Buying of arms.
With other countries. I was involved in a deal with the American company ITT. That was close to San Francisco in (indecipherable) , where ITT is located. We purchased in 1987, at the end of 1986 we purchased three radar systems from ITT called Falcon, for the Navy, a shore based radar system. For sea traffic surveillances. A defense system. They sent a delegation to Beijing, gave a seminar on their product, this was conducted, and we expressed our interest in buying the system and they got the deal. Not very big, only about $15 million. There was no competition for this sytem.
Sometimes we bargained hard. Not from my company, but especially from the end user. That was so funny in China, the Navy and the Air Force, they were the ones who eventually would use the system. We didn't make a profit at all in this. The Chinese system is sttrange, especially in terms of my country, that is you never worry about money. Because you always knew that if you didn't have the money, you don't have to worry about buying anything. The only time you are interested in buying anything is when you have the money, and you know how much you are going to spend. This makes it a lot easier and actually, what's so funny, is that, if for example, the air force wants to buy an airplane, and then we just randomly figure out, all right, this plane.
The second negotiation that I was involved in immediately after this one, was the British ASW helicoper system. This time it was only the sonar system. The British company this time were from Aerospace and a GEC(General Electric Corporation), also accompanyied by GEC, like the US but the British corporation. Accompanied by GEC. Two companies. This involved a different weapons system, and it involved sonar buoys. Also this was 1986. All these negotiations that I was involved in at first, the deals didn't go through.
Things like Toll Sonar, or night images. I was involved in that for the army and for the cockpit for the airforce. For the iplots, night imaging. These were the fields in which the British were really advanced, at that time. At that time we didn't have a lot of negotations with the Americans, it seems to me. Not a lot of business with the Americans. The Japanese were not involved much. It involved principally the West Germans, the Swedes, abd others. We didn't make this deal. Later on I went with a delegation to Britain and I was on that trip. To see the weapons system. And there were virtually saw the Lynx helicopters and the Sea King helicopters. The US navy used the Sea King helicopters as the ship born air antisubmarines missions too. But Sea King has different versions. We paid a visit to the Royal Naval BAse in ...my goodness, I don't remember off hand...if I told you that Naval Base, people after reading this story would be able to identify me. It was on the very southwestern tip of Britain, Culdrose, a very famous British Royal Navy antisubmarine naval base. That's where the training helicopter was stationed. We were shown everything there. We went on board the helicopter. aND THEY EVEN allowed us into one of their Sea King helicopter simulators, real situation simulators, once you were insieed it you feel excactly like the poilots once they are airborne. You feel the noise and feel the wind blowing in the air, you can virtually hear the noise and feel the sound the ramp on the ship and so on. They let us see it because they wanted to sell the simulators to us, not only the helicopters. We were taken to the Naval base to see this aircraft how it performed and how the training was managed and the software and hardware system. Then we went to another location where we virtually saw the very advanced beeping sonars(?). It is attached behind the helicopter, they use a winding machine, and through a cable they can put it in the water and then actually hear noises emitted by a submarine. We were not in London, we made a lot of trips. The helicopter headquarters at that time was in Kent. We stayed in Rochester in a luxury hotel, of course. Later on they used naval planes to fly us back and forth.
The British, you know, are honest. Really. The businessmen and the naval service. Really. They were honest and gentlemen and I really liked them a lot. Unfortunately, partly because of their honesty they could not make a deal with the People's Republic of China. But they could make a more successful deal in the long run, no doubt. The French, I don't like them. They are rubbish, really. And we knew that when we dealt with them. Agh. French women can be beautiful, but anything else, never.
We never bought that sonar system. I don't know what the problem was at that time.
The British expressed their dismay and dissillusionment with us on several different occasions.
dOf course, on several different occasions. On several diplomatic occasions they knew that I was sort of their friend, and they told me man to man, OK, what kind of a corrupt system do you guys have? YOu just keep purchasing garbage from the French, for God's sake. We believe these systems will never work in a real war situation. It's true.
