Bradley Perrett/Beijing

For aircraft component makers used to seeing China as a fierce competitor, the view from the other side of the hill may be surprising. To Chinese plant managers, technical and management problems abound, wages are rocketing, and sharp rivals in such countries as Mexico and Morocco are only making life harder.

Shenyang-based SACC, an internationally focused airframe maker in the Avic group, admits to a range of such daunting challenges as it strives to achieve its goal of becoming a strategic partner of major aircraft builders. One of the answers from its president, Pang Zhen, is specialization—something that Chinese aerospace managers have not been very good at enforcing.

SACC is already a product of a strong effort by Avic over the past five years to get each of its subsidiaries focused on a limited range of activities. In their decades as closed weapons builders for a Communist military, aircraft plants tried as far as possible to make whole aircraft. With economic liberalization, they liberally began making even more things, from motorcycles to gym equipment.

Pang's company was split from Shenyang Aircraft Co., a famous fighter works, in 2008 with the task of making only civil airframe parts. It builds forward, center and aft fuselage sections for the Bombardier Q400 but Pang wants to tighten its focus even further.

In trying to build whole aircraft, “we cannot bring together the resources needed to do things properly,” he says. “So we have decided to follow the path of specialized development. Currently, we are concentrating on the aircraft tail section, doors and engine mountings to develop our business.”

The whole Chinese industry lacks scale, Pang says, noting that its international deliveries are about a tenth of Japan's. SACC, at least, thinks it is has to get bigger. Then there is technology. For all the funding that the Chinese state has lavished on the aerospace industry, Pang says that its manufacturing techniques are still mostly traditional, with SACC's automation at less than half the level commonly seen in Western countries. He aims to change that.

And management is not up to scratch. Pang tells Aviation Week that if SACC could immediately implement Western management techniques it could improve labor productivity by at least a third. That would buy the company about three years of respite from the problem of wage inflation.