China Airlines

China Airlines Deal Worth $10B

Airbus inked the deal reportedly worth $10 billion to the French airline industry with Chinese Prime Minister Wen Jiabao on December 6, 2005. The new aircraft will be distributed to Air China, China Eastern Airlines, China Southern Airlines, Sichuan Airlines, Shenzhen Airlines and Haiman Airlines as they are completed. This order follows last month’s 70-aircraft order awarded to Boeing in the U.S. worth about $4 billion.

Expansion To Benefit Business Travelers

The 220 aircraft will significantly increase China’s position in the worldwide airline industry and is good news for business travelers. At one time air travel between the U.S. and China was restricted, but those restrictions appear to be fading. Much of this is due to the huge economic impact China continues to have on the world market. Opening additional air routes between the two countries can be seen as a positive move that China welcomes additional trade and may be setting the stage for increased business trade agreements. The opportunities for small business owners will increase as the trade doors swing wider.

Benefit To U.S. Small Business

While China may be more interested in exporting products rather than imports, it will need a vast amount of raw materials, technology, products and services to maintain its fast pace of economic growth. Business partners will be needed to assist in the development of new industry and new business based on Western models. While Internet restrictions are still in place, the Internet has become a powerful tool that links the two countries at the economic hip, despite differing views on Western influence. China is still a dictatorship that appears to distrust the U.S., yet agreements between the two countries have been solidified of late, after President Bush went for a visit. While Taiwan is still a question in the minds of many, the sheer volume of money to be made will continue to hold the trade doors open wide.

Some Bad News

The China airlines agreement does not bode well in all aspects. China is one of the fastest-growing markets for air travel and will continue to expand. The agreement between France and China signifies a growing French presence in China. The French are one of the more aggressive trade partners that the Chinese have. While the huge airline order is good news for the struggling French economy, it’s not good news for the airlines industry in the U.S. Boeing has won about 60% of all airline manufacturing orders from the Chinese to date. But a growing French presence may not be good for the U.S., which still continues to experience an on-again off-again relationship with the French government, especially considering the U.S. involvement in Iraq and the fallout from the Oil For Food program scandal.

And Some Good News

While Boeing may have lost market share in China, the volume of business opportunities is huge for American entrepreneurs. With the strength of the Internet and China air travel costs decreasing because of the increasing numbers of available aircraft, the road to China, while not yet paved in gold, will certainly have a silver lining.