Rolls-Royce committed to China investment

British power and propulsion solutions provider Rolls-Royce remains committed to investing in China, as the country has a promising aviation market and plays a vital role in its supply chain, the company's top executive in China said.

"We have suppliers across many different locations in China. China has been, and is, an important part of our supply chain … They supply to the engines that are manufactured for the global market," Julian MacCormac, regional director of Rolls-Royce Greater China, told China Daily in an exclusive interview recently.

MacCormac, also chair emeritus of the British Chamber of Commerce in China, said Rolls-Royce has one wholly owned manufacturing facility and a number of joint ventures across the country. These are not only involved in the manufacturing of parts, but also include the assembly of diesel engines, as well as maintenance, repair and overhaul.

MacCormac said Rolls-Royce continues to look at the capability in China because some of its best-performing suppliers that are located here are able to produce to its exacting standards and are competitive at the same time.

He said Rolls-Royce sees great growth potential in China's aviation market as it is recovering well from the COVID-19 pandemic, which once brought serious challenges to the sector.

In the first half of this year, China transported 350 million passengers by air domestically, growing 23.5 percent year-on-year. This was 9 percent above the pre-pandemic level in 2019, according to the Civil Aviation Administration of China.

Besides, aviation is closely linked to the improved standards of living and GDP. As the Chinese economy continues to expand, its aviation market will grow accordingly, he said.

China's GDP expanded by 5 percent year-on-year in the first half of the year, in line with its annual growth target.

Against such a backdrop, Rolls-Royce has carried out further investment plans to make sure its capacity meets surging demand.

"We have to invest in this region so that we're able to get close to our customers … and also then that we can provide the services and the support that our customers need, to service that growing installed fleet in China," MacCormac said.

Rolls-Royce has invested with Air China in a partnership in Beijing. A maintenance, repair and overhaul facility was jointly established by the two companies in 2022 and will be put into operation by 2026.

MacCormac said the company is investing in skills and talent to ensure that it has the right people and capability for the project to service and maintain the engines.

"When it is at full capacity, there will be 250 engines per year maintained at that facility, servicing operators in China and beyond. And that's a really exciting program for us. It's the biggest investment that we've had in the Chinese mainland," he said.

If the country wants to further deepen opening-up and attract more foreign investors, it should ensure greater clarity and transparency in terms of what to expect and predictability for business, MacCormac said.

"What companies are really looking for is a level of predictability. It's clear that there are significant opportunities as China continues to grow, but what is really important is that companies feel confident that they are part of that future growth story," he said.

According to a resolution adopted at the third plenary session of the 20th Central Committee of the Communist Party of China in July, China will further reform the institutions and mechanisms for promoting foreign investment, ensuring national treatment for foreign enterprises in terms of access to factors of production, license application and standard setting.