SAO PAULO, July 7 (UPI) -- Brazil's Embraer announced expansion of its aviation business into China with the opening of a subsidiary company that will provide technical services for aircraft already on the Chinese inventory and many more on order.
The aircraft maker said it is investing $18 million into the new operation that supplements previous activities of Embraer in China and is seen by analysts as part of Brazil's overall strategy to expand its defense manufacturing and exports.
Brazilian President Luiz Inacio Lula da Silva launched a multibillion-dollar regeneration of Brazil's defense industry that became dormant in the later years of dictatorship and return to democratic rule.
The new subsidiary is called Embraer China Aircraft Technical Services Co. Ltd. Details of its ownership weren't immediately revealed.
Embraer said: "In light of the steady growth of its customer base in the country, Embraer strengthened its existing customer support capability by creating ECA. The business scope of the new subsidiary covers logistics and spare parts sales, as well as consulting services regarding technical issues and flight operations."
China already has more than 70 Embraer aircraft in service and has ordered a dozen more from the company.
This is Embraer's first subsidiary but the second business venture in China. In 2003, Embraer and the Aviation Industry Corporation of China jointly started the Harbin Embraer Aircraft Industry, the northeastern Chinese city of Harbin, which began manufacturing aircraft the following year.
Guan Dongyuan, president of Embraer China and chief executive officer of ECA, said in the company statement the establishment of Embraer China Technical Services demonstrates "our long-term commitment and confidence in the growing Chinese aviation market."
ECA will be Embraer's third maintenance operation outside Brazil. The company has maintenance operations in the United States and Portugal.
Embraer has become one of the largest aircraft manufacturers in the world by focusing on specific market segments with high growth potential in commercial, defense and executive aviation, the company said on its Web site.
"We develop and adapt successful aircraft platforms and judiciously introduce new technology whenever it creates value by lowering acquisition price, reducing direct operating costs, or delivering higher reliability, comfort, and safety," Embraer said.
Embraer was Brazil's largest exporter from 1999 to 2001 and the second largest in 2002, 2003 and 2004. It employs nearly 17,000 people, with about 95 percent of its employees in Brazil.
Based in Sao Jose dos Campos, Embraer was founded in 1969 as a government initiative and then privatized Dec. 7, 1994.
In 2006 the company went through capital restructuring and opted for a simplified capital structure composed only of common shares and pledged to implement enhanced corporate governance practices and transparency standards.