Though investors are
interested in China's general aviation industry, many observers feel
that capital has not been used properly for the development of the
sector, according to the Shanghai-based National Business Daily.
Economies
of scale have not really been achieved in any of the general aviation
industrial parks in China and companies in the sector have been
surviving with the help of government subsidies, said an industry
researcher.
According to the Daily, market observers are
concerned that the construction of industrial parks has grown rapidly
before general aviation firms have had a chance to become profitable,
Figures
from the Aircraft Owners and Pilots Association of China (AOPA) show
the country had 116 cities at county level and above that are
constructing or are planning to build industrial parks for use by the
general aviation industry. In the 56 disclosed projects, investment in
each park stood at an average of 11.23 billion yuan (US$1.84 billion).
Several
cities in Sichuan province in southwestern China plan to build such
industrial parks, as does the neighboring municipality of Chongqing. In
one project there, construction began in August 2012 on a site covering
790 acres and involving investment of 600 million yuan (US$98 million).
Baotou
in Inner Mongolia and Kunming in Yunnan both have similar plans, with
Baotou constructing a more than 2,000-acre aviation production base.
However,
a market observer notes that the domestic production capacity for
general aviation industrial parks in China are already enough to meet
global demand for a couple of years at just over 1,000 small-size
aircraft a year. A single industrial park in China can turn out 500
small aircraft a year. They warned investors to watch out for these
possible traps before investing their money.
As of 2013, China
had 178 general aviation operators and an additional 110 were in the
course of being established. The majority of them have made losses as
their business model has been too simple.
A securities firm
stated that the general aviation sector in China mainly covers
agricultural use, while the complete activities for the sector could run
to 34 categories.
Source: http://www.wantchinatimes.com
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