Strategy (and Policy Alignment) Pays Off

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State visits from the France and the US often result in big trade deals – especially for planes…and especially when a company makes a good strategic play in relation to support for Chinese policy. In the latest case the big contract is for Airbus (the obvious loser is Boeing ), and the policy is China’s aim to make passenger jets by 2020.

The good news for France (ahead of the EU-China Summit) is reported in the Economic Times reports:

“Airbus said it signed contracts Monday to sell 160 passenger jets worth around US$14.8 billion (euro10 billion) to China in a deal that stands to push the Eureopean plane maker past archrival Boeing in total commercial aircraft orders this year.

Planes ordered include 110 of the company’s A320 jets and 50 of the slightly larger A330 planes, Airbus officials said in Beijing, where they were accompanying French President Nicolas Sarkozy on his first state visit to the Asian trading giant.

Airbus and Chinese partners this summer signed an agreement to produce A320s in China in anticipation of large Chinese orders for the popular single aisle jet that seats 150 or more passengers. Size-wise, the plane is well suited for Chinese domestic routes expected to show strong growth in the years ahead as the economy continues to expand. “

…Decisions on aircraft orders in China are made by cabinet-level officials who typically place large orders timed for maximum political effect.

In a similar move, China last year bought 150 Airbus jets worth over US$9 billion during a visit by Premier Wen Jiabao to France.

Airbus and U.S.-based Boeing Co. predict China will become the world’s second-biggest aircraft market after the United States, with airlines buying 1,900 to 2,600 planes over the next two decades.

Monday’s order looks to put Airbus ahead of Chicago-based Boeing for the year.

…Airbus has agreed to assemble planes in China, a move that is seen as part of a long-term strategy to win a greater share of the Chinese market that for years was dominated by Boeing.”

Aligning strategy with Chinese policy can be a good way to win friends and influence people. Of course there are also risks associated with any strategy, and it will be interesting to see how the very different strategies of Boeing and Airbus work out in the long term. For the moment though, the Champagne is for Airbus.

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One Response to “Strategy (and Policy Alignment) Pays Off”

  1. The Political News You Need to Know » Strategy (and Policy Alignment) Pays Off Says:

    […] “Airbus said it signed contracts Monday to sell 160 pas Read the rest of this great post here
    Posted by on December 3rd, 2007 | Filed in Uncategorized |


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