Thursday, October 28, 1999

China’s Car Guy

“China’s Car Guy”: FORTUNE October 11, 1999

This week I came across an article in Fortune magazine about General Motor’s (GM) venture into the Chinese marketplace and the 48 year old Chinese business, Mr. Hu Mao Yuan, person who made it work.

Hu, president of Shanghai General Motors (SGM), in the interview conducted by FORTUNE stated that his greatest fear would be that “the largest joint venture in the People’s Republic would wind up as an auto company that just produces quarrels between its partners.” To make matters worse, USA critics of the venture derided GM for “giving away too much technology and getting locked into making Buick sedans that are too expensive for the market.” From the success the joint venture has achieved, the worries and criticisms were needless at least given the path that Hu and GM set the venture onto. To that end, GM held out a very bold vision; “changing the very nature of competition in China” and in Hu, China (and GM) found someone who “could bridge the gap between Western and Chinese business practices.”

As I read the article, I noted that Hu highlighted many of the cultural difference issues one would expect, however he also noted a few things that surprised me. For instance, he stated that issues of trust, communication, egos, and differences in social, political, and legal systems all created obstacles which I would have expected. But then he surprised me by stating that “Americans are known as individualists but they spend a lot of time building teamwork.” He further added that “Chinese nowadays are increasingly focused on individual development.” Both statements surprised me in their frankness and the repealing of my assumption as to ‘commonly held’ knowledge. Hu then goes on to describe how the parties finally established “ a level of trust” which enabled the development of relationships some of which Hu rightly refers to as “a secret weapon” in achieving success. To this point I felt I could directly relate as I’ve found in my own cross-cultural adventures that if you could establish a basic one-human-to-another level of communication, everything else would become easier to at least talk through.

Hu also indicated just how far China had come by sharing that in the 1950’s “saying that a joint venture’s interests should come first could land you in jail.” On the other hand GM’s vision of building “a world-class auto industry in China,” their $2 billion in investment and the resulting “Bucks with fewer deviations from specs than those built in North America” have begun to change the mindset in China.

I think though that Hu’s self-developed “4S” principles get at the real heart of his success story. Hu’s first “S” is to “study each other’s culture and practices to get the advantages of both.” The second is to put SGM–the joint venture’s needs ahead of either party. The third is to standardize wherever possible. And the fourth, which is really a double “S” is to be a spring, “which represents the idea of being flexible rather than stubborn.”

Clearly Hu’s attitude which he fostered amongst the venture’s partners and workers has provided a foundation to make “everything easier to achieve”. That’s probably good advice for each of us to consider in our study of Global Management techniques.

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