Another example would be, one year later, I went to Italy on a survey trip, at that time we had nuclear power submarines and conventional submarines, but the problem was the torpedo we used were still gas powered torpedoes. That is why the Argentines, in their Falkland's war against the British, used really obsolete torpedoes, the same kind that we had. And so we were trying to phase out this system and come up with something better. We were shopping at that time for some advanced wire-guided torpedoes there. And we tried to make a deal with the Italian companies. In Italy, they have a very powerful defense industry group, called Selenia Elsag, and they produce and sell different sorts of weapons system. The technology of the wire-guided torpedo is this. Once the torpedo leaves the tube, the wire guided torpedo, in the water, can be controlled very well. Another torpedo used remote control, but sometimes the signals sent out by the remote control can be adversely affected by the range of the torpedo. Once the torpedo is out of range, the signal is so weak it is beyond control or it is not accurate enough, so the torpedo may miss the target. Or if it hits the target it might not explode, in that it was not programmed to explode at that time, not primed for an explosion at that time. So some scientists figured out a way to put wire beyond the torpedo, a very thin cable, but it is almost transparent, very thin, otherwise the weight would be overwhelming. This would be a miles long wire, perhaps as long as 10 miles of wire to trail behind it. The torpedo then is always connected with the mother ship and many signals can be sent through the wire and that is more accurate than signals through the air. The wire makes it the best guidance system for a torpedo. And that is what we were shopping for in Italy. There were two trips to Italy for shopping at that time, one of them we went to Talento, a southern naval port of Italy and that is where this sort of torpedo tested. So we went there with the Italian navy representatives to see the trial and it turned out very successful. We were there not just for torpedoes, of course, some of them stayed in Milano, and they were shopping from other weapons system. So but the manufacturer was the Whitehead Company, they were the number one manufacturer of torpedoes in the world, and they were situationed in Livorno, close to Pisa, where the leaning tower was. We visited there on our time off. They transported us from one place to another at that time by helicopter. The torpedoes, after the trip was completed, the Italians, the president and the general manager of the Company from Salenia Elsat, and the president used to be the chief commander of the Italian Navy. I knew him psersonally because he knew me. ON different occasions he came to talke to me. I seemed to be one of the decision makers at that time. He is indeed well known, the former Italian naval commander, he has a difficult name to remember, and he was the president of the group. He visited Beijing on several different occasions and he wanted to convince the Chinese that these torpedoes were a really good buy. But we had but one budget at that time. The budget was for $90 million. And this was exactly the amount of money that we needed to pay if we made a contract with Silaneo Elsat. So at that time, what is so funny, is that our because Chinese, we are also short of ship to air missiles systems, too. And the French were the manusfacturers of that system, which we were shopping for. And they were the ones that approached China. Because at that time, we had naval forces fighting with the Vietnamese in the South China Sea, and after that Naval Clash, we had a territorial dispute with the Vietnamese over the Paracel and the Sprately Island, and immediately after that, the Vietnamese stationed two squadrons of SU 26, that is a fighter bomber, from the Soviet Union, they sent them to the veyr southernmost province of southern Vietnam. That meant that all the ships that we sent out on the South China Sea, were within their range. But it turned out that our ships lacked sufficient anti-air weapons systems, because we were inadqequate in that field. We received then instructions from our superiors, telling our company that now you have the money and you start looking for something else, for some ship to air missiel systems, and a lot of people from the air force and the navy were involved again, and actually the French, the original price of the Sea Crotale, that is a rattling snake or a sidewinder,(translation: sea rattlesnake), anyway, that was what we interpreted it to be, like a sidwinder, or like a rattling snake. That was the French term to refer to the sidewinder. Actually, on one occasions I was approached by the US Army attache to BEijing, and he told me personaly that because the Embassy had a banquet and I was invited there and I talked business there, and he waid, "Listen, if you buy that stupid god damned French system, I can tell you for a fact that in a real wartime situation, this system will never shoot down a single plane. Not one." And he said this loud enough so that everyone at the table heard him talking about this. He said this to everyone around the table, and everyone heard him refere again and again to this "stupid system" that the French were trying to sell us. And once agains the French approahced our general staff, and they approached especially the equipment department, and they kept telling us that this advanced system is really good and this is really what you need, especially in the south china sea.
