Enchanted by the vision of an ocean of consumers and cheap laborers, American businesses rushed to China 10 years ago when diplomatic relations were re-established. Now disillusioned, many of these businesses are reevaluating their ventures in the Middle Kingdom. Yet China was then, and still is, a land of potentially great rewards where caution and patience can yield profitable results.
How then did so many experienced business people fumble on both sides of the Pacific? Using American Motors Corp. for his case study, Jim Mann ably chronicles a decade of earnest enterprise, grave misunderstanding and serious self-delusion among American business people in China.
Now that markets in Russia and Eastern Europe beckon, the lessons that AMC and other firms learned can serve as guidelines for future dealings in this newly opened "socialist" world. We should be mindful that our competitors in Japan and Europe always stand ready to capitalize on our lost chances.
The former Beijing bureau chief for the Los Angeles Times, Mann tells an engaging tale of American Motors' joint venture in China, from its hasty, optimistic inception in 1979 to the present period of frank reevaluation.
The choice of AMC is a good one. Often touted as the model for all Sino-American ventures, AMC's ground-breaking deal seemed to have something for everyone: respectable short-term profits for AMC with glorious long-term possibilities, and swift modernization for its joint venture partner, Beijing Automotive Works. AMC had the tools and the know-how, China the labor and the promise of unlimited sales.
Anyone who has tried to do business in China will read "Beijing Jeep" with recognition and nostalgia--recognition of a shared experience of daily life in Beijing and nostalgia for an era lost in the debris of the Tian An Men Square Massacre on June 4, 1989.
Those who never have been to China will find in this book a revealing and enjoyable portrayal of the Chinese working world, from the negotiating table to the assembly line. Equally instructive is Mann's hard look at the workings of American business, including the costly and classic schism between overseas operations and the home office.
Perhaps the most fundamental Western misconception about the Chinese is that they can be forced to respond to Western business methods and attitudes. As the author points out, what was true for the British in the late 1800s still holds today--China is at best a reluctant consumer of foreign goods. "We have never set much store in strange or ingenious objects, nor do we need any more of your country's manufactures," wrote Chinese Emperor Qianlong in a 1793 letter to England's King George III. It's a seminal point: Upheavals aside, most things still change slowly in China.
Moreover, as business people dealing with any government well know, ideologies come and go, but bureaucracies are forever. Mann reminds us that it was ever thus: "China's intractable bureaucracy had stymied Mao and Deng just as it had the imperial and republican leaders who went before them."
In the mid-1970s, AMC was in an economically frail position. In spite of a merger with French auto-maker Renault, the company was sustaining itself largely by sales of a single, very profitable product, the Jeep. So, when Todd Clare, AMC's vice president of international sales and self-styled "China hand," decided the time had come for the AMC jeep to be manufactured and sold in China, he was enthusiastically supported by senior AMC management.
On paper at least, it seemed irresistible. With a population of 1 billion, China was certainly the largest new market in the world. Even if local sales flagged, labor costs near 34 cents per hour promised a highly competitive product for export to nearby Asian countries.
The deal looked good to the Chinese as well. They saw an opportunity to acquire Western technology, build up foreign exchange and replace their aging Soviet-designed jeeps, used by the military and civilian work units, with an entirely new model designed and built with AMC expertise.
The original 1979 memo of understanding was nothing if not promising. It laid out, Mann writes, "the broad objectives: to improve the quality of the Chinese jeep, to introduce a new family of jeeps made under AMC's directions, and to begin manufacturing parts and components in China to export."
It was all so simple! "Clare was dazzled by the speed with which they had reached the agreement. My God, he had only been in China for seventy-two hours, and boom, crash, everything's fine, it was all done. China was going to be much easier than they expected. Clare thought this was going to be a pushover." What Clare did not realize is that the Chinese consider such memos routine courtesies designed to initiate a relationship, not define it. In a sense, the Chinese were just being polite.