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By John Greenwald

Like most second marriages, the DuPont company's latest joint venture in China represents the triumph of hope over experience. When DuPont opened an agricultural-chemicals plant in Shanghai in 1991, local entrepreneurs made off with the formula for the company's Londax rice herbicide and started up a rival firm to produce it. DuPont's secret was not protected under Chinese law. Undaunted, DuPont plans to invest $16 million in a joint venture in Shanghai in 1995 that will manufacture equipment for integrated circuits. But this time the Delaware-based giant is trying to be smart about reducing its exposure to theft: in his August trip to Beijing, chairman Edgar Woolard lobbied Chinese President Jiang Zemin to safeguard the patents of manufacturers.

Such entreaties have become essential for America's blue-chip companies as they charge into the vast markets of China and its East Asian neighbors. Spurred on by the Clinton Administration's efforts to strengthen commercial ties with Beijing, firms ranging from Boeing to DuPont are teaming up with local partners to build plants in China and circumvent the country's nettlesome trade barriers. In doing so, however, U.S. firms may find themselves marooned on a capitalist frontier where a version of intellectual property rights has yet to be invented and where newly unleashed entrepreneurs openly imitate the products of Western firms on their territory.

The risk of losing patent secrets is heightened by Chinese demands that foreigners share their know-how as a condition for doing business in China. "The real danger is that America's best companies will be forced to sell their technology crown jewels to foreign competitors in exchange for market access," says Alan Tonelson of the Economic Strategy Institute in Washington.

China also wants jobs, of course, and American companies have been providing plenty of them lately. That dismays U.S. workers who have watched their employers cut jobs in cities like Wichita, Kansas, only to expand production in Xian. Shortly after Scott Paper disclosed plans in August to lay off 10,500 workers (nearly one-third of its work force), the company announced an $18 ^ million joint venture that will create 200 jobs when it begins producing facial tissue in Shanghai in 1995. At the same time, Boeing, which has dismissed 4,000 workers in Wichita over the past two years owing to a worldwide slump in aircraft sales, has begun shifting construction of some tail sections of the 737 aircraft to Xian. Warns Dale Moore, who represents the machinists at the Kansas plant: "Once we start making deals to give them work, the more they get, the more they'll want."

American firms insist they must build plants in the world's most populous market or watch rivals wing off with the business. Boeing, which sold 52 jetliners to Chinese carriers last year, expects that its Xian alliance will help boost sales of 747s and other planes to Chinese buyers. "We're trying to protect the largest number of jobs now and in the future," says spokesman Dave Jensen. "We try to give a little and gain a lot."

Boeing shares that view with McDonnell Douglas, which has assembled 35 MD-80 jetliners at a Shanghai plant that it has run with Chinese partners since 1985. (China purchased 30 of the planes, and TWA bought the remaining five.) Nor does McDonnell Douglas fret about losing its technical edge. "We're developing a partner," says Peter Chapman, who heads the company's China operations. "The more technology we can transfer to them to help supply us, the better."

Caterpillar, which has been embroiled in a United Auto Workers strike since June, will hire 1,000 workers in China in the next few years to build engines and excavators there. That infuriates Jerry Brown, who heads the U.A.W. local in East Peoria, Illinois. Says he: "They're selling the quality and technology that we helped build over the years. We're being forced to suffer from our own success."

But Caterpillar vice president Siegfried Ramseyer argues that American workers will come out ahead in the end: by launching joint ventures in China, the company will create a larger market for, say, Caterpillar's 240-ton truck, which is currently made in Decatur, Illinois. This, he says, is a long- standing strategy. "Wherever in the world we went to manufacture, we exported more from America."

For many experts, the debate over who wins and loses as U.S. companies build factories abroad misses the point. The shift of expertise and capital, they contend, is inevitable. "The underlying skills in China are so great that any American company that transfers technology will create rivals," says Roy ( Grow, a political scientist at Carleton College in Northfield, Minnesota. The solution, Grow adds, is for American firms to develop new know-how faster than they can give away their skills.

With reporting by Tom Curry/New York and Mia Turner/Beijing