The Boeing Company's Development and Strategies in China
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國立中山大學大陸研究所 碩士論文 波音公司在中國的發展與策略 The Boeing Company’s Development and Strategies in China 研究生：陳儀芳撰 指導教授：張顯超 博士 中華民國 97 年 7 月 中文摘要 美國在航空製造業已有百年歷史，而這個行業一直以來為國家發展重點，並 一直為科技、利益及政治的角力點。比起其他國家，美國的航空製造業發達，並 為帶領全球領先科技的產業。然而，面對一波又一波的全球化影響以及高油價時 代，許航空製造公司在無法突破重要科技之下，面臨裁員及併購。雖然在美國本 土縮減開銷，海外的拓展卻從末收手過。 亞洲經濟的快速成長，讓在歐美開發已久的跨國公司找到新據點。亞洲也成 為其他國家在此爭鋒相對的地點。在亞洲，特別是中國，有著廉價的人工及豐富 的自然資源，許多跨國公司的工廠紛紛到中國設廠。美國波音公司也不例外，在 中國增加了廠房設置據點，並與中國政府有科技合作。 中國的政治背景令西方國家擔憂，但卻又無法放著這麼大的市場不開發，因此， 中國的籌碼日益漸升。美中的貿易差額讓美國不得不像中國施壓，而中國也以大 手筆的採購來減緩壓力。然而，中國國力日益增強，使得各國不得不重視對中國 科技產品的輸出限制。 在科技、利益及政治的角力下，美國波音公司所扮演的角色及其競爭對手在 全球及中國的策略，牽涉到多邊關係。以中國特殊的政治背景遇到民主的西方國 家，在航空製造業中的火花牽動著許多國家的經濟及發展。 關鍵字：波音公司、跨國公司、航空製造業、空中巴士、全球化 Abstract The aviation industry has more than a hundred years in history in the United States. And the industry has always been one of the important projects to conduct of the country. The industry involves not only technology, capitals but also politics. In order to maintain the influential power to the world, countries, especially the United States and Western Europe invest huge amount in this industry. However, under the globalization and high oil prices era, the industry encounters some difficulties to change. Outsourcing has become the solution for those manufacturers. The high growth of economic in Asia becomes another battle field for western countries to fight, especially in China. Chinese power is getting stronger; however, western countries concern about the special political backgrounds in China. Nevertheless, conducting business and finding cheap labor resource have been multinational companies’ priority these days. The influential power of multinational companies and those parent countries become the major decision maker in the game. The Boeing Company has all the characteristics of these controversial issues. Chinese government, the Boeing Company, the rival Airbus and the U.S. government in the game would affect the industry. Keywords: the Boeing Company, multinational company, aviation industry, Airbus, globalization Contents Acknowledgement---------------------------------------------------------------------------i List of Figures and Tables--------------------------------------------------------------iii Chapter I Introduction --------------------------------------------------------------------------------------1 Chapter II Aviation Industry-A Competitor to Boeing 2-1 The Rival-Airbus ---------------------------------------------------------------------------9 2-2 Merge and Acquisition-McDonnell Douglas ------------------------------------------18 2-3 Chinese Government Procurement on Civil Aircraft and the Laws ----------------27 Chapter III Boeing’s Conduct between China and the U.S. 3-1 Boeings Overview and in Military ------------------------------------------------------37 3-2 U.S.-China Trade Deficit -----------------------------------------------------------------46 3-3 Restrictions of Exports (USA) ----------------------------------------------------------53 Chapter IV Boeing in China 4-1 Boeing’s Development in China --------------------------------------------------------59 4-2 Service Center, Training and Outsourcing ---------------------------------------------67 4-3 China’s Goal -------------------------------------------------------------------------------72 Chapter V Conclusion --------------------------------------------------------------------------------------77 Bibliography -----------------------------------------------------------------------------------81 Appendix Appendix I Trade in Civil Aircraft ----------------------------------------------------------89 Appendix II Arm Export Control Act -----------------------------------------------------100 Acknowledgement On the roads in life journey, two years of study in master degree is not long. However, the people I met and the things I have learned definitely may change my life. Having full supports from my loving family, I was able to fulfill my dream. Having all the care from my classmates, I was able to hang on the study. With professors’ guidance, I am able to go on from here. I’d like to give my greatest appreciation to my family. Being Mom and Dad’s girl is the greatest thing in the world. Sister’s encouragement always makes me energetic to realize my plans. With all the love and proud they have for me, I know I would not let them down. I’d like to thank Morris, who accompanied me at those nights and weekends in order to help me focus on my thesis. Also, I’d like to thank Samantha Wu, who was the first one brining me here and being my consultant all the time. I’d like to thank Ms. Chien-yi Wu, who is responsible and always gives her the best to help all the students at the institute. I’d like to thank Amy, Jasmine