Deal With McDonnell Douglas : Chinese Engineers in Southland Seek to Learn, Not Play

As visitors to Southern California go, Wang Weihan and his 127 countrymen defy the stereotype.

Frolicking at the beach is of little interest to them. The lights of Hollywood haven’t mesmerized them. And while they say California food is just fine, they prefer to fix their own meals at home, an apartment complex in Long Beach.

They are Chinese aerospace engineers, a very serious group that has spent the last six months in Southern California learning how to build commercial jetliners at McDonnell Douglas.

Under what is billed as the largest technology transfer ever between two nations, Wang’s Shanghai Aircraft Manufacturing Factory will co-produce aircraft designed by Douglas Aircraft in Long Beach.

The deal is valued at $1 billion and provides for the final assembly of 25 MD-80 jetliners in Shanghai. Five more aircraft will be assembled in Long Beach and delivered to the Chinese under the deal.

On the Back Burner

Wang says the agreement will provide China with important new technology to develop its own aircraft industry and a quantum leap in its participation in the international aerospace market. While China has long produced its own military fighter jets, it has never mass-produced passenger jetliners of its own design. Its first program to develop its own jet transport, the Y-10, has been put on the back burner.

The Chinese aerospace engineers and technicians spend their days at Douglas in classrooms reviewing the detailed assembly methods used on the MD-80 and in the factory seeing how their American counterparts do the job.

“The work is very hard,” Wang says. “But the people here are very good teachers.”

While many of the Chinese speak some English, they rely heavily on translators. Douglas officials give the Chinese high marks for diligence as students. After a long day in class at Douglas, the Chinese go home to continue studying, Wang said.

They haven’t had much time to watch television and don’t take in much of California’s night life because they rely on McDonnell Douglas buses for transportation. In China, so few private citizens own cars that not many of the engineers know how to drive.

Wang has avoided many of the tourist routines. He says he has gained many American friends. The Chinese have hosted several dinners at their apartment building for their Douglas teachers, including one 12-course feast of Chinese food, said Don Hoisington, one of the Douglas teachers.

About 150 Douglas officials will go to the Shanghai factory to assist the Chinese in starting up their assembly line next year.

“They are very good people,” Wang says of his American counterparts. “We would like to thank all our American friends for their utmost friendship.”

Wang recalls that several Long Beach neighbors brought him traditional Chinese “moon cake” during the Festival of Middle Autumn. The important holiday marks the unity of the family. Wang missed spending the holiday with his wife and two children this year. He says he passes many evenings writing long letters to them.

Training Nearly Completed

Wang and most of his group have nearly completed their training. The parts for the first MD-80 to be assembled in China will be shipped in January, and the Chinese engineers will begin leaving at that time. Once back home, they will train an additional 2,000 workers who will be employed in the Shanghai factory to build the aircraft. The first plane is expected to be completed in early 1987.

While the program is important to China, McDonnell Douglas has gained a valuable foothold in a potentially large market, according to Gareth Chang, president of McDonnell Douglas China, a McDonnell subsidiary that is conducting the venture.

The deal took 10 years of negotiation to complete, Chang said. The long and tedious negotiations included a meeting between McDonnell Douglas Chairman Sanford McDonnell and Chinese leader Deng Xiaopeng in April, 1980, at which McDonnell officials thought the deal was clinched.

“Mr. Deng said, ‘Please be patient,’ ” recalls Chang, who attended the meeting. “He said he was still interested in the project.” But it was another five years before the agreement was concluded in a 500-page contract, a period in which other major aircraft manufacturers from around the world continued to sell aircraft to China.

While the big deal doesn’t give Douglas leadership in the Chinese market, it does put the firm on a par with other industry leaders, such as Boeing and Airbus Industrie, in a market that is expected to grow significantly, Chang says.

Air travel in China is far behind that of the industrialized world. In the United States, 86% of all intercity passenger trips longer than 200 miles are by commercial airline. In China, only 2% of intercity trips are by air, Chang says.

“If that even doubles, that is a very big market for aircraft,” Chang said. “We are projecting a 12% to 13% annual growth in air travel in China.”

The civilian air transport system in China is roughly equivalent to the U.S. system in the early 1950s, Chang said. The total revenue passenger miles flown each year, a key measure of passenger volume, is less than that compiled by a single major U.S. airline.

Historically, air transportation has a direct relationship with economic growth. As the economy and personal incomes grow, people tend to fly more. Rail transportation is likely to remain the predominant mode of passenger transportation in China, Chang said, although by 1991 China is expected to open three new international jetports.

Under the co-production program, Douglas Aircraft will ship MD-80 kits that will be assembled in Shanghai. The kits contain about 80% of the value of the completed aircraft, which are worth about $25 million each.

While China has never produced its own passenger jets, it did build three Y-10 jets, which closely resemble Boeing 707 aircraft.

“I am very proud of our airplane,” Wang said. “Last year, it landed at Lhasa, which has an altitude of 12,000 feet. It is very difficult to fly there. Of course, we would like to work to improve our airplane.” Despite the strides in aircraft design that the Chinese made with their Y-10, the jump to the MD-80 provides them with access to the latest aerospace technology, Wang said.

The MD-80 joint venture is scheduled to be completed in 1991, but McDonnell and China already are considering another joint program to build a prop fan, the next generation of commercial aircraft technology. Air Italia, an Italian producer that currently builds parts for the MD-80, will also participate in that program.