Study Leader In China's Civil Aviation Industry In The Upgrade

Civil aviation manufacturing industrial chains are producer-driven, and trunk liners are leader firms in the chains. The leader firms master the integrated design ability and integrated assembly ability of trunk liners, and control the high added value segments, constructing an integrated platform. The leader firms are the core of the platform, surrounded by components suppliers. The country that wants to be first class in aviation field must have its national trunk liner manufacturing firm. China has taken great efforts to master the technologies of trunk liner manufacturing and of core component manufacturing in the past few decades, but the achievements are not significant. The aim of this thesis is to study the reasons that slow down the speed of China’s aviation manufacturing upgrading and to come up with a reasonable upgrading path.At first, this thesis calculates the value-added coefficients and ROEs of different aviation industrial segments, proving that in civil aviation industry trunk liner manufacturing firms enjoy the highest returns, core components manufacturing firms are the next-highest, and regional liner manufacturing firms and general components manufacturing firms’ returns are the lowest. The difference among returns roots in the different degree of monopoly in different levels, and the monopoly roots in the upgrading difficulties faced by low-level firms. This thesis then uses the theory of global value chain governance to sort the governance relationships in civil aviation manufacturing, finding that the governance of designing is hierarchy and relational type, the governance between aircraft assembly firms and core components manufacturing firms is modular and relational type, the governance between core components manufacturing firms and general components manufacturing firms is captive type, and the governance between material firms and the firms in other levels is markets type. Chinese trunk liner firms’upgrading is difficult to achieve since the Chinese firms need to improve technologies and learn how to handle the relationships with core components manufacturing firms, and on the other hand, to face the obstructions giving by international leader firms. Chinese general component manufacturing firms are also difficult to upgrade in that they are captured by international core component manufacture firms. Based on the practical situations of China’s aviation manufacturing, this thesis comes up with an idea that constructing a national value chain within China’s boarders to replace global value chain, and the nationality of the leader firm in this national value chain should be Chinese. In this value chain, the China’s firms can upgrade in that the China’ leader firm is facing a big enough market, meanwhile, China’s component manufacturing firms may undertake design and making-standard work which are out of their business in global value chain. After the Chinese firms’ strength approaches or reaches their international counterparts’, the Chinese firms can compete with other players globally.