeronautic business, which Wang says he needs to meet his 2017 sales target.

 

The unveiling ceremony was attended by the deputy commanders of the Chinese air force and navy. No army participation was mentioned.

 

www.aviationweek.com

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