Airbus rides the Chinese dragon

TIANJIN, July 1 — In the time it takes to complete the paper work for planning permission in Britain, a factory in Tianjin has been built and is producing passenger jets.

Once a month, an Airbus A320 passenger jet rolls out of an airy hangar on the outskirts of northern port city of Tianjin, China’s window to Western ideas for a century and a half. Within two years these US$72 million (RM255 million) twin-engine jets will be emerging once a week.

The number of French, German, British, and Spanish engineers “shadowing” the local work force will be down to a handful.

By then production of identical models of the A320 workhorse will be tapering off slowly at the Airbus sister plants in Hamburg and Toulouse, starting with a cut from 36 to 34 this autumn.

The Chinese engineers learn fast. This factory kicked off nine months ago, a nanosecond in aviation time. It takes longer in Britain to complete the paper-work for planning permission.

“It’s a miracle,” said Lan Xinguo, head of Sichuan Airlines as he took delivery last week of the first Chinese A320 — splendidly adorned in red with dragons — to the sound of the Star Wars film track.

“What’s been done is beyond our imagination a few years ago.”

Lawrence Barron, head of Airbus China, said Tianjin jets are geared to voracious demand from local airlines, at least — and here comes the kicker — “in the early years”. There is no reason why an Indian, Australian, or European airline should not buy a Tianjin jet one day.

It is an odd arrangement. The Tianjin plant is a joint venture with China’s Aviation Industry Corp (AVIC), the 430,000-strong spearhead of China’s drive to be an aeronautics superpower.

AVIC in turn holds a stake in the Commercial Aircraft Corp of China (COMAC) which has already launched its own Chinese-designed regional jet, the 90-seat ARJ-21.

Under the Communist Party’s 13th “Five-Year Plan”, it now aims to challenge the West head on with a 180-seat jet. “We believe after six to eight years development, our aircraft will overtake Boeing and Airbus,” said COMAC chairman Zhang Qinqwei last year.

Airbus is taking a big gamble. It is clearly sharing technology with an octopus-like network of state-led enterprises (some linked to the military) that openly boast rival ambitions.

Yet it is a risk that Europe’s planemaker believes it must take to win the aviation jackpot of the next twenty years, an estimated market for 2,800 big jets and 470 freighters worth US$300 billion.

“There is no co-operaration without technology transfer,” said Tom Enders, Airbus chief. “We are protecting what matters most. And whatever happens, I have no doubt that a great and ambitious nation like China — that is already able to send men to space and bring them back home safely — is one day going to build its own aircraft anyway,” he said.

Safeguarding secrets is not easy. The aging A320 dates back to the late 1980s, but China is also insisting on a 5 per cent share of the new A350 XWB. Chinese engineers are working on advanced composite materials in Beijing.

For now, Airbus in enjoying the downpayment on this deal — a cascade of fresh orders for 410 jets worth US$36bn from China’s aviation authority — although Boeing is pulling in Chinese orders, too, and many are wide-body jets with a higher value.

The Americans are watching the Airbus venture uneasily from the sidelines. Boeing buys parts from Chinese suppliers but has stopped short of full assembly. But then the Americans have been burned before. McDonnell Douglas came awry on its venture building the MD-82 in Shanghai in the early 1990s, misjudging the shifting political currents in Beijing.

Brazil’s Embraer came to grief too. Richard Aboulafia from Teal Group consultants said Airbus China risks the same fate.

“The last efforts were disasters, so perhaps it’s third time lucky. I think this is a fool’s game. Anybody can assemble a jet and put their flag on it. The real value added is in the components,” he said.

As yet, the Airbus work at Tianjin is final stage assembly, putting together the fuselage, wings, engines, tails, noses, and doors imported from Europe.

“We’re talking about 5 per cent to 10 per cent of the value added,” said Maurice Chretien, a floor manager in Tianjin.

But the picture is changing fast. Rear passenger doors and the nose landing gear for the A320 family are made in Chengdu, emergency exit doors, wing ribs and edges in Shenyang, cargo doors in Shanghai, and wing boxes and brake blades in Shaanxi.

It is the Airbus “Wing Cooperation Agreement” with China that most worries workers at the UK wing plant at Broughton in North Wales. For the time being, Broughton is still “Big Brother”. The Chinese parts are sent back to Wales for refinement — a costly way to do business.

Under the next phase, the Chinese wing parts will never leave Asia. They will be equipped and tested in Tianjin instead. Enders is brutally honest.

“The UK is the supplier of wings for the Airbus family but that doesn’t mean the Chinese can’t build a good wing. As long as the UK maintains competitive working conditions, Wales is OK,” he said.

Airbus is coy about how much it pays staff in China. Chretien says cheap labour is more myth than reality.

