One Billion Customers - James McGregor [90]
CATIC assured the Americans that the information was coming, but it also told them about another decision it had made. Fearful of being left out of the skimming and kickback opportunities inherent in running a Chinese factory, CATIC officials had decided it would keep the most sophisticated machinery for itself in a fifth factory that would make the most complex parts for distribution to the other four factories.
Hitt liked the idea. It would be much more efficient than having the Chinese duplicate the capability in each of the four factories. But he also warned that the change in plans would delay the export license applications since some of the equipment would now be going to a different location than originally envisioned. He reminded CATIC that it would be responsible for all storage costs for the equipment until the licenses allowed export to China. CATIC suddenly woke up and faxed the necessary information.
McDonnell Douglas in May 1994 filed twenty-four export license applications covering thirty-two pieces of equipment. Internal U.S. government debates delayed the application for months. Commerce finally obtained consensus by adding conditions to the licenses, including one particularly burdensome requirement: McDonnell Douglas must provide quarterly reports to the U.S. government about the location of the machine tools and how they were being used. CATIC soon hauled its bargains off to China. Meanwhile, China’s aviation industry was purchasing some two dozen state-of-the-art computer-controlled five-axis machines from Europe and Japan.
On March 24, 1995, Bruns set off on the first of the government-mandated quarterly inspections of the equipment CATIC had bought. He took photos of crate numbers and checked them off his list, but he couldn’t find six of the machines. He asked his CATIC escorts where the machines were. Avoiding direct eye contact, they muttered, Bu tai qingchu, which literally means, “That is unclear.” It really means, “I can’t tell you.” Bruns would have to talk to their bosses.
Bruns was furious. He had spent four months pestering CATIC executives and cobbling together information for the license applications. He had held their hand throughout the whole process, dealing with information that was usually confusing, vague, and late. From the day he joined McDonnell Douglas’s China operations it had been drilled into his head that all U.S. government laws and licenses had to be strictly followed. Bruns stormed into CATIC’s Beijing office the next day and confronted the program managers. He grew angrier and angrier as they continued to evade his questions. At first, they were also muttering bu tai qingchu. But Bruns kept pushing. His company’s integrity was on the line. He simply had to find those missing machines. Suddenly the Chinese discovered that the equipment had been sent to Nanchang, a city in southeast China.
“We ran out of storage space and sent them to Nanchang,” a CATIC official said.
Bullshit, Bruns thought, something else is going on here. But what really pissed him off was that the Chinese were being so cavalier about it all. They didn’t take the export license conditions seriously. In China, the art of getting licenses and approvals is to tell the government whatever it wants to hear, and then do whatever you want after permission is granted. You can always work around the system in China. What a mess, Bruns thought.
Bruns and Hitt, anxious about the apparent violation of the export license conditions, immediately reported the problem to the McDonnell Douglas export control office. A McDonnell Douglas letter on April 4 notified the U.S. Commerce Department that six machine tools had been diverted without McDonnell Douglas’s knowledge to the Nanchang Aircraft Company.
It took until August for Hitt and Bruns to get permission from the Chinese government to visit Nanchang. There they found just another sprawling, dilapidated, and filthy Chinese factory. Five of the big machines were still crated, but a sixth,