They used the South China Sea as a perfect example. They knew nothing about what was happening there. And our side, and we were sort of pleasantly surprised, because this fit into our senario perfcectly. Now at that time the wire-guided torpedo was called A-184, and we were already to sign the contract with them because of our need. But then we just received instructions from the equipment department as to spend this amount of money before the end of the yar. Originally we didn't have any plan to purchase any ship to air system, but because of this sudden instruction, it seems to me that we had to spend this huge sum of money, either on a torpedo system or on ship to air system. Because this amount of money had to spent before the end of the year -- the Western calendar year. So there was hot competition. But the Italians, unfortunately, had no idea what was going on in China. No idea at all because they just didn't have the correct channel. But the French knew exactly what was going on in China. The couple passed on information, but they had some personal connections, too, to the generals in the equipment department. Like the VIPS and the generals, they knew. They maintained a very good relationship, for example, with He Ping, the general manager of our company. He is really on good terms with the Grench. So before the contract was signed, almost everyone had strong feelings that this time again the French might get the deal. And what happened? The Chinese Navy, strongly proposed that because of all of these submarines, which had empty launching tubes at that time because they were phasing out the old torpedoes, the advanced models of the submarines, which was a big fleet, but the advanced ones because the diameter of the tubes was larger and they required a more advanced torpedo, and we were short of them right at that moment, and we needed to import from foreign countries immediately, and the A184 seemed to fit into every criteria that were we looking for at the moment. So the navy very strongly proposed that we must provide money on this fighting system otherwise if we had war or hostilities, then the submarines, especially the best submarines that we had, they would have no torpedoes.
You have to consider this proposal strategically. Because, there was a known enemy, Vietnam, of course, but still Vietnam is no big deal to the Chinese. Even if they cross the border or do damages to your ships, it is only two or three ships. But torpedoes, is something that involves the nuclear submarine force, you can't leave these nuclear submarines with nothing in their torpedo launching tubes, with no torbpedoes. Now that was stupid. They literally were launched and they had nothing in their tubes. Nothing at all. Sometimes, some of the research insititues were deeply involved in developing and designing our own torpedoes, but at that time they had not actually come out, and some of their designs were not up to the standards of the Chinese Navy. So they continued to work on it. They worked on it, but still the Navy desperately needed someting at that time. Now. I am not the only one that thinks we have to buy those torpoedoes because the whitehead company is going to lose out and we are both going to bwe left out the same way. Because was we understand it, both of these are going to turn out the same way. And it has to be based on this sum of money becuaee both of them are ninety million dollars And so the French approach us again, I knew that something was going on. I knew that something was going on because the admiral this time, he should speak for the Navy, he should speak up in favor of the navy, and he spoke up not openly against the navy, but not actually against the Navy, but he said something to the extent that, "Ok, we want the torpedo design, we basically could rely on ourselves and we don't have to import from foreign countries, and he said this at a table, I was at the occasion, and foreign importation was important but we could not solely rely on it because we want to rly on ourselves, like Chairman Mao told us. Since we were at this meeting with Poly technologies sitting on one side iof the table and the admiral on the other, and the meeting took place and the general invited poly to sit in on this meeting. And a lot of people from the Navy said, all right we are in very sharp need of foreign torpedoes. On the other hand, the people from the army said, all right, the ship to air missile systems, that we have on the very top of our list for acquisitions. Speaking of ship to air capablities we need things from other countries, to be sure. This was a hot debate, and then all of a sudden that admiral stood up and said, now foreign torpedo importatoin from other countries, "I'm not saying that foreign importation of torpedoes from other countries, is not important, it is important. But what I am saying is that at this time, China is speaking about a torepedo industry and we are advanced too in the world. Comparatively speaking we are relatively advanced, too, so we can rely on ourselves at this stage. And so the people from the equipment department, it is time that they decide, and since they were approaches so many times by the French about what was going on and so this time the French got the deal. And so on the 26th or the 27th approaching the end of Nocvember, we just signed the contract with the French. With Aerospecial again, they won a 90 million dollar contract. For the Sea Crotale. The rattlesnake.
There was never again a three letter memorandum for this deal. But the French knew how to operate. The meeting lasted a couple of days and we all stayed in the same hotel during the negotiations. For group discussions. The meeting discussions. The second day of the negotiations, we talked, and I talked with the secretary of the admiral, and I asked, "Hey, what's going on. The Italian torpedo is really a good one. And why did you guys go for the other deal. " He said, "You know what is going on. I don't have to tell you again." And he laughed. At that time, Admiral Li's son, who was already in Paris.
I was so angry about this deal, becasue I had been in Italy making a survey of the torpedo testing, and I saw this system and I saw how well it worked. And then the USA Army attache told us that this sort of French bullshit never really works in war time. And the US military is very advanced in the anti-air systems, like the patriot missile systems, we tend to believe what the Americans say. And the funny thing is that once again, the Sea Crotale system was somthing that the French Navy never used itself. AGaina, China ended up pitifully as one of the countries that actually used this system on board their ships. Saudi Arabia also used it, and the Yemen Navy had the system, and a few other countries. OPnce we signed the contract, then the execution of the contract ook place, once the French had the money then came the execution of the contact and we had to send people to France to see the system work on board French naval forces, and we had to see the production and so on. The training could last as long as 12 months for a system like this.
