Chapter 131: Radar Selection, Part Two

Seeing that the head leader had taken his seat, the junior members of Marconi Company finally relaxed. If the vice president were truly about to leave, the negotiations this time might very well collapse.

With radar designated for second-generation fighter jets, the Republic had numerous options: American, French, even Italian equipment could be chosen. If the radar order was lost to another supplier, then even if all other outsourced equipment for the project was secured, it wouldn’t count as a victory.

“Spey...” George, who had just sat down, pondered for a long moment before slowly uttering the name, dragging the syllables out. Everyone knew exactly what he was thinking.

After several minutes of reflection, George began to speak.

“I am not the vice president of Ferenti, nor am I an official in the Ministry of Defense overseeing technology exports. Therefore, all I can do is help you immediately contact domestic authorities. I still hope we can successfully sign the new radar contract.”

George’s words didn’t seem insincere. As a Marconi vice president, he truly lacked the authority to make final decisions on export technology.

After consulting with others, Chief Engineer Yu expressed understanding. To save time while awaiting the British response, the negotiation team continued to discuss other projects.

“Very well, then we’ll wait for the British reply. Mr. George, please be sure to convey one message: if the technology transfer cannot be secured, we absolutely will not equip the new aircraft with this radar.”

...

During the wait, news first arrived from the British Ministry of Defense: in principle, they did not oppose a normal technology transaction.

“No opposition” essentially meant agreement. The Republic’s side was elated, and so was Ferenti in Britain. Ferenti’s current fortunes were grim; a sudden windfall would be a welcome relief. It was known that Ferenti’s situation was much like Rolls-Royce in the 1970s.

The Blue Fox radar developed by Ferenti had barely recouped its research costs. Moreover, the Sea Harrier’s failure to intercept Argentina’s Super Étendard during the Falklands War led to widespread skepticism about the Blue Fox radar’s performance.

The Blue Vixen radar, still under development, had faced many difficulties. Its extremely high performance requirements made research costly and technologically risky. Development began after the Falklands War and was only completed in 1994, spanning over a decade. Technical challenges were one factor, but funding was the greater hurdle.

...

Ferenti’s presence in the Republic was not a first; their subsystems had been involved in the avionics technology negotiations for the J-7M fighter jets.

As the new round of negotiations commenced, the usual meeting rooms could no longer accommodate the Ferenti delegation and military officials. They had to find a larger venue, more fittingly described as an auditorium.

The new talks began with Ferenti’s representatives and Marconi negotiators entering arm in arm, all smiling broadly.

Yang Hui and Prince Sultan sat in the second row—not too close to interfere with negotiations, but near enough to observe developments in real time.

The opening move naturally belonged to Ferenti. Though cautious not to overreach, Ferenti was adamant that $350,000 for 150 sets in exchange for Blue Fox technology was unacceptable. The current president of Ferenti, Evan, had already formed his strategy.

“This time you wish to purchase Blue Fox radar technology; we are in principle agreeable. The only issue is the purchase price. Our bottom line is a $30 million buyout for the technology. For $30 million, you will receive more than just the Blue Fox radar. I trust you understand the relationship between this radar and the Seaspray radar.”

Thirty million dollars for this radar was exorbitant. Chief Engineer Yu had estimated the purchase price at only around $10 million, including production line expenses.

“Is it really worth $30 million? If you still hold that view, then perhaps we should end negotiations now to avoid wasting time. The UK isn’t the only country producing radars, nor is Ferenti the only company willing to sell technology.”

Threatening to end talks abruptly seemed like a bad joke. Drawing on past experience, Ferenti knew the Republic was strapped for cash and unlikely to pay that sum. They lowered the price.

“Very well. Considering your limited funds, we will symbolically reduce the price to $20 million. However, you cannot export the radar you produce; it must be for your own use only. Of course, you must first place an order for 150 sets. Only upon receipt of that order will we transfer the technology.”

This was a genuine concession—a symbolic one-third discount. Who knew how much lower the price might go if negotiations were sincere? Twenty million was still a staggering amount.

Yu shook his head immediately. This condition was still unacceptable. Twenty million was far beyond budget; more concessions were needed.

“No, $20 million is still too high. We might be able to meet the 150-set order, but $20 million must be lowered. We cannot bear this price. Remember, this project lacks state support. Funding must come from research and development budgets, and $20 million is simply unattainable.”

Ferenti had assumed this was a state-backed project akin to Spey, but it was actually a private venture, making funding difficult.

...

If they could not make a windfall profit, then earning what was due was acceptable. Twenty million was finally adjusted to Ferenti’s final price.

“Alright, $15 million. This is absolutely the lowest we can go. It’s our final price.”

Several rounds of probing followed, but $15 million was never lowered further. This was evidently the British bottom line. Everyone understood and sought to negotiate more favorable terms instead.

Chief Engineer Yu quickly proposed another approach: “Fine, we won’t lower the price, but we must have a new production line and the radar’s core fire control code. The 150-set order must also be reduced to a maximum of 50 sets, and we want the right to export.”

These four conditions were worth the five million-dollar price cut. Reducing the order by 100 sets saved at least two million, not to mention the cost of a production line. Overall, it was acceptable and worthwhile.

The British were also adept at calculations and precisely evaluated the value of these four conditions.

“No, that won’t do. There is only one production line for the Blue Fox radar. If we give that to you, then what do we use? That’s unacceptable.”

This was mere evasion.

“What’s the problem? Your Blue Fox radar is already in production. The production line is just a refurbishment line and can be handled on the Seaspray overhaul line.”

Yang Hui had just finished speaking when Chief Engineer Yu added decisively: “You all know this radar is outdated. What use is exclusive export rights now? It’s better to hand everything over to us.”

Having said so much, Evan no longer argued. It was agreed: the production line would not be sold but left unused, producing no effect.

“Alright, we’ll agree to your terms. But you must join us to sign the contract at next year’s Farnborough Airshow, and you must first produce the 50 sets before the production line is handed over.”