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The Top Leaders of China and New Zealand Witnessed the Contract Signing between Beijing General Aviation (Group) Ltd. and Pacific Aerospace Limited

2014-11-20

On November 21 in New Zealand time (Beijing time: November 20), Chinese President XiJinping who was visiting New Zealand, and John Phillip Key, Prime Minister of New Zealand jointly witnessed the signing and exchange of several China-New Zealand bilateral cooperation agreements. XuHeyi, Chairman of BAIC Group and Beijing General Aviation (Group) Ltd., and New Zealand’s Pacific Aerospace Limited (here in after referred to as “PAL”) signed and exchanged the agreement, under which BAIC Group acquired a part of the stock rights of PAL, and the agreement for establishing Beijing Pan Pacific Aerospace Limited by BAIC Group and PAL through ajoint venture. These two agreements open a new mileage in the field of high-end manufacturing cooperation between China and New Zealand, and also become an important symbol of the cooperation between the two countries reaching a new level.

Both China and New Zealand are APEC members, and also negotiating partners in the regional comprehensive economic partnership agreements. In the future, the two sides will strengthen coordination and cooperation, forge regional free trade arrangements that benefit all parties, and promote the Asia-Pacific economic integration. Under the new situation, both China and New Zealand will also raise the level of bilateral trade and investment. BAIC Group signing a contract of cooperation with New Zealand’s PAL to jointly promote the general aviation industry development which is undoubtedly a representative event that will propel the regional integration process and promote the prosperity of the Asia-Pacific region.

The general aviation industry in China is booming. General aviation has already been listed as one of the national seven strategic emerging industries, and the “low-altitude airspace opening” is gradually clearing out. On November 22, a low-altitude airspace management reform work meeting was held, pointing out that our country was now carrying out a pilot reform of the airspace management below the true height of 1000m in flight control areas of Shenyang and Guangzhou, and flight control partitions of Hainan Island, Changchun, Guangzhou, Tangshan, Xi'an, Qingdao, Hangzhou, Ningbo, Kunming and Chongqing, and will strive to popularize it across the country in 2015.It signifies that the low-altitude airspace resource management in our country has begun to change from an extensive form to an intensive form.

Starting in 2010 and over 4 years now, the general aviation enterprises and the general aviation aircraft in China have rapidly grown. The general aviation flight hours in 2013 grew nearly by 500% compared with those in 2010.According to the forecast of the Civil Aviation Administration of China, in five years, the number of civil aircrafts in China will be more than 5,000, and domestic demand for general aviation will amount to $15.5 billion. The general aviation is an emerging industry and a new economic growth area with a huge potential, and need to be urgently developed, and it has become an important industry to support local governments to realize regional economic rejuvenation. Jiangxi, Yinchuan, Jilin and other provinces and cities have listed the development of the general aviation industry in their regional key development plan. The “Twelfth Five-Year” development planning and deployment of the Beijing municipal committee and the municipal government proposes to attract international resources to build the capital economic circle high-end manufacturing base. The rapid development of the domestic general aviation industry is the best opportunity for BAIC Group to expand its aviation industry.

From September 25 to September 28, 2013, Beijing General Aviation (Group) Ltd. and PAL jointly attended the 15th session of the Beijing International Air Show, signed the Cooperation Letter of Intent, and then held a press conference to officially announce it, winning an enthusiastic response. Afterwards the two sides, through mutual visits, talks, exchange of understanding and opinions on the market and way of cooperation, decided to preliminarily establish the cooperation relations. The Beijing General Aviation (Group) Ltd. obtained the exclusive right to sale theP750 aircraft in the Chinese market, and the joint venture and cooperation talks carried on. In February 2014, the two sides reached the Consensus of Wellington, and the P750 project was upgraded to a comprehensive strategic cooperation between the two sides. On March 18, 2014, witnessed by New Zealand’s Prime Minister John Phillip Key and Beijing Mayor Wang An shun, Beijing General Aviation (Group) Ltd. and PAL signed the Comprehensive Strategic Cooperation Framework Agreement to determine that Beijing General Aviation (Group) Ltd was the equity holder of PAL in the form of an agreement. Beijing General Aviation (Group) Ltd. became the holder of P750 core intellectual property rights, and in the future, Beijing General Aviation (Group) Ltd. will work with PAL to research, develop, design, and produce general aviation aircrafts. Prime Minister John Phillip Key said at the time that the cooperation between BAIC Group and PAL would open a new chapter in the cooperation between the general aviation industry in China and New Zealand, and he also hoped that BAIC Group and PAL can make more contributions to the trade cooperation between the two countries and become a model of China-New Zealand cooperation.

On November 21, in the signing ceremony scene, XuHeyi, Chairman of BAIC Group and Beijing General Aviation (Group) Ltd., and Mr. Christopher Verissimo (WeiZhizhen), Chairman of New Zealand’s Pacific Aerospace Limited, exchanged two important agreements in connection with the P750 project.

The important cooperation agreements signed and exchanged by both parties specify the equity ratio in PAL, acquired by BAIC Group, and the “Joint Venture Contract On Establishing Pan Pacific Aerospace Limited”. This joint venture will settle in Pinggu and in the future will produce the P750 and other general aviation planes. This becomes a core project of BAIC Group’s general aviation base of fixed wing aircrafts. This northern base will develop a whole general aviation industry chain, to form a general aviation industry cluster with the symbols of a corporate aircraft operation hub, general aviation service center, and aviation maintenance base and others, in order to attract more of New Zealand’ smature general aviation enterprises to settle in this industrial district, and to promote international cooperation. At the same time, BAIC Group’s southern general aviation base of rotorcraft, located in Jingdezhen, Jiangxi Province, will build a first-class helicopter industry chain in China through cooperation with Italian Agust a Westland.

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