15 December 2010

Continental Now Owned by the Chinese Government

This story posted on AvWeb yesterday is getting a lot of attention. In it Continental Motors announces that the company has been bought by AVIC International, which is part of Aviation Industry Corporation of China, which is 100% owned by the Government of the People's Republic of China.

Some people are very worried about this, does this mean that foreign interests are taking over the US Aerospace industry? Does this mean that every time you buy something "Made in China" that the Chinese government will take that cash and buy chunks of the USA?

After all the Cessna 162 is made in China by Shenyang Aircraft Corporation, which in turn is again owned by the Aviation Industry Corporation of China. Of course that now means that this Chinese aircraft will have a Chinese Continental O-200-D engine in it.

I would contend that this is all nothing new, that it has been going on for a while, just that people haven't been paying attention. After all the Chinese government already owns a sizable part of the Alberta tar sands and most people don't realize that, either. What a lot of people seem to have missed or forgotten includes:

1. Cirrus Aircraft is 58% owned by Crescent Capital, the US arm of the First Islamic Investment Bank of Bahrain (now called Arcapita).

2. Liberty Aerospace is 75% owned by the Kuwait Finance House, a wholly owned subsidiary of Kuwait Finance House of Bahrain.

3. Piper Aircraft is 100% owned by Imprimis which is owned by the Government of Brunei.

4. Epic Aircraft is partly owned by China Aviation Industry General Aircraft Co. Ltd., which is part of Aviation Industry Corporation of China once again and thus the Chinese government.

Should you be worried? Maybe, but in most cases if these foreign companies hadn't bought these US companies they might not be around anymore, since Americans didn't seem to want to buy them.

Of course some Canadians find this all a bit amusing and ironic. After years of having US companies running around buying up Canadian businesses the Americans are getting a taste of it. In their press release Continental tries to spin it like this:

"I am excited about the opportunity to work with the AVIC International team,” said Rhett Ross, President of Continental Motors. “AVIC International will greatly strengthen Continental Motors’ market access. In addition, increased investment will accelerate new products, such as Continental Motors’ TD-300 diesel engine, which is well-suited to growing regions given international fuel availability. The transaction will allow Continental Motors to continue to be a global leader in the general aviation piston engine industry."

"The sale of Continental Motors to AVIC International is the right long-term solution for Continental Motors, its workforce and the Gulf Coast Community,” said Robert Mehrabian, Chairman, President and Chief Executive Officer of Teledyne. “This sale allows Teledyne to focus on its core businesses, while ensuring a bright future for Continental Motors to build on its long, successful history as a manufacturer of proven piston engines for general aviation aircraft. This will significantly enhance Continental Motors’ opportunity to enter the global market for the sale and service of general aviation piston engines."

The outcome of all of this is anyone's guess, but while I am waiting to see what happens next I should go and practice my Tai Chi....


Mike Shaw said...

nǐ hǎo Adam

Interesting observations.

Xie Xie


Adam Hunt said...

Has anyone notice the irony: Continental's motto used to be "America's Standard, Powerful as the Nation" and showed a photo of Washington's Capital Hill.

Adam Hunt said...

Paul Bertorelli at AvWeb wades in.

Adam Hunt said...

Looks like here is a company that would have been much better off under a Chinese government buy-out:

Narco Avionics in Liquidation

Adam Hunt said...

For the curious or those who thought that the USA would object, the sale of Continental to AVIC has been completed.

China Lays Out Its GA Plan, by Russ Niles,