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Archive Blogroll Development Challenges, South-South Solutions Newsletters

China’s Outsourced Airliner Development Model

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Many emerging-market countries in the global South have built up substantial foreign currency reserves. Much of this has been a response to past foreign currency crises, particularly the Asian Crisis in the late 1990s (http://en.wikipedia.org/wiki/1997_Asian_financial_crisis).

But what to do with this often vast wealth? How should it be used to improve economies, human development and people’s lives?

China — whose foreign currency reserves reportedly total US $3.7 trillion — is showing one approach, using the wealth to build industrial capability in sectors traditionally associated with more developed countries, such as aircraft manufacturing.

China is seeking to build a commercial airliner able to compete with the sector’s longstanding giants, Boeing and Airbus. To ensure it can do it to the highest global standards, it is outsourcing much of the parts manufacturing to the best around the world, while keeping the overall design and assembly in China.

Comac, or Commercial Aircraft Corporation of China, Ltd. (http://english.comac.cc/products/ca/pi/), is located outside Shanghai, China’s rapidly growing global business hub. The modern Comac factory is working on building China’s first commercial airliner, the C919. It is also making a smaller jet, the ARJ21.

Comac calls the outsourcing method an “airframer supplier” model. Suppliers provide the components, and Comac designs and assembles the plane.

Countries making the parts include the United States, France, Ireland, the United Kingdom, Austria, Switzerland and Japan.

Comac’s dream is to graduate to the top tier of global aircraft manufacturers alongside Boeing and Airbus, which together account for 70 per cent of the global commercial airliner market (Fortune).

At present, this is just an aspiration, with a detailed life-sized plastic model of the C919 – right down to the intricacies of the cockpit instrument panels — all there is to show for the project.

Founded in 2008, Comac ambitiously aims to be making and selling commercial airliners within a decade. State-owned Comac is an amalgamation of various aviation companies, as previous efforts to make a commercial airliner in China had failed. China has invested US $3 billion in the venture.

The name, C919, breaks down as C for China, 9 because it sounds similar to the Chinese word for forever, and 19 because it will carry 190 passengers.

The idea is to target the city-to-city aircraft market which is dominated by Boeing’s 737 and  Airbus’s A320.

China saw huge aviation growth in the first decade of the 21st century, and is expecting that trend to continue. The country is on track to surpass the United States for airline-passenger traffic by 2032 and is already the world’s second largest market (Fortune).

To feed this fast-growing market, China will need an estimated 5,580 new planes by 2032, costing US $780 billion in today’s prices (Boeing).

China has decided, rather than committing this vast investment to purchasing all the aircraft from overseas manufacturers, to instead use this wealth to build a competitive aircraft manufacturing industry to rival the big leaders. This would create jobs in the country and create a multiplier effect as airline industry investment helps the domestic economy.

China already has years of experience manufacturing aircraft parts for foreign companies. Comac makes the tail section of Boeing’s 737, as well as manufacturing cargo door frames for the Airbus’ A320.

More importantly, since 2009 China has assembled A320s for Airbus under license in Tianjin — 130 of them to date (http://www.airbus.com/company/worldwide-presence/airbus-in-china/).

The C919 is similar in some ways to the Airbus A320. They have similar dimensions and are made from similar materials. Comac has hired over 100 foreign experts to help with the project, to ensure quality control meets global standards.

By trying to compete with the world’s best, China is entering a very competitive and complex marketplace. The complexity of modern aircraft (an average of 4 million parts in a typical commercial airliner) means there is no room for mistakes or cutting corners. And this is where China has to change its reputation. The country has experienced several high-profile manufacturing failures due to corner-cutting and corruption. These have included tainted milk products, poorly constructed buildings that collapsed, and high-speed train crashes.

The C919 is an opportunity to show high standards and high quality can be the norm in Chinese manufacturing.

In the 1970s, China designed and built the Y-10 (http://en.wikipedia.org/wiki/Shanghai_Y-10) in Shanghai, modeled on Boeing’s 707. But it was a failed programme, shut down after the plane flew once.

Those behind the new plane acknowledge that this is a learning experience for China: “Comac must learn how to walk first before running,” Comac chairman Jin Zhuanglong told Fortune magazine.

