One reason for surmising that the mainland Chinese market will normalize and begin to seek more small aircraft is that users will begin to see aircraft more for their utility than their showiness. Moreover, manufacturers note that early buyers in a market, usually the richest, inspire people with less means to buy necessarily smaller aircraft as the market matures.
Interestingly, however, the dominance of large aircraft is more obvious in figures that also encompass Taiwan, Hong Kong and Macau—which are more mature markets than the mainland but still ethnically Chinese. For all of so-called Greater China, large aircraft account for 70% of the total.
China is far from dominant in the global market, however, and by the time the country is highly influential its tastes may have changed. Growth is fast from a low base: the late-2012 fleet of 193 was up by 55 (or 40%) on a year earlier. But globally, manufacturers delivered about 700 business aircraft in 2012, and more than 1,200 in their last good year, 2008.
Only a tiny fraction of mainland Chinese users want secondhand aircraft. Gulfstream has sold two used aircraft into the market, says Roger Sperry, senior vice president for international sales. Bombardier has sold “a few,” says Bob Horner, senior vice president for sales. Notably, both succeed by selling used aircraft under conditions that most nearly matched those of new aircraft: supplied by the manufacturer with its warranty.
Horner, cautiously, believes business aircraft users are likely to trade in or trade up more frequently in China than elsewhere, but adds that it is hard to predict how often. Sperry believes it is too early to make any predictions. Li, on the other hand, is looking forward to a wave of business in the next few years as buyers begin replacing. (He also believes that most potential buyers have already bought, although that is not evident in the recent fleet growth.)
One factor that should facilitate frequent updates is easy finance, says a Hong Kong executive with long experience in obtaining money for aircraft. “They can get 100% even 105% financing,” she says, noting that lease arrangements also bring tax benefits for Chinese mainland buyers.
However the Chinese market develops, the big winner so far has been Gulfstream.
When mainland Chinese buyers enter an unfamiliar foreign market, they naturally reach for a known brand. In business aircraft, the name that they know best is Gulfstream. Among those large aircraft that dominate the Chinese market, users operated 48 Gulfstreams at the end of 2012, according to Asian Sky Group. There were 27 Bombardiers and 12 Dassaults.
Because potential Chinese buyers are quickly learning more about other brands, Gulfstream's challenge must be to translate that starting advantage into a long-term strength in the Chinese market, relying on recommendations from its early customers, say industry executives keenly watching the company's progress. Word of mouth is a powerful factor in selling business aircraft, notes Sperry.