“It is an illusion that you find well-qualified people for nothing in China. I have a laser tracker specialist who earns just 20 per cent less than his Toulouse colleague here to coach him. The cost advantage is thin,” he said.

Airbus workers in Europe can be forgiven for harbouring doubts. The Chinese yuan is up to 50 per cent undervalued against the euro, and China is graduating 600,000 engineers each year. Unless something radical changes in the currency and trade structure of globalisation, Chinese labour will be very hard to beat for years to come.

Europe cannot buck history. China will strive to be an aeronautics powerhouse whatever Airbus does. By taking the plunge, the company can at least hope to lash its fortunes to the world’s rising force for a quarter century.

Take chances where you can. — The Daily Telegraph

What does The Pirate Bay ruling mean for the web?

LONDON, April 19 – Does the court ruling against The Pirate Bay mean that illegal online filesharing has been scuttled?

It has certainly fired a powerful warning shot across the bows of those who would follow the site’s lead: The Pirate Bay’s co-founders, Gottfrid Svartholm Warg, Peter Sunde, Frederik Neij and Carl Lundstrom, have been found guilty of breaking Swedish copyright law and sentenced to a year in jail.

They have also been ordered to pay damages of 30 million kronor (£2 million) to several entertainment companies named in the lawsuit, including Sony Music, Warner Bros and EMI, who accused The Pirate Bay of facilitating the illegal sharing of their copyrighted material.

Although The Pirate Bay did not itself host any of these files, it did provide links to other websites and torrent services where music and films could be illegally acquired. Nonetheless, the court ruling has fundamentally asserted the right of media companies to have their creative copyright internationally recognised and upheld, and to exploit this material as they see fit for financial benefit.

It has also clearly demonstrated that even those websites which do not host illegal material, but simply point to it, can be held responsible for subsequent copyright infringement.

It begs a number of important questions, not least how the ruling will affect search engines. Will Google, for example, fall foul of copyright laws simply for returning a search result that links to a site that does not have permission to host copyrighted material?

Mark Mulligan, an analyst with Forrester Research, said The Pirate Bay had positioned itself as a sort of 21st-century “digital Robin Hood”, stealing from “fat cat media companies” to redistribute creative wealth among the “poor consumers”.

Gottfrid Svartholm Warg, one of the defendants, called himself “captain in Sweden’s battle against corporate America”, a view that enraged the entertainment industry.

The fact remains, though, that The Pirate Bay is simply the latest in a long line of filesharing websites against whom legal action has been taken, and yet the levels of online piracy shows no signs of abating.

The prosecution of Napster almost a decade ago was supposed to nip piracy in the bud; instead, canny web users have simply found other ways to swap music and videos, be it through instant-messages or emails, or sharing hard drives and music libraries.

Given that such legal action does not appear to be producing the desired effect of stemming the tide of copyrighted material, it begs the question as to why the industry continues to fight these battles in court.

Mark Mulligan believes that the answer is quite simply because it has to be seen to be doing something.

“It’s the same reason that customs officials and police continue to fight illegal trafficking of drugs and other contraband despite doing little more than scratching the surface of the problem,” he writes on his blog. “If the music industry isn’t seeing to be taking action then it effectively turns on a green light to the illegal sector.”

While the industry’s desire for legal resolution to its woes is understandable, the music labels, in particular, are starting to realise that the best way of combating illegal filesharing is to beat the pirates at their own game – to fight free with free.

Music streaming services such as Last.fm and Spotify, which allow music-lovers to listen to millions of tracks for free, over the web, are at last providing a real alternative to torrent sites.

The music is not only 100 per cent legal, but it’s also invariably of better quality, and without the inherent risks of viruses and malware that’s usually part and parcel of using torrent services.

And free has, in some cases, proven to be a successful business model for people. Author Paulo Cohelo, for example, discovered that sharing foreign language translations of his best-seller, The Alchemist, online, actually increased sales of the hard copy novel.

And Trent Reznor from rock band the Nine Inch Nails is blazing a trail, experimenting with new ways of connecting with fans, pioneering digital technology and giving away some tracks for free while instead charging for premium content that true fans will always invest in.

It is perhaps ironic that before the Swedish courts gave their official ruling on the trial this morning, the guilty verdict had already been leaked online.

“Really, it’s a bit LOL,” said Peter Kolmisoppi, one of the team behind The Pirate Bay. “It used to be only movies (that were leaked online), now even verdicts are out before the official release”.

Perhaps the fact that Sweden’s National Museum of Science and Technology has acquired one of The Pirate Bay’s servers for its collection demonstrates that some, at least, believe online filesharing and piracy is soon to become a relic of a bygone age.

But a generation reared on the free consumption of music, film and TV shows over the internet would beg to differ.

While The Pirate Bay might have sunk, there will be many more sites just like it sailing in to view on the horizon, looking to continue what the Swedes started. – The Sunday Telegraph