“I’ve always maintained the point that we won’t be a big challenge for Airbus or Boeing in the short term,” said Jin, who used to work in China’s satellite and spacecraft industry.  “But in terms of some single product, we might be competitive.”

There’s no doubt that China needs planes. China will have constructed 80 new airports between 2011 and 2015 (China Daily). It has already received 1,000 Airbus planes for domestic carriers, quickly bringing fleets to international standards.

State-owned airlines, including China Air, China Southern and China Eastern, dominate 80 per cent of flights. All stand to be a ready market for the C919, which will sell for around US $75 million – US $10 million less than the next generation Boeing 737 and the Airbus A320 (Fortune).

Ireland-based budget airline Ryanair is considering being the first Western airline to purchase the C919.

Ryanair CEO Michael O’Leary is confident people will fly on a Chinese-made plane: “Ninety-nine percent of my passengers don’t know what kind of aircraft they are getting on,” O’Leary told Fortune. “You trust the Chinese to make computers and medical devices, and the question is, Would you get on a Chinese aircraft? Of course!”

Brazil has shown it is possible. The Embraer (embraer.com) aircraft company, based in São José dos Campos, is now a US $6 billion a year success story that has won the public’s trust.

Comac’s C919 project is a risk, but the rewards could be enormous.

Published: May 2014

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https://davidsouthconsulting.org/2020/04/17/virtual-supermarket-shopping-takes-off-in-china/

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Creative Commons License
This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023

Categories
Archive Blogroll Development Challenges, South-South Solutions Newsletters Southern Innovator magazine

Innovation from the Global South

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

 A major study has documented a rising tide of scientific innovation coming from Asia’s fast-developing countries, especially India and China. Conducted over 18 months by UK-based think tank Demos, it challenges the conventional wisdom that scientific ideas come from the top universities and research laboratories of large companies based in Europe or the US. It found ideas emerging in unexpected places, flowing around the world conveyed by a mobile diaspora of knowledge workers from the South.

China has seen its spending on research and development jump by 20 percent each year since 1999. India is now producing 260,000 engineers a year and its number of engineering colleges is due to double to 1,000 by 2010. Research and development in India has grown by threefold over the past decade. There is now a global flow of research and development money to the new knowledge centres of Shanghai, Beijing, Hyderabad and Bangalore.

The study found the greater political and economic emphasis being placed on science and technology was paying dividends. These emerging science powers are now investing heavily in research to become world leaders in information technology, biotechnology and nanotechnology within the next ten to fifteen years. This is also producing a flood of scientific papers from China and India to the world’s prestigious scientific journals.

For India, its knowledge-based industries by the end of this year will be a US $57 billion export industry, accounting for 4 million jobs and 7 percent of Indian GDP. Interestingly, the study also found a new wave of change is underway. Where once it was mostly low-wage manufacturing and call centre jobs that were going to China and India, a new wave of research and development jobs is now moving there. Drawn in by technology clusters in Shanghai and Bangalore, “Microsoft began to realize we can’t find all the talented people in the US. Nowhere in this universe has a higher concentration of IQ power (than India),” said Harry Shun, head of Microsoft’s research in Asia.

Published: April 2007

Resources

  • The Atlas of Ideas is an 18-month study of science and innovation in China, India and South Korea, with a special focus on new opportunities for collaboration with Europe. It is a comprehensive account of the rising tide of Asian innovation. It pinpoints where Asian innovation is coming from and explains where it’s headed. Special reports on China, India and Korea, introducing innovation policy and trends in these countries can be downloaded for free here.
  • Entrepreneurship Development Institute of India
  • Innovation China: A website linking all stories on the fast-breaking world of Chinese innovation.

https://davidsouthconsulting.org/2022/10/05/african-innovation-eco-system-taking-shape/

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https://davidsouthconsulting.org/2017/10/18/innovation-agenda-and-timeline-2007-2015/

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https://davidsouthconsulting.org/2020/12/14/innovation-in-growing-cities-to-prevent-social-exclusion/

https://davidsouthconsulting.org/2022/04/28/innovation-in-the-slums-can-bring-peace-and-prosperity/

https://davidsouthconsulting.org/2021/03/04/innovation-villages-tackling-mdgs/

https://davidsouthconsulting.org/2021/10/22/innovations-in-green-economy-top-three-agenda/

https://davidsouthconsulting.org/2016/04/14/southern-innovator-and-the-growing-global-innovation-culture-14-april-2016/

https://davidsouthconsulting.org/2022/11/01/southern-innovator-magazine-2010-2014/

