Pratt & Whitney Starts Venture in China

U.S. jet engine maker Pratt & Whitney on Monday launched a $22-million joint venture with a Chinese firm to produce parts for commercial engines.

The founding of Chengdu Aerotech Manufacturing Co. marks the first time a foreign firm has taken a controlling interest in a venture involving China’s strategic aviation industry, executives said.

Pratt & Whitney, a Hartford, Conn.-based unit of United Technologies Corp., holds 52% of the equity and Chengdu Engine Co. of Aviation Industries of China holds 48%. Production is scheduled to begin by the end of this year.

A 50-piece brass band played as senior Pratt & Whitney executives symbolically shoveled earth to break ground for what will be a modern factory in what is now a sprawling, gritty industrial complex.

“Our commitment to this joint venture symbolizes our much broader commitment to the Chinese market,” Robert Wolfe, president of Pratt & Whitney’s Large Commercial Engine Division, told reporters.

For Pratt & Whitney, which has bought parts from its Chengdu partner since 1981, the venture offers a chance to get in on the ground floor as China’s aviation industry takes off.

Passenger and cargo traffic have been growing at a rate of 20% to 30% a year during the 1990s.

“We believe it is critical to enter the market as a local citizen by way of this joint venture,” said Lyman Marshall, Pratt & Whitney’s chief negotiator for the project.

Experience in earlier nascent aviation markets, such as Japan’s, suggests that firms who exploit the first windows of opportunity are best placed to grow with the country, he said.

The Civil Aviation Administration of China said last month that it would earmark $1.1 billion for civil aviation in 1996, 30% more than in 1995.