CHINA'S AND South Korea's selection, of a Western partner to help develop a new 100-seat regional jet, will be determined by the level of foreign technology transfer.

According to South Korean aerospace sources, local industry access to new technology will be the key to choosing either a US or European partner, rather than equity share. China and South Korea want to avoid any restrictions being placed on the technology provided.

"Whatever the percentage stake is, the required technology to build an aircraft must be there," says a South Korean industry source. "The question is, what do US and European manufacturers mean by technology transfer?"

Aviation Industries of China (AVIC) and the Korean Commercial Aircraft Development consortium (KCDC) are offering Boeing, McDonnell Douglas, and a consortium of European manufacturers a 20% stake in their proposed 100-seat twinjet project.

A Western partner would be expected to provide aerodynamic and avionics technology in return, together with marketing support. AVIC and KCDC have also insisted on Asian project leadership and production of the aircraft in Asia. A decision is expected by early October.

The European consortium, comprising Aerospatiale, Alenia British Aerospace and Daimler-Benz, is understood to be pushing for at least a 30% stake, but has now abandoned a proposed second production line in Europe. "We can't split 20% four ways," complains a European source close to the negotiations.

A larger Western stake is likely to come at the expense of a third Asian partner. China and South Korea each hold a 35% share and were planning to offer 10% to another yet-to-be-selected Asian participant - possibly India.

Source: Flight International