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Creative Commons License
This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023

Categories
Archive Blogroll Development Challenges, South-South Solutions Newsletters Southern Innovator magazine

Dynamic Growth in African ICT is Unlocking Secrets of SME Treasure Trove

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

A newly released survey of 14 African countries in 2006 has documented the impact of Information and Communication Technology (ICT) on private sector development and how it is contributing to developing a vibrant Small Medium Enterprise (SME) sector in Africa. It discovered how dynamic the SME sector is, how it has rapidly adopted mobile phone technology (96 percent have it), and how if used properly in concert with this new technology, extraordinary economic growth is possible.

The survey – Towards An African e-Index: SME e-Access and Usage in 14 African Countries – covered only businesses employing fewer than 50 people and took in the vast informal sector in the countries. It investigated if they had access to ICTs, how they are using them and if it was making them more productive. SMEs were especially interesting because they do not waste money (most people are just trying to survive) and they only use what is really useful to them to increase income. In the informal sector this has become the mobile phone.

The countries surveyed included Botswana, Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. With most of the continent’s poor working in the SME sector, little was actually known about the impact of ICT and its link to profitability and labour productivity. And surveying only formal businesses would be telling half the story since about two-thirds of non-resource driven GDP generation is derived from SMEs, and a large share of that from informal ones.

“This is a sector that has no access to formal finance,” said Dr. Christopher Stork, a senior researcher at the Witwatersrand University in South Africa. “The mobile phones present an opportunity to tap into this market and offer finance, banking services, cash transfers – we see this already in Kenya – without the risks of other services. These informal businesses can build up a history, learn how to better control their businesses, and receive loans. Where the financial system is dysfunctional or overpriced, airtime credits can be the new cash form.”

Africa has a high proportion of entrepreneurs because people have next to no social supports to fall back on and need to do business to survive. Most fall into the informal sector where they can avoid paying tax, pay low wages, and keep overheads down. According to Stork, if governments are serious about dealing with poverty, then the best approach is to acknowledge this sector, and rather than crush it, draw it in to become more sophisticated and efficient. He sees the mobile phones as key to this strategy.

“Innovative technology can help these entrepreneurs to acquire the tools they need to do business better. There is a lack of skills in all areas, a lack of accounting skills, a lack of basic financial management. This is where ICT can overcome this. SMEs can get a monthly statement with all their business transactions, making it easier to manage things. This would be a great way to distribute micro-finance. Savings clubs could store cash on the phones.”

The e-Index also noted the trend for mobile phone providers to consolidate and offer common regional services. This could fuel an explosion in cross-border trade as it becomes cheaper and easier to communicate via mobile phone for business. The e-Index also found the ever-growing importance of internet cafes remains. They continue to evolve into multi-purpose business centres offering a wide range of services, from post to word processing. At present they still remain the main means of accessing the internet. And with broadband still minimal and very expensive, it falls on mobile phones to offer internet access, though this will remain mainly in the continent’s capitals.

The survey’s sponsor, Research ICT Africa! (RIA!) network, seeks to build an African knowledge base in support of ICT policy and regulatory design. The network emerged out of a growing need for hard data and analysis to help the continent join the information age. Throughout 2007 it is conducting household surveys on e-access and e-usage and will present the findings in 2008.

You can download for free the entire report Towards An African e-Index: SME e-Access and Usage in 14 African Countries here: Click

Published: February 2007

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https://davidsouthconsulting.org/2022/10/26/shopping-and-flying-in-africas-boom-towns/

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

https://davidsouthconsulting.org/2022/11/01/southern-innovator-magazine-2010-2014/

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023

Categories
Archive Blogroll data UNDP Mongolia 1997-1999 UNV News

Starting From Scratch: The Challenge Of Transition

By David South (Canada), UNV Information Officer, UNDP, Mongolia

UNV News #78 November 97

After seven years of transition to a market economy, Mongolia – a former satellite of the Soviet Union that has had a democratic government since 1992 – has been profoundly changed. Where it once had a rigid communist government and few contacts with the west, Mongolia has pursued rapid economic, political and social liberalisation. Mongolia has a small population – 2.3 million – spread out over a vast territory wedged between Russia and China.

