State-run Aviation Industry Corporation of China (AVIC) and state-run Harbin Bearing Group (HRB) have signed another joint venture agreement to manufacture precision aerospace and specialty bearings.

The new company, AVIC Harbin Bearing Co. Ltd. (5251R9N7), is a venture between Harbin Bearing Group and four of AVIC's 200 other businesses: AVIC Dong' an, AVIC Chengfa Technology, AVIC Liming and AVIC Xi'an Aero-Engineering Ltd. The venture will apparently build a 350,000 square meter facility in Harbin to manufacture aerospace and specialty bearings.

AVIC is China's massive state-run aviation industry holding company. It employs nearly 500,000 people across ten major business units, 20 companies, and approximately 200 facilities nationwide. It has been reorganized several times, and now is back to just AVIC. In 1999, it had been split into AVIC I and AVIC II, with AVIC I working on large- and medium-sized aircraft and aerospace projects while and AVIC II worked on smaller aircraft and helicopters.

AVIC is larger than just military and civil aircraft and aerospace. It runs state assets, investment companies, financing businesses, land use operations, aircraft service and leasing, engineering, and many others. But it also runs companies that manufacture automobiles, motorcycles, engines, textile equipment, pharmaceutical and medical equipment, environmental equipment and other non-aviation interests running all the way to real estate development and import-export.

In 2008, AVIC I and AVIC II were reunited back into the single AVIC organization.

AVIC acquired Harbin Bearing Group in 2007, so the new AVIC Harbin Bearing Co. is essentially a joint venture between companies already operating under the same state-run umbrella.

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Harbin Bearing, founded in 1950, employs nearly 20,000 people across its bearing manufacturing facilities in China. Harbin is a vertically integrated manufacturer, producing a wide variety of standard, rail, and aerospace-quality ball and roller bearings, including the rolling elements. Harbin Bearing also manufactures automotive wheel hub assembly units -- in 2008, Harbin completed a 10,000 square meter addition to provide more floorspace for hub assembly production as Chinese auto manufacturer demand continues to rise.

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Li Ping, Deputy Chief Economist and Director of Capital Operation Department of AVIC, said AVIC Harbin Bearing Co. will focus on design, R&D, production, maintenance, marketing and after-sales services of high-precision bearings and related products for aircraft, aerospace, rail, and large wind power equipment.

Tan Ruison, AVIC's Deputy General Manager, said he expects all of the operations to gain by sharing their resources and specific advantages. He also mentioned that China's aerospace industry is not the only focus, but AVIC Harbin Bearing needs to focus on manufacturing a wider range of internationally competitive high-end bearings.

Noted prominently in the announced list of new products to be produced by AVIC Harbin Bearing are high-precision large-diameter slewing ring bearings for advanced wind energy applications. This is the first time AVIC has acknowledged it will get involved in producing wind energy bearings.

eBearing spoke to several China market observers who noted state-run AVIC will immediately become the unspoken but favored supplier for advanced wind energy bearings -- high precision bearings suitable for larger turbines -- "undoubtedly" at the expense of foreign companies who have already invested heavily to manufacture large slewing ring bearings in China.