(FORTUNE Magazine) – MOST WESTERN companies find frustration behind China's supposedly open door. Nailing down a sale can take ages, and even in a nation of a billion consumers, orders can be dishearteningly small. Manufacturing deals get stuck in bureaucratic molasses. Though inspired by capitalism, the government is still Communist, as U.S. partners in joint ventures may be reminded if they try to fire a lazy worker and can't. Yet McDonnell Douglas has flown into this discouraging atmosphere and emerged with a supersale. The company has landed an aircraft order worth $1 billion, the largest U.S. sale to China so far. To close it the American manufacturer made an awesome commitment: The Chinese get to build the planes. The star of this show is Gareth C.C. Chang, 43, president of a subsidiary called McDonnell Douglas China. Born in China and fluent in its Mandarin dialect, Chang is American educated and an experienced manager of risky projects. He spent more than six years negotiating the China contract, almost giving up a few times. But Chang, who claims never to take no for an answer, carried his offer to the very top Chinese leadership. Now he has been given the challenging job of carrying out the project he sold. McDonnell Douglas's $1-billion man is a relative newcomer to building commercial aircraft. Chang was formerly vice president for engineering of Actron, a high-tech McDonnell subsidiary. One reason he thinks he was chosen for the China job: ''When people think something can't be done and it looks like it could be done, that really excites me.'' His bosses figured that the Chinese-American might understand China too. Chang left his native country for Hong Kong at the innocent age of 6, just as / the Communists were taking over in 1949. A decade later his family settled in La Habra, California, where, he recalls, ''we were fully integrated into the American middle class.'' While doing graduate work in math and physics at California State University in Fullerton, Chang was recruited by North American Aviation as a research engineer on the Minuteman missile program. Later, after a business fiasco with a small start-up company, ''I decided that I'd better learn about management,'' Chang says. So he earned an MBA degree studying nights at Pepperdine University. In 1973 he joined McDonnell Douglas, soon emerging, at 31, as one of its youngest vice presidents. When Chang was assigned to the China sales effort late in 1978, he warned the company that his family background might be a liability. Both his parents graduated from Chiang Kai-shek's military academy and had served with the Nationalists, who bitterly fought the Communists and continue to resist them from Taiwan. Sandy McDonnell, then president and now chairman, decided Chang would still be his point man for China. That family connection turned out to be a tremendous asset. Chang's uncle had led the Nationalists in negotiations with the Communists in the 1930s. Chang's father served as the military aide, and his counterpart on the Communist side was Deng Xiaoping, now China's de facto supreme leader. Says Chang: ''My father and Deng must have exchanged documents 300 times, often over lunch at a restaurant. Their standing joke was, 'Who's buying today?' '' Peking welcomed Gareth Chang as a compatriot, inviting him to lecture at Chinese universities. His basic marching orders from McDonnell Douglas seemed simple at the time: The company ''wanted to develop a working relationship that gives us an edge in the market,'' Chang says, and it couldn't afford to lose money on the deal. In early discussions the Chinese talked about buying 125 aircraft, which Chang now describes as ''not realistic.'' China signed up for its planes in October 1979, but then Peking ordered an ''economic readjustment.'' Plainly put, China had run out of money. After six months of nervous uncertainty about the deal, Chang arranged to see Deng. Sandy McDonnell flew to Peking for the meeting. The Chinese leader asked for patience and reaffirmed that the project would be realized someday. As Chang tells it, Deng also expressed interest in other McDonnell Douglas products, ''the ones that start with F,'' meaning fighter planes. And when talk inevitably moved to the old battles between Nationalists and Communists, Deng smoothed over the past, saying: ''Wasn't there a civil war in America too?'' Chang ended up with a letter from Deng instructing Chinese officials to guide him around the country's aviation facilities. He spent ten months traveling with a bodyguard, even visiting a missile base. In return the Chinese wanted a frank appraisal of their aerospace industry. Summing up his report, Chang says: ''Everything up to 1960 technology was great, but time had stood still.'' At government-owned Shanghai Aviation Industrial Corp., Chang discovered that China had developed its own commercial jetliner and wanted to export it. A prototype, based on Boeing 707 technology and appropriately called the 708, took to the air in 1980. That knockoff plane, renamed the Y-10, used American engines from Pratt & Whitney, which Peking had purchased as ''spares'' when it ordered some Boeing 707s. As a home-grown project invested with national pride, the Y-10 was a potential obstacle for McDonnell Douglas. Chang overcame it. He persuaded the Chinese the plane could not be certified airworthy in most countries to which it would fly. The Y-10 was shelved, but Chang explains: ''Without that experience, Shanghai Aviation wouldn't be qualified to undertake our program. Now they have a technical group that understands what it takes to build an aircraft.'' Chang realized that he couldn't close a sale simply by peddling planes. McDonnell Douglas would have to fashion a broader arrangement that would help China meet some long-term aspirations. Former Shanghai Mayor Wang Daohan, a key player in forging the link, explains: ''Its main importance to us is establishing a manufacturing base for commercial aircraft.'' Hu Dingzhou, 51, vice president for contracts at Shanghai Aviation, adds: ''We could buy the aircraft cheaper, but we want a partner to get our products into the international market.'' McDonnell Douglas and China signed their agreement in March of last year. Though not a joint venture, the tie-up is just as intimate. Under the terms of the 12-year deal, which beat a rival offer from Boeing, McDonnell Douglas will provide 30 to 45 jetliners, which will be used by the Civil Aviation Administration