Communication has in many ways deteriorated over the past seven years as the old communication networks from the communist era have not been fully replaced by the private sector. More and more it became apparent that government and the private sector were almost working in the dark in understanding how transition has affected Mongolians.

In partnership with the Mongolian government, UNDP initiated the researching of Mongolia’s first human development report back in the middle of 1996. It was launched on September 5 of this year, with UNVs playing a key role. To lead the team in producing the report, British poverty specialist and UNV Shahin Yaqub was brought in. Only 29-years-old – one of the youngest UNVs in Mongolia – Yaqub joined a rapidly expanding UNV presence in the country. There are now 24 international UNVs and 26 Mongolian UNVs deployed throughout the country in UNDP’s projects.

The thirst for expertise in Mongolia – a country undergoing the growing pains of transition to a market economy – has placed high demand on UNVs. UNVs occupy senior roles in all of UNDP’s projects.

The 1997 Mongolian Human Development Report is a prime example of the important goal of capacity building conducted by the UNDP. For Yaqub, the report’s principal author, it was like starting from scratch. A poverty research office had to be set up before the work could begin. A team of Mongolia’s top statistical researchers had to be trained in the latest methodologies for social research.

Yaqub was excited by the project. He said: ”There was no office when I first came. We had to organise the office to understand who does what and basically create the focal point for poverty analysis in Mongolia”.

Yaqub also had some of his basic assumptions tested. The small population of this country – only 2.3 million – had meant the previous communist regime was able to build up a large archive of statistics on the population. A good portion of the information was not up to international standards, but it potentially represented a wellspring of data to start from. “Mongolia is number-rich. To even have that kind of data is very rare for a developing country. But unfortunately we found all this information was stored on Russian mainframe computers that didn’t work anymore!”

During the actual production of the report, Yaqub was joined by three more UNVs: Mustafa Eric, a Turkish journalist working with the Press Institute of Mongolia, Jerry van Mourik, a Dutch journalist now working as the Support Officer to the United Nations Resident Co-ordinator, and UNDP Information Officer David South, a former journalist with the Financial Times in London, England.

The high-profile role played by media UNVs was crucial if the report was to not end up collecting dust on a government shelf. The report is a repository of essential and new information on the state of human development in Mongolia, including data showing rising poverty rates and serious threats to food security. Like all human development reports produced by UNDP, it was not meant to be a prescriptive tract, but a lubricant for a national debate on sustainable development in Mongolia. This altered the design and presentation of the report.

Instead of looking academic, the report took on the appearance of a magazine, from its cover to colourful children’s paintings inside. UNV Mustafa not only assisted with the report’s design and production, he also used his contacts in the Mongolian media to ensure the report was distributed across the country. UNV van Mourik assisted with publicity, including producing an emotionally-charged television commercial weaving together vignettes from Mongolia’s recent history to tell the story of human development.

Already in its second print run in both English and Mongolian, the report has been adopted as their study guide by Mongolians wanting to learn English.

“Mongolia is a rewarding place to work,” said Yaqub. “As a technical specialist and UNV, what you bring to the job is valued. I researched poverty for five years before coming to Mongolia and I felt I had something to contribute. But I also realised I had something to learn as well. You always have to keep in mind you are bringing your own baggage to the job – be it cultural, emotional or intellectual. Coming from an academic background, I was not afraid to be told I was wrong.”

Yaqub, who had worked in poverty analysis in the Philippines and Bangladesh before coming to Mongolia, will never forget the country that sparked his new passion: horses.

“You give up things as a volunteer – your time, your income, all the things you took for granted back home. But what you give up is compensated by rewarding work and good friends. When I learned to ride a horse, I can place it directly and clearly to Mongolia – that memory will always be with me.”

Just before Yaqub left Mongolia for work with UNDP in New York, he participated in a series of public debates in one of Mongolia’s poorest provinces, Khuvsgul aimag. The public debates are used to introduce the report to the grassroots while sparking discussion on sustainable human development.

