Jiangxi Changhe Aviation Industries Co Ltd, a subsidiary of Hong Kong-listed AviChina Industry and Technology Co Ltd (AviChina), yesterday signed a contract with Italian helicopter maker Agusta to establish a joint venture to build helicopters in China.

Changhe, based in East China's Jiangxi Province, will control 60 percent of the new company and Agusta 40 percent. But neither side would disclose their total investment in the joint venture.

The deal represents the implementation of an agreement by the Chinese and Italian governments in June, 2003 to cooperate in the aviation sector.

Agusta, a major helicopter manufacturer, will move all its A109E helicopter activities to China. The first A109E delivery to China will be made next year.

Agusta Chief Executive Officer Amedeo Caporaletti said the joint venture plans to produce 100 to 150 helicopters in the next 10 years for the China market.

The joint venture company will also be responsible for China sales and services for the A109E, the most advanced type of two-engine light helicopter.

The joint venture company will eventually provide services for all Agusta products in China.

Five A109E helicopters, produced by Agusta elsewhere in the world, have already been sold in China. They are now flying in Liaoning, Guangdong and Henan.

Changhe's General Manager Hu Haiyin said the joint venture is being established at a time when China is starting to develop into a meaningful market for helicopter makers.

Hu estimated that about 500 helicopters are now in service in China. Most of them are used for specialized purposes such as public security and fire fighting. Those for general use, that is, helicopters simply as a means for transportation account for less than 20 percent of the total.

He said he believes the market for civil sector helicopters is about to take off.

In the United States, there are 24,000 helicopters in use, Hu says.

"If the China market can grow to half the current size of the US market in 30 years, that will mean a demand for 300 to 400 helicopters every year," Hu said.

"The use of helicopters will increase in coming decades," he said.

The ultimate parent of Changhe and AviChina is the China Aviation Industry Corp II (AVIC II), which umbrellas all the major producers of helicopters and regional jets in China.

AVIC II and its subsidiaries are active at the ongoing China Aviation and Aerospace Exhibition, an event held every two years in the coastal town of Zhuhai in South China's Guangdong Province.

(China Daily November 3, 2004)