I was so frustrated by this. Of course, there were other deals. And now if you pay a visit to the Chinese and the PLA naval fordce, you will find one thing for sure: We have Dolphin helicopters, because we purchased them from the French and now we have a stream lined production of them in Harbin. For the Dolphin helicopters, but just to make very short story. June 4th of 1989, was the day that the Tiananmen Massacre took place. On June 3rd, when Beijing was in Chaos, and everyone was out in the streets, there was no public transportation and no policemen in the streets, and everything was out of control, in our office on the 5th floor of the Citic building, we signed another contract with the French of $45 million for an additional for another four Dolphin helicopters. On the night of June 3rd, after 5 o clock. Then we had a banquet. That night, and that is why I had a lot of problems on getting home that night. The banquet was on the 28th floor of the building, in a restaurant that we call the Window of the World, a lot of people say thqat is the best restaurant in Beijing. The Window of the World. A big delegation of the French was there, the head of the Aerospeciale and the general manager of Thompson CSF were there in a signature ceremony. Because that is where the weapons system was produced for some platforms for helicpoters. In the restaurant we could watch everything. The restaurant was well illuminated and so it was difficult to see what was happening in the dark streets below. So at five o clock oin the afternoon we signed the contract in the afternoon. Later we told our British and American Friends and they all laughted. They said, "Oh, sure, that's the French." "That's the French people," they said. "They are just money oriented." They were never surprised. Money and no political considerations. No surprie at all. And they knew on that day that the French helicopters were flying over the Square. And they were just pleased by that. And for the whole day they staid in our Citic building. We were all there for the final stage of the contract and we were all very busy. And later on employees from other companies, on the 6th and the 7th stormed the offices of Poly and God only knows where the came from, they broke the windows and they shouted up and down the corridors and if you were coming ont there on the elevator, they pointed their fingers in your face and they yelled at you and questioned you as to what you had done. OK, they said, look what you spent your money on, all those stupid things, they said, accusing us of what had happened in the square. And that is why we moved to the fifteenth floor later on. There were other businesses in the building, and the security guards, two of them, for the building, in stupid uniforms, they were no longer there. On the 3rd, the whole building was virtually unguarded and anyone could get in. I don't know why that happened and we were so preoccupied with signing the contract. We wanted to sign in the morning, but because of some techinical problems we were postponed in the afternoon.
So we signed the contract with the French for four helicopters. $45 million for four helicopers, Dolphins, with avionics, with two equipped with avionice systems, something inside the cockpit and the other two were empy and didn't have the high tech stuff in them. The people who were present were worried, everyone was worried, and they didn't talk about it. Who was not worried at that time. Who. We didn't know what was going to happen. No one left in the middle of the dinner. Everything was going on as normal before that. I had watched with my own eyes what was happening in BEijing, I was for the students, but I could not leave work. I couldn't go to the square. I had to prepare the contract for the signings. I had to work hard in those last days and I had to perform my job. At that time, from what I saw, when I saw the contract signing, all I could think of at that time was that I really hated the French, from the depth of my soul I hated them. I thought, the French, My God, I will never have respect for them. I'll never have a friendship witht hem again, never in my life. I'll never speak to them again. They are filthy. They knew, they knew what they were doing. It was not as thought they just arrived in Beijing on the third, and they didn't know what was happening. They had been in Beijing for one month, and they knew everything that was happening. That is why eeryday when they came to our building theyhad a lot of trouble in their transportation. Someties they were held up. Sometimes their hotel, the car that was supposed to bring them to us, refused to carry them to Citic. Because the taxi drivers were on strike too at that time. They stayed in the Great Wall hotel. In the citic building we didn't have facilities for them.
I felt disillusionment with the government, too. That is why I left the company after that. I saw from the inside how the whole system was funcitioning, I knew the deals that were made with the Thai Royal Navy and others. This is not the end of the story. This is just the beginning of the story. Other than that. I was not talking about arms expeorts at this time. Exports was the other aspect at this time.
That sort of thing never stopped. We dealt also with the General Electric Company, American companies.