Starting from scratch – The challenge of transition

Résumé en Français

UNV News #78 November 97

Sept années de transition vers une économie de marché et une libéralisation rapide tant économique et politique que sociale, ont profondément transformé la Mongolie, vaste territoire à faible densité de population bordé par la Russie et la Chine. Les communi-cations se sont fortement détériorées et ni le gouvernement ni le secteur privé ne se trouvaient manifestement en mesure d’évaluer l’impact de la transition sur la population. En collaboration avec le gouvernement, le PNUD a donc procédé à l’établissement du premier rapport sur le développement humain en Mongolie, publié en septembre de cette année.

Plusieurs VNU parmi le nombre croissant de volontaires actuellement en poste en Mongolie au sein de projets du PNUD – 24 internationaux et 26 nationaux – y ont pris une part prépondérante, tout particulièrement Shahin Yaqub, spécialiste britannique en recherche sur la pauvreté. Pour Yaqub, puis pour ses trois collègues VNU Mustafa Erik, Jerry van Mourik et David South, le défi consistait à partir de rien – pas de bureau, une base de statistiques existante… mais sur des ordinateurs russes hors service – pour mettre sur pied un rapport riche en informations qui, une fois terminé, n’irait pas dormir sur l’étagère d’un bureau gouvernemental mais servirait de base à une action durable à l’échelon national. Grâce au format adopté – un magazine abondamment illustré – , à sa présentation par les médias – notamment la télévision – et à sa diffusion à travers le pays entier, c’est chose faite. Le rapport, imprimé en anglais et mongol, sert même de guide aux Mongoliens étudiant l’anglais.

Pour Yaqub, qui a depuis rejoint le PNUD à New York après avoir participé à une série de débats au sein d’une des provinces les plus pauvres de Mongolie destinés à promouvoir un développement humain durable, ce fut une expérience unique en son genre.

S’il a fait bénéficier la Mongolie de son expertise, il considère qu’il a retiré tout autant de son affectation: un travail gratifiant, de nouveaux amis – et en particulier une toute nouvelle passion, celle des chevaux.

Starting from scratch – The challenge of transition

Resumen en Español

UNV News #78 November 97

Después de siete años de transición hacia una economía de mercado, Mongolia goza hoy de un crecimiento económico, político y de liberación social, con una población de 2.3 millones de habitantes esparcidos sobre un extenso territorio ubicado entre Rusia y China. Su sistema de comunicación no es del todo satisfactorio, ya que la antigua red usada durante el comunismo no fue reemplazada completamente por el sector privado, sin embargo poco a poco el gobierno así como el sector privado comienzan a percatarse de la repercusión. En colaboración con el gobierno en Mongolia, el PNUD inició su trabajo de investigación sobre el desarrollo humano y realizó su primer informe sobre Mongolia que fue presentado el 5 de septiembre de este año.

El grupo que tuvo que realizar el informe fue encabezado por el especialista británico en asuntos sobre la pobreza y voluntario de NU, Shahin Yaqub. Actualmente hay 24 voluntarios internacionales y 26 nacionales, su labor juega un rol importante en la realización de los proyectos del PNUD. Para la realización del informe, Shahin tuvo la colaboración de otros tres VNUS, Mustafa Eric, Jerry van Mourik y David South, todos periodistas. El informe es un compendio de información esencial y actual sobre el estado de desarrollo humano en Mongolia. Para no parecer académico el informe se ilustró como una revista, con dibujos y pinturas infantiles. Mustafa no solo asistió en el diseño y la producción, también usó sus contactos dentro del ámbito periodístico local para hacer circular el documento dentro del país. Jerry por su parte se encargó de un aviso de televisión. Ya en su segunda edición el documento fue publicado en ambos idiomas, inglés y mongol, y es usado como libro de estudio entre los mongoles que quieren aprender el inglés. Para Shahin Mongolia es un lugar gratificante para trabajar. El siente que con su trabajo y sus esfuerzos pudo ayudarle a la población y además tuvo su gran satisfacción personal, no solo en su labor, también en el sentido humano. Aquí aprendió montar a caballo, lo cual será para siempre relacionado con Mongolia.

https://davidsouthconsulting.org/2020/12/19/case-study-4-un-undp-mongolia-1997-1999/

Citation

O’Brien, Gantsetseg and Trotman, Greg (1999) “Selection and Preparation of Australian Expatriates and Business People for Postings in Mongolia,” University of the Sunshine Coast, Department of Marketing, International Business & Tourism, Working Paper 99/3.

This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2025