Back in 2007, a Boeing senior executive looking after commercial airplanes in China, John W Bruns, predicted that China would definitely be a contender in the aerospace manufacturing space in years to come. Its production, he predicted, would have to supply the $280bn worth of planes those watching the nation said it would require within the next 20 years.

A few years on and this movement is already starting to speak for itself. Spurred on by the 2008 Olympic Games and Expo 2010, demand for civil aircraft is growing. A report released by CCID Consulting shows that 6,000 to 7,000 civil aircraft will be required in China by 2015.

So there is little surprise that smaller, international companies are starting to look towards a new Chinese dream – that of the successful business in what could seem for some like unchartered territory that offers hope as big as you are willing to imagine. But is it all that easy, especially for companies not used to dealing on foreign soil?

“In recent years, the Chinese Government has been offering serious support to its aerospace sector.”

In 2005, the first British-based aerospace components producer Sigma Components rolled up its grey factory shutter doors to begin business from China, paving the way for companies curious about new business opportunities. Working out of Chengdu, in Sichuan Province – one of the many cities where aircraft and components are manufactured – the company started work under the name of Chengdu Sigma Precision Components and according to general manager Graham Bannerman, it soon discovered just how much demand really existed in the nation now eager to become one of the world’s aerospace powers.

“At first we thought that our bread-and-butter contracts would be with the aviation parts integrators but we quickly jumped up one rung on to the supply chain ladder. Now we are dealing direct with Rolls-Royce and GE,” Bannerman says.

The bold scarlet lines on their conference room graphs show a confidence inspiring 45° climb. In the 30,000ft² factory staff work day and night shifts producing components for General Electric, Moog, Goodrich, Pattonair and Eaton Aviation and staff numbers have grown threefold since the doors first went up.

China’s rise

In recent years, China’s government has been offering serious support to its aerospace sector and despite the ongoing financial crisis, this cushion still seems to be holding strong. In November last year the government organised the Aerospace Trade Show, which produced about $4bn in deals involving 102 aircraft. Companies from 35 countries attended the event.

A further example of how integrated China is in the aerospace sector can be seen with Boeing’s 737. According to Bruns, the whole tail section, the vertical fin and the horizontal stabiliser, doors and about an eighth of the structure is manufactured in China.

“We’ve been buying parts from China since 1979,” Bruns said in an interview for the Council on Foreign Operations website. “China is a huge market for us.”

As the figures for Sigma show, offerings further down the supply chain can only benefit from this.

“During the last two years we [Chengdu Sigma Precision Components] have produced 327 new articles. A ‘new article’ is when we receive drawings and specifications from a potential customer, produce the part and send away samples. Of the 327 of these, about 30% have resulted in confirmed orders,” Bannerman says.

“China has been doing all it can to entice the aerospace industry to invest in its economy.”

And these orders are not small in scale. A recent order for pie pan clips was confirmed at $400,000 – work that will keep that part of the factory busy until March 2010 according to Bannerman. And orders are not only to companies outside of China. Chinese aerospace firms are also pushing forward with the building of their own projects. For example, in Tianjin, another aerospace hub, China’s new-generation launch vehicle is being built and local firm Aviation Industry Corp of China is setting up a helicopter company with the help of the local government – all signs that things are still moving ahead.

“We have gone in two years from a turnover of $200,000 to $1m-plus in world sales,” Bannerman says, adding that sales in China have helped the company reach such high levels of success.”

Working in China

In recent years, China has been doing all it can to entice the aerospace industry to invest in its economy. Just this year, the government announced a new economic stimulus programme for its leading military aerospace company China Aviation Industry Corporation. It has also introduced policies for encouraging industry development – and it no surprise. In 2006, the aerospace industry in China was valued at 82,801m yuan (about $12,129m).

But that does not mean it is always easy to get in to China in the first place, according to Bannerman. Sigma started off with a small presence in Chengdu where it provided consultancy work before going in search of financial backing for the major start up.

“We presented our plan to many companies, and while many shut doors in our faces, our efforts were at last successful with Avingtrans in June 2006,” Bannerman says. “What convinced them was that we had earlier signed a letter of intent with a large UK integrator. That letter gave us so much clout and credibility.”

From then on, Sigma’s route to getting off the ground was relatively easy and quick. Equipment for the factory came in from the US in late 2006. Even now, in general terms, everything required for production is imported from the US or Europe, with an even split by sea and air freight. All exported production goes out by air with FedEx or UPS.

Complex customs paperwork is one drawback that comes with Sigma also selling within China. The whole factory operates in a bonded status and Sigma does not pay any duty on the imported steel, aluminum or lubricants. All material must be accounted for either in products or waste swarf, down to the last ounce, according to Bannerman.

The company is also subject to control by Bureau Veritas audits every year, and by its customers. “We have had as many as seven visits in one year, each taking two to three days,” Bannerman says. At its second audit Sigma was awarded approval for AS 9100 – making it the only company in China to merit the classification at that time.

“The Chinese Government is really keen to see more development in the aviation industry.”

Control systems instigated by the company can trace every part made to date of production, every source of material, every batch number and the name of the employee working on the part can also be found on the job card. White-gloved staff meticulously scrutinise and measure the parts with electronic scanners before they are packed for dispatch.

Sigma founder Simon Timothy says in respect of the process, however, working in China has been relatively easy.

“Everybody said that getting the permits and the licences would be so time consuming and slow, but really I didn’t see that, to me it was normal,” Timothy says. “The authorities at the export processing zone were really great. For example, as it is rather a long way out from the centre of the city (west Chengdu export zone, a 45-minute drive from the CBD), they organised a bus route to make life easier for the staff. Any complaints are rectified within a week. The Chinese Government is really keen to see more development in the aviation industry.”

This sentiment was echoed by Bruns in his earlier interview. “The Chinese government really encourages it [foreign companies doing business there]. There’s little in the way of restrictions on what kind of work we can put into China from their side – they’d like to see us do more and more,” he said.