of China, some on overseas flights. The plane is the company's fuel-efficient, twin-engined MD-82, designed to carry up to 172 passengers on flights of up to 2,360 miles. The company has already delivered five fully assembled MD-82s from its plant in Long Beach, California. The rest will be put together by Shanghai Aviation under a co-production arrangement -- the first time a U.S. commercial jet has been assembled abroad. The U.S. Federal Aviation Administration must certify that the aircraft, scheduled to start rolling out of Shanghai next summer, are as airworthy as those made in California. In addition McDonnell Douglas has pledged its ''best efforts'' to promote up to $300 million in exports from China. For starters the company is giving subcontracts to Shanghai Aviation. About 60% of McDonnell's American-built MD-80 series jets are equipped with landing-gear doors made in China. As a final condition of the deal, Chinese engineers are participating in the preliminary development of a new-generation McDonnell Douglas air- craft and may eventually help build it. The toughest part of Chang's assignment is shaping up Shanghai Aviation, which suffers from China's past isolation. To keep its 6,500 employees busy, the company has to turn out electric fans, dry-cleaning machines, and buses as well as planes. Many of its workers need training, a legacy of the Cultural Revolution, the Maoist ideological binge that halted education for a decade. Still reeling from its effects, experienced managers cautiously plod toward retirement at the ages of 55 to 60. Chang says, ''They were afraid to make mistakes, so nothing would get done.'' Until recently the Chinese company's president had little time for the factory's daily problems because he also held down a full-time government post as director of the Shanghai Aviation Bureau. CHANG HAS STARTED his own revolution at the Shanghai operation. McDonnell Douglas moved in with 42 managers who advise their Chinese counterparts, many of whom have gone through training in Long Beach. Chinese executives are candid about their shortcomings and are pushing hard to catch up. Signs at the plant ask the 1,200 Chinese working on the American program: ''Comrade, what have you done for the MD-82?'' McDonnell Douglas must be extraordinarily vigilant because it is responsible for assuring the quality control required for FAA certification. John Robinson, a vice president who leads the McDonnell Douglas production advisers in Shanghai, says: ''We're creating a mirror image of Long Beach here -- the same parts, stock numbers, and drawings with notation translated into Chinese.'' But it's not quite California yet. Robinson adds, ''They do things a bit differently. The Chinese have someone standing behind each worker learning the job. And it takes everyone a long time to get up the nerve to put that first rivet in a fuselage.'' Chinese workers practice riveting on an old fuselage section of a Y-10. Jing Deyuan, 52, who took over as full-time president of Shanghai Aviation this spring, is also shaking things up. Having risen from the production line to manager of a helicopter factory, Jing swept into Shanghai like a typhoon. Working 12 hours a day, he discovered shortages of everything from skilled workers to hand tools and got more resources from Peking. He talks as tough as any U.S. chief executive: ''There's no room in this program for failure,'' he says.

Motivating subordinates with rewards and punishments, Jing delights McDonnell Douglas. He removed his director of tooling for falling behind schedule. Jing says, ''If we lack materials, workers have no way of doing the job. The director should set up evening meetings to find out what's needed, but that wasn't done.'' Jing has ordered a bonus for workers on the MD-82 fuselage and put through a salary increase for outstanding performers in manufacturing support.

To give Shanghai Aviation time to pick up U.S. methods, the first six planes to be assembled will be made entirely with parts shipped from California. Then Shanghai Aviation will start making some nose and tail components. Assembly will increase to an average of five planes a year (vs. two a week in Long Beach). As chief of this complex scheme, Chang must crack a cultural barrier. Initially Shanghai Aviation executives appeared to agree with McDonnell Douglas advisers during meetings, but did not follow through. It turned out a polite nodding of heads was not a commitment to action. Chang says, ''For a year we avoided conflicts, which is why we couldn't work together.'' His solution: Train U.S. and Chinese managers to identify conflicts, then resolve them. That effort has revealed striking differences in perceptions of what a schedule means. The Chinese, as Chang puts it, say that ''somehow the schedule would be met whether or not we draw a resource chart and assign responsibilities for each step.'' Without that breakdown, the Americans believe nothing can be done on time. Now Chinese managers are starting to handle schedules the American way. Chang must also work with what he terms ''another layer of management'' -- Shanghai Aviation's Communist party officials. A number of goodies for employees, such as bonuses, require their approval. Chang woos party functionaries by such moves as including the factory's party secretary among the 143 Chinese sent to California for training. THE BEAUTY of his China deal, according to Chang, is its growth potential. Shanghai Aviation is investing around $100 million in facilities, which will pay off only if China orders a lot more MD-82s. He says, ''If Shanghai builds 40 planes, it could break even. But once we get the factory up to speed, I think China will end up buying 60.'' That depends, of course, on Chang delivering all he has promised. The deal will be a long time paying off for McDonnell Douglas as well. Chang insists: ''We look on building planes in Shanghai almost as an exercise to develop technical and managerial skills. Then we'll have a low-cost, high- skill partner for our next aircraft.'' Maybe, but if the experience of other Western companies in China is any guide, McDonnell Douglas will run into many an air pocket along the way. Regardless of how the deal turns out, however, China will probably continue demanding that vendors sell it not just products but also technology and management expertise. That means other companies hoping to close giant sales in China may end up on the trail McDonnell Douglas is blazing.