* China is world's second biggest market for private jets
* Lack of new orders announced at Shanghai air show
* Growth in China market seen slowing to 1 pct this year
* Second-hand jets now make up more than half of sales
* Industry sees hope from government plans to open up
SHANGHAI, April 14 (Reuters) - China's rich are foregoing
fancy new private jets in favour of second-hand planes or
rentals, reflecting how the country's business elite are
increasingly shunning flashy signs of wealth amid slower
Planemakers such as Embraer and Bombardier
are shifting focus to after-sales services in
response, while brokers are refurbishing older jets or hiring
out planes as the once high-flying industry braces for its
weakest growth in a decade.
Dealers at one of Asia's top industry shows in Shanghai this
week said second-hand jets now made up more than half of sales
to wealthy Chinese entrepreneurs and corporations, up from under
a third two years ago.
Chinese buyers, who began purchasing new business jets 30
years ago, were also becoming more pragmatic about buying
cheaper, second-hand jets and giving them a makeover, they said.
"Now ... while you can still get a Gulfstream 550 for around
$50 million for a new one, you can get an extremely adequate
aeroplane for $30 million," said David Dixon, president of
business jet brokerage Jetcraft Asia.
"So $20 million is a lot of money to anybody."
In part the shift reflects a broader trend that is making
life tougher for firms selling luxury goods in the world's
second biggest economy, as Chinese buyers increasingly push for
bargains on everything from high-end handbags to holidays.
In such a market, where new planes quickly lose their value,
dealers said second-hand jets were simply a less risky bet.
"When the economic climate is going down, there's fewer
buyers in the market honestly, so the depreciation rate is
higher," said Jackie Wu, president of Hong Kong-based plane
broker and charter firm JetSolution Aviation Group.
She said a new jet typically lost around 15 percent of its
value last year, faster than the 10 percent loss in 2015.
"Now pre-owned aircraft are a better buy," she said.
Greater China is the world's second-largest business jet
market behind the United States and had seen annual growth of up
to 49 percent before 2012, when President Xi Jinping launched a
fierce crackdown on corruption that has discouraged conspicuous
displays of wealth.
Owners include China's richest man, Wang Jianlin, who flies
a Gulfstream 550, and Tencent founder Pony Ma who has a
Bombardier Global 6000, according to data compiled by Hurun
Report which tracks China's super-rich.
But growth has been slowing since 2012 and sales remain
subdued. At the Shanghai show there was a distinct lack of new
orders announced, while planemakers instead talked up their
Consultancy Asian Sky Group estimates the private jet fleet
across Greater China will grow just 1 percent this year - with a
total of five new plane deliveries - its weakest on record.
There are currently around 480 private jets in China,
compared with 466 in 2015 and 67 in 2007.
"The entire market is now experiencing a cold wind," said
Guan Dongyuan, president of Embraer China.
Guan said, however, that the Brazilian planemaker was
holding out for better days, given the potential of a market
that is still a long way behind the United States, where there
are around 12,000 private jets.
"We want to use the period when the market is relatively
depressed to improve our after-sales services," he said,
referring to its spare parts and engineering units.
Canadian rival Bombardier, which has 110 aircraft based in
Greater China, last Friday opened its first business jet service
centre in the country in the coastal city of Tianjin.
Executives said they were heartened by government signals to
encourage growth of the country's aviation industry, which
remains hampered by a lack of infrastructure and tight military
control of China's airspace.
Last year, China said it would have more than 500 airports
specifically for business jets by 2020, and would further open
up airspace for civilian use with a view to grow the country's
general aviation fleet to 5,000 aircraft by that year.
"It's good that there's commitment, it takes time and we
need to be patient," said Bjorn Naf, chief executive of Hong
Kong-based jet management firm Metrojet, who said competitors
were still swarming into the market despite the headwinds.
"The market will swing back, I'm convinced."
Fang Xinyu, Beijing-based vice president of Deer Jet, which
manages a fleet of 90 aircraft in China, said there had been a
period of "depression" but that business jets still made sense
for busy company executives.
"The value general aviation provides in terms of time
efficiency and privacy have always been present," he said. "This
is something no one can take away."
(Reporting by Brenda Goh; Editing by Alex Richardson)