GE company negotiations started in 1985, that was the biggest contract that we ever signed with a foreign firm was with this one. Now your Grumman Aerospace, they signed a $500 million contract and that was made for the Chinese Airforce through our company too. That was the biggest one. The second largest was with GE, the Grumman deal was signed in 1987. Actually the Chinese airforce personnel are still with Grumman at that time. When I was in Poly I was in the western European Arms section.
GE contract. That was signed for $120 million, and that was for the LM 2500, a ship born gas turbine, very large, twenty meters long, a turbine system for propelling a big ship. YOu would not use that to propel a torpedo boat but it would progel a destroyed. It is gas propulsion system.
I served as an interpreter on a couple of occasions for this deal. I was borught in. The guy from their office was not very satisfied, and they called on me to help them out.
The sessions were started of course as they always were with a seinar. At that time the Americans were competing with a West German company. The company in GErmany was MTU, the biggest gas turbine manufacturer in Germany at the time. At that time USGE and MT were in hot competition. The US got the deal, although GE was higher in price, we found that itw as much better in quality. And this time quality entered into the quotient. The Americans never tried bribery, at least not in China. They may have, but it is not to be knowledge. No three page letters. The Americans did not understand China as well as the French did. The American businessmen were reluctant to go into much detail when they presented their products. They just told us, well this is the system we have, like it or not, take it or not, this is what it is. So that is the kind of thing that actually attracted us a lot. And if you anxiously want to sell something, we thought, then there is something wrong. If you are in a hurry and explain too much of the detaila snad make too big a promise, then the more we distrust yo. Because we know there is a reason for you to do that. But if you trust the whole system and you know that it isrea lly going to work for you, then it is not necessary for you to go into much detail. You see you believe in yourself and that was what we were looking for. They told us, Look, this sytem is going to work for you on hour ships, it is perfect, believe it or not. If you believe us buy it and if you don't believe it, then don't buy it.
We wer smart guys in our company. And we tried to figure things out in this way from the sellers.
The Americans used this system on their destroyer fleet. I assume there are a lot of navys in the world that use this system. LM 2500 system. This negotiation took place in the Beijing hotel and when we got this deal we had a big signing ceremony, and that was in 1987 and for a foreign business firm, that hold s a banquet in the Great Hall of the People. That virtually faces Tiananmen, and that is where normally state banquests are held but because the GE company is willing to pay and spend money for this banquet. They said, we want to to express our gratitude, just tell us the best place is that we can have dinner. And we said, And we said, OK, the best place in Beijing well, let me think, well that must be the Great Hall of the People. Let's make it that place. And we asked them if it might be too much and they said, "Well, don't worry about the cost. No problem. I was there at that banquet, not very luxurious., but in terms of the place it was symbollically very important. We had a band there playing music, modern music a brass band playing badn music.
The Grumman negotiations, I knew about the deal but was not directly involved in that.
This Admiral was with a delegation to Britain to look into the Sea King helicopters. But he was supposed, after this trip, to go directly to fRance. He hwas anewly promoted rear Admiral. So the French they picked him, and there were people higher than him in rank at this time on the way to France. And we got to our hotels, and his was in the suburbs in Paris, for some reason. And he was given a key and he was supposed to share his room with another guy. He was so angry at this, he complained, and later on he refused to go to the negotiation room sahyqing that he could not sleep well. But of course, we have ana office in Paris, and we knew the situation was bad, so we took him out of the hotel and had him stay in one of our offices in Paris, our offices there are very spacious. We let him spend the night there and it was much better than the hotel. The next day he refused to attend the negotations. Late ron, the other admiral, who was head of the delegattion, he was concerned and he told the French, "Don't ever do this again. And the next day the French moved the Admiral and his staff to much beter quarters.
We didn't stay on the Chantes Elysese. We stayed in best hotels in Paris and they were not on that street. There are some hotel sin the suburbs of Paris, like the Shangri La that are really nice.
Everyone spoke a little Chinese, very little though, among the foreigners. But none were fluent in Chinese. We had to speak their language or speak English. They didn't employ American born Chinse, it seemed to us, either.
The Chinese airforce sends a lot of interpreters to the US to help out. We don't think it's stanage, we know that the foreign business firms are not equipped with interpreters. They just hire, when they had such a need, termporarily, they never put an interpreter on their staff. The Japanese never sell arms so we had no dealing with them. They have a constitution that forbids that, but they buy arms primarily from the UAS. They have things very advanced, like the P3C, ASW patrol aircraft, a very big one with a long tail behind, that is the one that the Japanese import to look for soviet and Chinese submarines.