and Stephanie for listening to me and giving me advice whenever I was in need. i The last but not the least, I also would like to show my greatest appreciation to my advisor, Dr. Chang. He has been the guardian for his students and always gives his best to the students on study. Without his guidance, this thesis was impossible. Finished the study here at NSYSU, but starting in life at the same time. I do feel great and fresh again! ii List of Figures and Tables Figures Figure 1-1 Framework----------------------------------------------------------------------------------------8 Figure 2-1 The McDonnell Douglas Market Share ----------------------------------------25 Tables Table 2-1 Historical Orders and Deliveries of Airbus and Boeing (1974-2007)-------12 Table 2-2 Operating Fleet Statistics----------------------------------------------------------33 Table 2-3 Controlling Shareholders of 3 Major State-owned Airlines ------------------34 Table 2-4 Subsidiary Airlines of Major State-owned Aviation Groups------------------34 Table 3-1 U.S. Trade in Goods with China--------------------------------------------------47 iii Chapter 1 Introduction Motivation Before the U.S.-China Strategic Economy Dialogue began in 2006, the Chinese vice Prime Minister, Wu Yi and the delegation were sent to the U.S. as “Buying Mission.” “The biggest action is on trade, because China expected to order at least 80 Boeing aircraft.” 1Why the Chinese government can decide on the aviation procurement? In June 2005, Boeing received lots of orders in the 46th Paris International Air Show. What are the trends of the global aviation market? Why some experts expect the demands would come from Asia, especially from China? What are the reasons of the increasing demands from China in this high oil price era? The Boeing Company is the largest aircraft supplier in China. As of July 2005, Chinese airlines operated 826 jet aircraft in China (excluding Hong Kong and Macao), of which 523 are from Boeing and 196 from Airbus.2 John W. Bruns, vice president of Boeing Commercial Airplanes’ China operations said that the Boeing Company did not plan to follow the rival Airbus in setting up an airplane assembly plant in China, but would seek new investment opportunities in the country.3 Bruns also said that adding more capacity for final assembly did not bring any benefit to their customers, or to either China or Boeing. Furthermore, he emphasized that Boeing concerned more about the quality of products and the good connection between customers. What are the strategies that Boeing conducts in China? In the world aviation competition, Boeing has a competitor, Airbus from Europe. The competitor is tough because it received lots of orders in Paris International Air Show in 2005 too. During the state visit to China in November 2007, the French President Nicolas Sarkozy signed a deal which “Airbus received orders from Chinese airlines for 160 passenger planes worth about 14.8 billion at list prices.”4 Both cases 1 Joseph Kahn, “Chinese on buying trip in U.S. seek to pave way for leader,” New York Times, April, 6, 2006, http://www.nytimes.com/2006/04/06/world/06china.html?_r=1&oref=slogin (Retrieved November 26, 2007) 2 “Boeing and China Pamphlet,” Boeing China, http://www.boeingchina.com/en/magazine/pam_boeingandchina/2002_5/pamphlet1.shtml (Retrieved November 26, 2007) 3 “Boeing to invest more in China, but doesn’t plan assembly line,” MarketWatch, September 19, 2007, http://www.marketwatch.com/news/story/boeing-invest-more-china-doesnt/story.aspx?guid=%7B2C58 6D30-BE12-45DB-AA9B-A51A20097601%7D (Retrieved November 27, 2007) 4 Nicola Clark, “Airbus part of $30 billion in contracts with China,” New York Times, November 27, 2007, http://www.nytimes.com/2007/11/27/business/worldbusiness/27trade.html?ex=1353819600&en=4924a 232d23a3ed8&ei=5088&partner=rssnyt&emc=rss (Retrieved November 27, 2007) 1 of Boeing and Airbus represent that the aircraft buying is not a simple business between a company and a customer. Does it show the fact that the aircrafts buying involves with governments? Governments used to gain resources or markets in other countries by weapons; however, transnational companies (TNCs) have changed this pattern ever since. Nowadays, more non-governmental organizations, groups and multinational companies have influences on global issues. What are their roles, especially the TNCs, in the international community? What is Boeing, as a TNCs’ role in the international community? Research Objectives: 1. What is Boeing’s role in the global aviation industry? 2. What is Boeing’s role among Chinese government and the U.S? 3. What are the challenges for Boeing in China in the next decade? 4. What are Boeing’s future development and strategies in China? And how China might react? Research Scope and Limitation In this study,