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

Jiangxi Changhe, based in east China's Jiangxi Province, will control 60 percent of the new company and Agusta 40 percent. Neither company would disclose its total investment in the JV.

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

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

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

The JV will also handle China sales and service for the A109E, an advanced two-engine light helicopter. The new company will eventually provide services for all Agusta products in China.

Five Agusta A109E helicopters have already been sold in China. They are now flying in Liaoning, Guangdong and Henan provinces.

Jiangxi Changhe's General Manager Hu Haiyin said the JV is being established just as 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 used for specialized purposes such as public security and firefighting. Those used for general transportation account for less than 20 percent of the total.

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

"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 ultimate parent of both Jiangxi Changhe and AviChina is the China Aviation Industry Corp II (AVIC II), the umbrella enterprise for all the major producers of helicopters and regional jets in China.

AVIC II and its subsidiaries are conspicuous at the ongoing Fifth China International Aviation and Aerospace Exhibition, a biennial event held in the southern coastal town of Zhuhai, Guangdong Province.

(China Daily November 3, 2004)