Avic Defense Adds Maintenance

BEIJING--China's newly formed military aircraft and missile company, Avic Defense, is emphasizing maintenance as part of a business model that it has expanded far beyond just making original equipment.General Manager Wang Yawei says the company will forge a complete value chain covering the whole life cycle of its products, from weapons system predevelopment to maintenance and support guarantees for equipment that it has sold.

Three maintenance businesses have been assigned to Avic Defense: Jilin Aircraft Maintenance Co. Ltd., Changsha No. 5712 Aircraft Industry Co. Ltd. and Tianshui Aircraft Industry Co. Ltd., each named after the city where it is based.

Shanghai Aero-engine Production Co., another unit of Avic Defense, also will be linked to the maintenance business.

Their operations all presumably are geared to servicing Chinese military airframes and engines and will supply the resources for supporting the combat aircraft and missiles that Avic Defense aims to sell.

An interesting question is whether the company will try to move into civilian maintenance.

There is a reason to think it will at least consider doing so: it says it is keen for civilian revenue. The company has annual sales of 30 billion yuan, but is aiming for 160 billion in 2017. With military markets likely to be fairly static, Wang says he needs non-military work to help meet his target.