AVIC International's US buys to boost global growth

Updated: 2015-07-31 11:44

By Lia Zhu in San Francisco(China Daily USA)

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AVIC International's US buys to boost global growth

Employees of AVIC International USA and Align Aerospace celebrate the acquisition of Align by AVIC International USA in April 2015. Provided to China Daily

AVIC International, USA Inc is integrating the resources of its US acquisitions to increase its global market presence and boost overall growth.

"Our priority now is to integrate the strengths of the acquired companies with our own advantages so as to achieve solid growth at a faster speed," said Zhang Xuming, president of the US operation of AVIC International.

The acquired companies can fill the holes of AVIC International's own operations and take advantage of the channels of AVIC International, especially in developing countries in Africa and Southeast Asia, he said.

The company's major acquisitions in the US include Align Aerospace Holding Inc, a distributor of aerospace fasteners and other hardware, in April this year, and aircraft engine manufacturer Continental Motors in 2011

The multi-hundred-million-dollar purchase of Align Aerospace, based in Chatsworth, California, is of great significance to China's aviation industry, Zhang said.

Align Aerospace distributed hardware and related components to aerospace original equipment manufacturers (OEMs) and their subcontractors throughout the world.

Among the top five aviation hardware suppliers in the world, Align's clients include such manufacturers as Boeing, Airbus and Bombardier.

With the purchase of Align, AVIC International will be able to integrate the distribution teams in the US, Canada and China's Zhuhai, to help in aviation hardware purchases, stocking and distribution for aviation manufacturing and maintenance industries in China and other countries, said Zhang.

With aerospace as its main business sector, AVIC International is the primary channel for the import and export of commercial aerospace products in China. It has exported more than 1,000 aircraft and imported hundreds of aircraft over the past three decades.

This year, China's home-developed ARJ21 regional jet and C919 passenger airliner are expected to realize customer deliveries and maiden flight respectively.

"The acquisition of Align will certainly help strengthen our performance in aircraft manufacturing and after-sale service," Zhang said.

AVIC International and Greenbriar Equity Group LLC, a private equity firm and Align's principal shareholder, reached an agreement to sell Align to AVIC International Holding (Zhuhai) late last year. The two sides closed the deal after receiving approvals from both the Chinese and US governments early this year.

"It's the right time for AVIC International to acquire Align," Zhang had said after the purchase was completed. "AVIC International has the need and desire to expand its business globally, and Greenbriar was looking for buyers at a time when the economy recovers (from the 2008 global financial crisis)."

AVIC International Chairman Wu Guangquan said at a ceremony in April in Los Angeles that Align would "bring valuable experience in aerospace supply chain management to AVIC International".

AVIC International has a strong emphasis on supply chain integration and management, and Align sells more than 100,000 SKUs (stock-keeping units), including fasteners and other aerospace hardware, through its distribution centers in the US and France as well as forward stocking locations around the world.

In return, Align's relevance with current customers and global presence, especially in the Chinese market, will be greatly boosted with the investment, resources and relationships of AVIC International, Wu said.

Align CEO Andrew Roberts agreed: "AVIC International's long-term focus on growth and supporting major commercial aerospace customers globally are a perfect fit for Align."

With the mission of developing overseas markets for the civil aviation industry and expanding international investment, AVIC International is engaged in several business sectors, including aerospace, trade and logistics, retail, electronics and real estate and hotel management, with a revenue of $25 billion in 2014.

Since 2013, the company has purchased six hotels in the US, two each in Southern California and Atlanta and one each in Denver and South Field to strengthen its business in hotel management.

"It's also part of our effort of ‘Chinese brand going global'," Zhang said.

The process of integration does not only happen in the business level, but also in culture and communication levels, said Zhang, adding that they have met certain challenges in the operation of the acquired companies.

One major challenge is to how to take advantage of local resources and channel the acquired company's traditional market and customers into a larger market and larger group of customers.

"The cultural differences are easily exposed in the daily operation and we have spent a large amount of time addressing it," he said.

As a company with a relatively long history of international operations, Zhang said valuable experience has been earned.

"Good communication proves to be effective with us," he said. "We encourage every employee to open up their minds and contribute their ideas and opinions.”

Brainstorming sessions are held regularly to provide a platform for communication, according to Zhang.

Every year, all the overseas companies and local employees are considered candidates for the awards of "Excellent Individual" and "Excellent Company". The excellent local employees are also invited to attend the annual meeting in China to claim their awards, which is a way to integrate them into the whole family.

"Last year, the Continental Motors won the 'Excellent Company' award," said Zhang.

So far, AVIC International has set up wholly owned or holding subsidiaries in major cities across China, established over 130 branches in more than 50 countries and regions, and owns eight listed companies. It has more than 80,000 employees in over 180 countries and regions.