Embraer in China

21 Pages Posted: 2 Jun 2017

See all articles by Sérgio G. Lazzarini

Sérgio G. Lazzarini

Insper Institute of Education and Research

Abstract

In late October 2007, the recently appointed CEO of Embraer and one of the key architects of Embraer's global expansion arrives in Manchuria China to visit the Harbin airplane assembly plant, the result of Embraer's joint-venture with the state-owned Chinese company AVIC II. The Harbin plant was established in 2002 to assemble the Embraer Regional Jet (ERJ) 145, the 50-seat plane used in regional passenger travel. After a disappointing start with only a small number of orders from Chinese airlines, in late 2006, Embraer received 100 orders: for 50 of the ERJ 145s, to be assembled in China and for 50 EMBRAER 190s (a larger, newer 108-seat aircraft), to be exported from Brazil. Still, several challenges lay ahead. AVIC I, the other Chinese state-owned aircraft corporation, was planning to launch a new family of regional jets, the ARJ21 to compete head-on with the EMBRAER 190 family. Also, regional travel in China was still emerging, and the development of new routes was heavily regulated by the government. The CEO must decide what Embraer should do to foster sales in the region, while at the same insulating itself from escalating competition.

Excerpt

UVA-S-0151

Dec. 31, 2008

EMBRAER IN CHINA

The brown air prevented Frederico Curado from seeing barely three meters ahead of the wing of his airplane as it landed in Beijing in late October 2007. Curado was in China to visit the Harbin airplane assembly plant in Manchuria, the result of Embraer's joint-venture with the state-owned Chinese company AVIC II. Recently appointed as CEO after eight years as executive vice-president of the Airline Division, Curado had been one of the key architects of Embraer's global expansion.

The Harbin plant was established in 2002 to assemble the Embraer Regional Jet (ERJ) 145, the 50-seat plane used in regional passenger travel. After a disappointing period with only a small number of orders from Chinese airlines, in late 2006 Embraer received 100 orders: for 50 of the ERJ 145s, to be assembled in China and for 50 EMBRAER 190s (a larger, newer 108-seat aircraft), to be exported from Brazil. Still, several challenges lay ahead. AVIC I, the other Chinese state-owned aircraft corporation, was planning to launch a new family of regional jets, the ARJ21 to compete head-on with the EMBRAER 190 family. Also, regional travel in China was still emerging, and the development of new routes was heavily regulated by the government.

It was time to disembark, and Curado could not help thinking about what Embraer should do to foster sales in the region, while at the same insulating itself from escalating competition.

. . .

Keywords: Global expansion, foreign competition, risk taking, strategic marketing

Suggested Citation

Lazzarini, Sérgio Giovanetti, Embraer in China. Darden Case No. UVA-S-0151. Available at SSRN: https://ssrn.com/abstract=2975204

Sérgio Giovanetti Lazzarini

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil
55-11-45042387 (Phone)

HOME PAGE: http://www.sergiolazzarini.insper.edu.br/indexelazza.html

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