In 2005, the accumulated subcontract revenue of Xi'an Aircraft International Corporation, Chengdu Aircraft Industrial (Group) Co., Ltd and Shenyang Aircraft Corporation reached USD 85.11 million, sharing 56.4% of the total subcontract revenue in China. After completing the capital cooperation with Chengdu Aircraft Industrial (Group) Co., Ltd and Shenyang Aircraft Corporation, subcontract business of Xi'an Aircraft International Corporation is expected to have over 140% denotative growth. It is forecasted that domestic subcontract industry will gradually shift from simple structure components processing to large aircraft components assembly and part design in 2007-2010, so the growth rate of business scale in China subcontract industry will be considerable.

Globally, decreasing the quantity of core suppliers, improving the scale and technology level of suppliers and assuming R&D risks together with core suppliers will be development trends of subcontract business of trunk line passenger airplanes. The quantity of core suppliers of Boeing's B787 aircraft off the production line recently decreased by over 40% compared to B777 aircraft and other previous models, less than 100. Airbus plans to decrease its over 3000 suppliers to 700-900.

Sales Volume and Sales Revenue Forecast of ARJ21 Structure, 2006-2010

Forecast on Scale of International Subcontract Operation of Xi'an Aircraft International Corporation, 2007-2010

2 Recent related developments

3 Civilian products business enters big-span development phase
3.1 Development analysis of Bombardier
3.2 ARJ21 market analysis
3.3 Subcontract business analysis
3.4 Development trends of trunk line passenger airplane supplier system
3.5 Subcontract business of Xi'an Aircraft International Corporation

4 Enterprise profitability forecast