Airbus will set up a logistics center in Tianjin to optimally manage the supply chain for all its projects in China, the aircraft manufacturer said yesterday.

The European aircraft manufacturer signed a memorandum of understanding with Tianjin Free Trade Zone yesterday to set up the center, which will serve as a hub to manage the transportation needs of all Airbus aircraft components flowing in and out of the country.

"As Airbus is expanding its activities in China, a logistics center will help us optimize the supply chain for all our projects in a more streamlined way while reducing costs and increasing efficiency," said Laurence Barron, Airbus China president.

Barron said Tianjin was selected mainly because of the northern coastal city's geographic advantage as a major seaport and its proximity to Airbus' A320 aircraft final assembly line.

The logistics center will begin operations at a temporary location in the free trade zone in January 2010. The facility will first manage simple logistics operations for the A320 wing-equipping project in Tianjin and Airbus' manufacturing joint venture in Harbin.

The center will become fully operational at a permanent location in March 2010 and its service will be extended to cover all Airbus industrial packages in the country, including the final assembly line.

More than half of Airbus' worldwide fleet has components produced in China. Currently, six Chinese aviation companies manufacture parts and components for Airbus. They are located in Harbin, Shenyang, Tianjin, Xi'an, Chengdu and Shanghai, and handle their own logistics.

The total value of Airbus' procurement in China surpassed $100 million last year and is expected to touch $200 million annually in 2010 and $450 million from 2015.

Airbus opened its first final assembly line outside of Europe in Tianjin last year. The plant delivered its first A320 plane in June and is expected to roll out a total of 11 jets this year. The project has helped Tianjin attract investment from other foreign aviation related companies, such as Goodrich and Thales.

The logistics center is expected to further promote the development of Tianjin as one of the major aviation centers in the country, said He Lifeng, the city's deputy Party secretary.