China's AVIC posts profit gains but highlights future challenges

The Aviation Industry Corporation of China (AVIC) – China’s biggest defence industrial enterprise – has announced increases in revenues and profits despite the impact of Covid-19. AVIC said on 22 January that the value of sales in 2020 was CNY468.5 billion (USD72.3 billion) and that net profit was CNY15.6 billion. According to AVIC’s statement, these figures represent year-on-year increases of 1.5% and 16% respectively.

However, the figures do not appear to correlate with AVIC’s previously stated financial statistics for 2019, although the state-owned corporation does not explain the discrepancy. In January 2020 AVIC reported revenue and profit of CNY458 billion and CNY19.8 billion respectively.

AVIC, the manufacturer of Chinese military aircraft including the J-20 fighter (pictured), has announced an increase in profits for 2020, but also highlighted several challenges facing future expansion. (PLAAF)

In its new statement, AVIC said that its performance during 2020 reflected a path of “high-quality development in the face of the coronavirus and the complicated international situation”. The group also pointed to a number of challenges that it is facing to meet future growth objectives.

AVIC said that during 2020 it had successfully implemented a number of reforms that had helped the corporation strengthen during the year. These reforms included: “decentralising” and “optimising” its industrial assets; the listing of some subsidiaries; and the promotion of the government’s ‘mixed-ownership’ strategy, through which private-sector firms are invited to invest in state assets.

Other priorities during 2020, said AVIC, were to: “strengthen its capital position”; enhance the effectiveness of science and technology innovation; support the government’s Belt and Road initiative, through which China is looking to expand its influence in developing markets; upskill the company’s workforce; and deepen the firm’s “anti-corruption work”.