Even as it faces increased costs and supply chain challenges with sourcing parts in China, Astronics intends to expand its operations in the country. The company inked a deal with China National Machinery Import and Export Corporation (CMC) at the beginning of November to help it access the local markets with its inflight entertainment and connectivity hardware lines.
This agreement enables Astronics to serve Chinese aircraft enterprises with the world’s most advanced IFEC hardware technology and certification services, and strongly positions us in the fastest growing aerospace market in the world.– Michael Kuehn, President of Astronics Connectivity Systems and Certification (CSC)
Doing business in China means finding a local partner to facilitate relationships. In this case the CMC partnership will allow Astronics CSC to deliver its completed hardware components to Chinese airlines, OEMs and service providers. CMC and CSC will also cooperate on certification efforts, ensuring that the same systems are authorized for use in the US and Chinese markets.
There is some irony that the current US-China trade war is adding millions of dollars in tariffs to Astronics’ production costs as the company now intends to sell some of those components back into the Chinese market. Still, expanding into the Chinese market, where most expectations for an inflight entertainment and connectivity boom remain optimistic, means potential for more business once the segment takes off.
Of course, the segment must actually take off for the company to realize returns on that investment. Despite government approval and much hype the IFE/C space in China remains relatively stagnant. Inflight connectivity companies have established similar partnerships. Gogo and Viasat announced local partnerships this year while Global Eagle still has its hardware on a single aircraft in the country. Panasonic Avionics remains the main connectivity player, but only on long-haul aircraft, not those flying domestic service. And the domestic routes are where the growth is expected. That a new satellite failed earlier this year, setting back capacity growth by a couple years, also does not help the Chinese IFE/C industry.
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