Because the degree of economic development and the foreign trade strategies of the ROC and Korea are similar, the two often play the role of "imaginary enemy" in the battle for markets. The aerospace industry is no exception.

"Currently, we are stronger than Korea in aircraft design, structural analysis, and aerodynamics, but Korea is better able to handle manufacturing," says George Shen, general manager of the Office of Industrial Cooperation (OIC). He notes that, because the ROC's international status is not affirmed, for self-defense it is necessary to develop military aircraft at home. The smooth test flight of the new Ching-kuo fighter shows the superiority of the ROC in design and systems. Korea, able to buy aircraft, has developed the industry from the view of industrial development, accumulating a lot of manufacturing experience based on "offset trade" over the years.

Korea has been able to use "offset trade" because "When the Korean government says do it, it gets done," says Jeffrey C.S. Hao, of the Aero Industry Development Center at the Chung Shan Institute of Science and Technology. Korea began developing the industry in 1976. Aside from designating it as a strategic industry directly under the premier, they also set "offset" rules in 1984 to acquire markets and technology. "Offset trade" simply means that when the government buys an aircraft abroad, it requests that part of the product include technology transfer or use parts produced domestically. Currently Korea's three main aerospace companies are manufacturing parts for civil aircraft and engines; many orders are from cooperation agreements.

The Korean government has also formally set a financial assistance plan for the industry, to be implemented at the end of this year. Obviously, with the government handling strategy, promotion, and finance, major industries handling foreign contracts and industrial development, and satellite factories in support, all closely linked legislatively and organizationally, a strong aerospace group is already taking shape.

As for the ROC, despite planning experience, strong engineering, and idle capital, a strategy is lacking. There is no institution to oversee implementation. Currently there is only the Committee for Aviation and Space Industry Development (CASID) under the Council for Economic Planning and Development. Also, as investment incentive regulations are about to be scrapped, no new incentive policies are in sight. And only at the beginning of last year, when China Airlines bought ten aircraft from the U.S., were offset conditions discussed for the first time. After negotiations, cooperation agreements have been signed with Boeing, MacDonnell-Douglas, and Pratt and Whitney totalling US$340 million. The OIC of the Ministry of Economic Affairs was responsible for planning and promotion.

The OIC mapped out cooperation plans and, through surveys and investigation, completed the "Aerospace Industry Long-Term Development Plan," which was sent to the Industrial Development Bureau and then to CASID in June. It is expected a report will be made to CEPD Director Frederick Chien in August, and preliminary conclusions can be reached.

Korea's version of the plan is expected to be completed this year. From their past effectiveness in implementation, this will certainly leave the ROC government feeling pressure. The strength of this pressure will not be any less than that felt by the Korean government when the Ching-kuo fighter took flight.

[Picture Caption]

The "offset trade" strategy of the Korean government helps achieve the goals of markets and technology for their private sector aircraft industry. (photo courtesy of Shen Cheng-chung)

Taiwan is ahead of Korea in overall design and systems, but Korea has the edge in manufacturing. (photo courtesy of Shen Cheng-chung)

Taiwan is ahead of Korea in overall design and systems, but Korea has the edge in manufacturing. （photo courtesy of Shen Cheng-chung）