Founded in 1969, Embraer was owned by the Brazilian government before it was privatized in 1994. At the end of 2006, Embraer had an order backlog of US$15 billion, 25 percent of which is from the Asia-Pacific region. Embraer sold its first jet to China in 2000 and has a backlog of 104 orders from China. It signed its largest single order in the country last August to sell 100 jets to Hainan Airlines Group (HNA), including 50 E-190 jets and 50 ERJ 145 jets. The 50-seat ERJ145 will be produced by a joint venture between Embraer and Harbin Aircraft Industry Co Ltd formed in 2003.

Mauricio Novis Botelho, Embraer's board chairman, spoke to China Daily in an exclusive interview during his recent trip to Beijing.

Q: How has Embraer, a company from a developing country, become one of the world's largest aircraft manufacturers?

A: This is an industry based on knowledge. A common thing behind the three phases of our business namely designing, manufacturing and servicing is knowledge. Embraer is one of the most successful long-term programs ever established in Brazil. After World War II the Brazilian government created an institution dedicated to aeronautics. Five years later, the government created a university dedicated exclusively to aeronautics. About 20 years later, the company was founded. Without this solid past, we would never have reached our position today.

We are also very effective in blending two cultures: the solid engineering and industrial culture formed over the years and a solid business culture that came just after the privatization.

Q: Is there anything that could be shared with China?

A: A key point is the care for people. When Embraer was privatized, a key issue was how to manage people and how to make them motivated and integrated with the objectives of the company. You can find machinery and capital in certain places. But you cannot always find qualified and motivated people unless you prepare them and train them.

Q: China plans to make large commercial aircraft by 2020. What do you think of China's capabilities in aircraft manufacturing?

A: I don't have any doubt on the technical capabilities of China. But my concern about this announcement is we don't know what aircraft it would be, what market it would serve and what specifications it would have.

The danger is that aircraft designers are superb designers and they love their creation, but what about the return on investment? What about the market you serve? What about your competitiveness in that market? You must have a very strong and firm view on the market, not on the product. The product must satisfy the market, not the other way around.

Q: Did you have similar experience in the past?

A: We had such a failure just before the privatization: the development of the CBA123 in the late 1980s. It was a marvelous aircraft with 19 seats. It could fly faster, higher, and less noisily than competitors. Engineers and pilots loved this aircraft. But they forgot an enterprise must make money out of it. That aircraft would cost 50 percent more than what the market was looking for. So we didn't sell one single unit.

Q: What do you think of China's regional aviation market potential? Is it taking off a bit slowly?

A: Yes, probably slower than what we would have expected. But with HNA's order for 50 ERJ145 jets, we are going to more than double our production in China next year.

HNA's orders will stimulate many more. It is mandatory for Chinese airlines to have their network complemented by a regional air network.