* Says China production cost 20 pct more than overseas
* In talks with govt on heavy levies on parts
BEIJING, Sept 16 (Reuters) - China's heavy import duty is
hurting the competitiveness of locally assembled foreign
airplanes, Embraer SA's EMBR3.SA country head said on
Wednesday, and that the company was in talks with the government
to resolve the matter.
China's average 3 percent import duty along with 17 percent
value added tax has pushed up production costs of locally
assembled planes of foreign companies, Embraer's China chief
Guan Dongyuan said.
"Production cost of our Harbin-made business jets is 20
percent higher than those made overseas," Guan told reporters on
the sidelines of the Beijing airshow.
Embraer started assembling ERJ 145 regional jets in
northeast China in partnership with Harbin Aircraft Industry
Group Co Ltd in mid-2000 and shifted later on to its Legacy 650
business jets in 2012.
Other foreign companies making planes in China, except those
which assemble jets in tax-free zones such as Airbus AIR.PA ,
are also facing the same issue, he said, adding not every
Chinese city has a tax-free zone.
He said many Chinese clients prefer to buy business jets
overseas and register outside China due to the high taxes.
When asked whether Embraer may stop assembling jets in
China, Guan said the company wanted to "let the market to make
the decision".
"Government has been encouraging local production, but the
precondition is that you shouldn't set the bar too high," he
added.
Embraer, which competes with Bombardier BBDb.TO among
others, now has 80 percent of China's regional aviation market.
It has firm orders of 167 commercial jets from the market, of
which 130 have been delivered.
It expects 1,020 net aircraft in the 70-130 seat segment
will be delivered to China in the next 20 years.