China's Shopping Spree

Like every other Communist nation, the People's Republic of China has a practically endless shopping list of U.S. products that it would like to buy to help in its economic development. Ever since President Nixon's February visit unlocked the door for increased trade, the big question has been: What would Peking buy with its limited shopping funds? Last week U.S. businessmen got their first answer: a little food and a lot of jet planes.

The Agriculture Department revealed that China has contracted to purchase 15 million bushels of U.S. wheat worth some $30 million at current world prices. The order hardly compares with the 400 million bushels bought so far this year by the Soviet Union. Still, the Far Eastern sale marks an end to China's heavy reliance on Canada for Western wheat and could well foreshadow much larger agricultural deals.

Barrelhead. The big winner in China's other purchase was Seattle's Boeing Co., which will collect a cool $125 million from Peking for ten of its workhorse 707 jets, including spare parts and training for pilots and maintenance men. As befits a first-time deal, the terms were strictly cash and carry: the Chinese agreed to a 30% down payment and will pay the rest by the time they take delivery of the last craft in about 20 months. Most other foreign buyers of U.S. jet fleets expect long-term financing.

The Boeing order was China's third aircraft purchase of the summer. The others were for six British-built Tridents and for three Anglo-French Concordes, the supersonics scheduled to go into service in the West in 1974. Why does China need so many new planes? "The Chinese do not have a very wide network of roads or a vast railway system," says Boeing Vice President Byron Miller, leader of the company's China delegation. "The cheapest way for them to obtain transportation to many places is the airplane, and I see a great potential in China for aircraft of all types." Miller expects to see some of the 707s flown by the Chinese to distant countries. Peking either has already successfully bargained or is known to be negotiating for reciprocal air rights with France, Albania, Ethiopia and Pakistan; at present China's only foreign flights are to major cities in five neighboring countries.

Although other U.S. aircraft companies, especially McDonnell Douglas and Lockheed, have tried hard to get into China, the only American manufacturer invited to make a presentation was Boeing. Both Miller and his second in command, Herbert Grueter, are convinced that their inside track was due to Chinese officials' familiarity with the 707, which the French and Pakistan national airlines regularly fly into Peking. (Air Force One, the presidential jet, also is a 707.) Even so, Boeing's salesmen used every method they could think of, including visits to Chinese offices in Hong Kong and advances through intermediaries, before getting the nod. Finally Miller tried the direct approach and spent 21-c- to mail a letter to the China National Machinery Import and Export Corp. in Peking. Back came an invitation for a Boeing contingent to attend the Canton trade fair in April and then go to Peking.

Boeing's approach was simple and polite. Says Grueter, a German-born businessman who represented U.S. and European interests in the Orient for 15 years before joining the aircraft firm: "You never sell to the Chinese--they buy from you." Aircraft salesmen usually pass around cuff links, miniature aircraft-panel clocks and other freebies to prospective customers, but Miller observed the Chinese emphasis on strict propriety by taking along as gifts only a stack of cardboard time-distance indicators that show flight times between various cities. These gradually disappeared from the table during the team's twice-daily three-hour sessions with officials of the machinery corporation and of China's civil aviation authority.

The first round of talks dealt with technical matters, and went smoothly; the Chinese were mainly interested in satisfying themselves that the 707 was still up-to-date. When the talk turned to money, though, the atmosphere changed. "The typical U.S. contract, as the Chinese see it, is too legalistic," says Grueter. "They know that their reputation for contract performance is No. 1 and feel that any company doing business with China does not need all kinds of protection." The Chinese kept haggling, stringing out the discussions on a minor matter of prices for spare parts. Two weeks ago, most of the Boeing men wanted to give up and tell the Chinese no deal was possible. Miller, who endured the bickering by nurturing a "Chinese frustration mustache," instead politely informed his hosts that the group planned to leave Peking on a certain date, with or without an order. That worked: the Americans deleted a few of the detested legalisms, the Chinese accepted the spare-parts prices, and the Boeing men went home with a 125-page contract.

This file is automatically generated by a robot program, so reader's discretion is required.