China’s growing aviation industry and its impact on global businesses
China’s booming aviation industry poses new opportunities – and potential challenges – for U.S. businesses.
In recent years, China’s demand for both domestic and international air travel has surged. The industry’s growth has implications for the global economy as well as U.S. companies that do business in China.
According to a recent article from Business Insider , China is expected to invest more than $80 billion in aviation projects this year to keep up with the increasing demand for air travel. Currently, more than 60 inland airports are undergoing expansion. Twenty new regional airports are also under construction – including several artificial islands that will host airports along the coast.
The growth of China’s aviation industry is also reflected in strong midyear results among the country’s airlines. China Southern Airlines, for example, reported net profits between $547 and $578 million, and other Chinese carriers performed similarly well.
Multiple factors have contributed to this explosive growth: lower fuel costs, increased business travel and a significant rise in outbound tourism, among others. Driven by a steadily rising Chinese middle class and loosening visa restrictions in the U.S., Europe and Australia, leisure travel has skyrocketed in recent years, bolstering the demand for international air routes. Last year alone, more than 100 million people in China boarded flights for recreational travel. This year, that number is expected to increase by at least 10 percent.
What this growth means for global businesses
The impact of China’s aviation boom stretches far beyond the country’s borders. The industry’s expanding infrastructure creates vast new opportunities for global businesses, including U.S. companies that supply:
- GPS, navigation and landing systems
- Air traffic management systems
- Surveillance and security systems
- Other avionics services
China’s demand for new aircraft will also have an impact on the global economy. Over the next 20 years, Chinese carriers are expected to expand their fleets by more than 1,500 aircraft – a number that represents 20 percent of the demand worldwide.
Minimizing risks by partnering with legal counsel
Along with these new opportunities come risks. International business dealings have countless legal ramifications, from intellectual property issues to taxation questions and more. As with any aspect of international business, success requires confronting these risks and working with experienced legal counsel to minimize them.
WHGC, P.L.C., is a leading international business law firm that partners with global clients to ensure their success. Based in Newport Beach, California, the firm offers strategic legal guidance for clients seeking to do business in China and elsewhere abroad.