Washington Iron Works, a century-old wood-processing-machinery firm, is just concluding shipment of a $12 million fiberboard planto to China as part of a new industrial zone being created on the coast of the South China Sea.

The shipments are headed for Fuzhou, the capital of China's Fukkien province on the coast opposite Taiwan. The province had been designated a special economic zone and is receiving priority clearances from central government authorities in Peking.It also has been receiving a good deal of interest from American firms such as the makers of Nike shoes who are planning a factory there as well.

Robert Landerholme, project manager for Washington Iron Works in Seattle, detailed an untroubled series of negotiations with Chinese officials that would be the envy of many a frustated American firm that has tried to do business in the People's Republic of China.

The turnkey project involves a plant for construction of medium-density fiberboard, a material made from various types of waste wood products. The wood scrap is processed, then compacted and baked in an oven with various binders and resins.The finished product can be incorporated as a layer in plywood or used alone and frequently is used in veneer or for furniture manufacture.

Landerholme confirmed that Washington Iron Works had beaten out a Swedish competitor that had made at least three full-scale presentations in China.

The woodworking complex, located on the outskirts of Fuzhou (Foochow), probably will cost a total of about $30 million, he said. The Chinese almost certainly will ship a portion of the medium-density fiberboard (MDF) overseas, as well as some of the furniture that will be made from it. It seems that such priority projects engineered and built by foreign firms for China are expected to serve not only the tremendous domestic market, but to export to earn hard currencies for a country desperately short of foreign exchange.

A Chinese delegation, mainly from the Ministry of Forestry, which visited the Puget Sound area in December 1978 and January 1979 specifically requested a presentation from Washington Iron Works. The company held a three-day seminar for Chinese officials, who seemed already aware that Washington Iron Works had built at least 75 percent of the existing MDF plants in the world.

The Chinese side asked for a full-scale proposal. Although Washington Iron Works only makes some of the major equipment components for MDF plants, it undertook to do all the engineering work as well as to assemble an entire plant, and to train Chinese workers. The two sides communicated via mail and telex for about a year, when Washington Iron Works sent its proposal to China. It followed up by sending a delegation of its executives and engineers to Beijing and then down to Fuzhou in March and April of 1980. By that time, the Americans were dealing directly with the local authority called Fujian (fukkien) Forestry Import and Export Corp.

"They were tough negotiators but very honest," said Landerholme, echoing sentiments of many others who have dealt with the Chinese. The contract went into force by June 1980, and the complete plant was being shipped by mid-August 1981. The Chinese have been paying in dollars, with no problems about meeting various schedules, according to Landerholme.