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Sat, Jan 29, 2022

Chinese Stake in Icon Aircraft Raises Eyebrows at FBI

Was the Amphibious LSA Maker Targeted for Illegal Technology Transfer? 

Icon Aircraft has been the subject of increased scrutiny in recent weeks, as investors worry that the Chinese gov-backed investment company purchased nearly 47% of the manufacturer.

Some American shareholders have accused the firm of carving out the plane maker to improve its own technology back home, taking the technological know-how back home to advance their domestic industry and undercut Icon at home. Reportedly, shareholders petitioned the U.S. Committee on Foreign Investment to check into the situation, which began looking into the situation in November 2021. The FBI has also, reportedly, begun probing possible criminal violations stemming from the tech transfer. 

Shanghai Pudong Science & Technology Investment Company remains the biggest shareholder of Icon, the company that made waves with its light sport A5 Amphibian and years of less than honest business actions. The company had hoped to have a type certificated A5 approved by the end of 2021 to open sales channels around the world in locales that do not recognize the light sport designation, but that appears to remain outstanding, if not unrealistic. When announcing the move in July 2021, the company expected to deliver 31 aircraft through the rest of the year, and more than 50 in 2022 – far less than the hundreds once trumpeted during their heyday.

Shareholders in many domestic aircraft companies have watches with consternation as foreign companies have been able to swoop in and take the lion's share of manufacturers. A 2017 RAND study named a few outfits subjected to such interference, from joint ventures as seen in Cessna, GE, and Brantly, to Mergers and Acquisitions, like Superior, Teledyne, Nexteer, Cirrus (which got into trouble years ago for related concerns), Glasair, Mooney, Southern Avionics, UT Align, and Henniges. Many times, the acquisitions were used to jump start Chinese production, lifting as much as possible from the parasitized company and taking it home for use there, sometimes by those with zero experience in the industry. 

Brantly International, a light helicopter manufacturer, was acquired in 2008 by an utter neophyte to aerospace assets, despite being hailed in english-language media as the "helicopter king". Back home, his investment partners, all in banking and financing, described the new owner as "very enthusiastic but does not understand aviation. He has absolutely no direction when doing things and has no success stories." Since then, the Chinese beneficiary of the transfer, Qingdao Haili Helicopters, has released a carbon copy of Brantly's B-2B in unmanned trim, but news from the coverage in the past decade is sparse. 

While some have expressed ambivalence at the marginal militaristic value of general aviation assets when pressed for legislation to stop such tech transfers and foreign ownership, the rapidly advancing unmanned systems industry has brought the viability of small aircraft into focus. Critics say the Icon A5 is a valuable lesson in multiple areas of combat aircraft design rolled into one: composite production, development, and evaluation; amphibious aircraft design; and lightweight engineering. The tips and tricks learned from the Icon could just as easily be applied to create a standoff, autonomous attack drone capable of parking itself on water or launching from the sea. 

Even if not used for the People's Army going forward, the aircraft could just as easily be used for a cheaper Chinese-made aircraft for later import to the US, undercutting it and similar aircraft with cheaper production costs and the lack of development needed to bring it to market. 

FMI: www.iconaircraft.com

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