Enstrom Helicopter is the latest general aviation manufacturer to be taken over by Chinese investors as the country paves its way toward more open skies.

The Michigan-based manufacturer joins a long list of light aircraft companies being snapped up by China's vast industrial complex in expectation of the demand for general aviation likely to come from the long-awaited deregulation of China's airspace. But the Enstrom deal is more significant than it might seem at first glance.

The deal by Chongqing Helicopter Investment Co. (CQHIC), believed to be worth $60 million, represents the first Chinese takeover of an entire helicopter manufacturer. For decades, Chinese industry has been working closely in partnership with Western helicopter firms to build knowledge and experience. While in a bid to get closer to the market, companies like Eurocopter, AgustaWestland and Bell have opened final assembly lines for select products in the country.

But many of these partnerships have formed in conjunction with, or under the watchful eye of, state-owned manufacturer Aviation Industry Corp. of China (Avic). Chongqing's purchase of Enstrom means that China now has a second helicopter manufacturer, under private ownership without the constraints and red-tape imposed by the state, albeit sitting on U.S. soil.

The buy also gives ambitious Chongqing real insight and experience in helicopter production, the general aviation industry and selling to customers outside China. Chinese airworthiness standards and certification levels are little recognized outside of the country, which makes sales of Chinese-built helicopters to those not aligned with the country simply an aspiration, at least for now.

CQHIC is no stranger to Western companies. In 2011, shortly after it was formed, the investment group signed a memorandum of understanding with AgustaWestland in the hope of producing the manufacturer's helicopters locally. But the two parties broke off discussions and the project appears to have fallen by the wayside.

For Enstrom, very little will change. The company has been owned by foreign parties for much of its 50-year history. CEO Jerry Mullins and his team did not have much to do with the takeover process, which simply saw Enstrom transferred from its previous owner, an anonymous Swiss investor.

“The first thing that everyone asks is, 'What has changed?'” says Tracy Biegler, Enstrom's marketing director. “Nothing has really changed. We still have the same management structure, the products are the same, but we don't really know what the future holds.” Of course, Enstrom is hopeful that Chongqing's investment will bring more success.

“For Chongqing, this takeover isn't just about the manufacturing,” Biegler says. “China already has a lot of experience in building helicopters and aircraft. A significant part of their decision is about gaining the experience and knowledge about the infrastructure of general aviation industry. That's an aspect they do not currently share with the rest of the world.”

Biegler says there are no plans to move away from the U.S., but he adds that some production could take place in China and offer opportunities for the company's supply chain. More critically, Enstrom hopes the takeover will help boost sales. Chongqing would like the company to achieve a 30% share in the Chinese light helicopter market and sell 110 aircraft per year by 2015, a rate not seen by Enstrom since the 1970s.

While they have never sold in the volumes that their competitors at Robinson Helicopter Co. have, Enstrom's family of piston and turbine-engine light helicopters are seen in the industry as highly robust and cost-effective. Today, the company's product line consists of the turbine-powered 480B and the piston-engine F-28F and 280FX models. The rotorcraft have been adopted for a wide range of roles from agricultural spraying to law enforcement.

For many years, Enstrom relied on the general aviation sector for much of its business, but it was able to diversify and secure against the worst of the economic downturn when it snagged a series of lucrative contracts for training helicopters in the Far East.

Enstrom has delivered 16 rotorcraft to the Thai army and it is building the last 20 in an order for 30 helicopters for the Japanese Ground Self-Defense Forces. Enstrom officials say they are working on at least four further military training program contracts.

The company has some experience in China, too. Through established dealerships, Enstrom has a backlog of 12 helicopters destined for China. Several of its helos are already being used for agricultural spraying in the country, and the Wuhan police operate a pair of 280FXs.

China's Aerospace Buying Spree
2009
Avic acquires Fisher Advanced Composite Components (FACC), a European aerostructures supplier.
2010
Avic purchases Epic Air, a U.S.-based general aviation kit aircraft manufacturer.
A Chinese partnership that acquired control of U.S.-based Brantley Helicopters in 1994 buys Superior Air Parts, a Texas engine and parts maker, and sends all of the Brantly tooling to China, where the company is attempting to develop an unmanned aerial vehicle.
Avic acquires U.S.-based Continental Motors, the second-largest manufacturer of piston engines.
2011
China Aviation Industry General Aircraft Co. buys U.S. general aviation manufacturer Cirrus.
2012
Bankrupt Hawker Beechcraft announces it is negotiating a sale of its non-defense businesses to Superior Aviation Beijing for $1.79 billion. Negotiations later collapse after U.S. regulators express concerns about technology transfer.
Jilin Hanxing Group takes over Glasair Aviation, manufacturer of homebuilt aircraft.
Enstrom becomes the first helicopter manufacturer to be taken over by Chinese investors when Chongqing Helicopter Investment Co. buys it.
Sources: ICF SH&E and Aviation Week Intelligence Network