So far, JinBei is still chasing success; although it was one of China’s Big Eight auto firms last year, it produced only 40,000 vehicles and earned a scant $8 million. But apparatchik turned executive Zhao Xiyou may yet be on his way to becoming China’s Henry Ford. Three years ago JinBei was just another state-controlled company, drawing fire for shoddy products manufactured by a bloated, inefficient work force. Now it is producing minibuses under license from Toyota and pickup trucks in a joint venture with General Motors. In October, Brilliance China Automotive Holdings, the majority shareholder in JinBei’s minibus subsidiary, even offered stock on the New York Stock Exchange, the first step in an ambitious plan to make JinBei a first-class automaker as China’s leaders open their economy. “Ten years ago,” says Zhao, “the head of a Chinese company would have starved before going to the U.S. stock market for investors.”
Only a man like Zhao could sell such a relic of socialism to the great capitalists of Wall Street. Although its 51,000 employees make up a work force half the size of Chrysler’s, JinBei (the name means Gold Cup) turns out only about one fiftieth of Chrysler’s output. To garner a listing in New York, he spun off the minibus firm and 6,000 employees. As far as quality goes, well, Consumer Reports wouldn’t be overwhelmed; buyers still complain about vehicles with defective tires, busted doors and bad gearboxes. But The Chairman, as his foreign partners call him, is such a master salesman that he can make people look past the shortcomings to the long-range promise of his products. His latest undertaking: persuading Toyota to become a full partner in the minibus venture, which he hopes will eventually produce cars for the potentially vast Chinese market.
Zhao’s automotive career began only in 1984, when the Shenyang city government asked him to leave his job as chief of the local industrial bureau to form JinBei out of 96 disparate truck- and auto-parts manufacturing shops. His first headline-making experiment in reform came in 1988, when JinBei issued shares to the local public. Conservative Chinese leaders (and Western journalists) promptly labeled him a capitalist. That didn’t prevent Zhao from hawking shares to top Communist Party officials in Beijing.
Someday, China’s fast-growing economy may well become the world’s largest market for automobiles. Zhao figures that his foreign connections will help him serve it. The $80 million proceeds of the U.S. stock offering will help expand production and continue to modernize the outdated equipment at the Shenyang minibus plant, and experts from GM, which is helping to update another ancient facility, are painstakingly teaching workers about quality. “Zhao is simply a visionary,” says General Motors’ Robert Stramy, president of the GM-JinBei joint venture.
The JinBei empire still remains saddled with socialist baggage. The Chairman would like to get rid of 20 percent of the work force, but that’s an impossible dream in a place where unemployment insurance is still nonexistent. Then there’s Beijing’s 120 percent duty on the imported, ready-made kits from which the minibus and a General Motors pickup truck, the S10, are assembled. Import duties would be lower if the company were to use more domestic parts, but most of Zhao’s suppliers are, as one Western auto expert puts it, “in the dark ages.” China’s bid to rejoin the General Agreement on Tariffs and Trade will mean lower duties in a year or two. Yet while that will cut costs, it will also invite a flood of imports from Japan and Europe.
Will JinBei make it? So far, investors think so. The price of its Brilliance unit’s shares were $26 at the end of last week-up 63 percent from the original offering price. It’s also helpful that image-conscious Chinese leaders want to make sure that their high-profile manufacturers succeed. “China’s leaders hate failure,” says Yang Rong, the 35-year-old chairman of Brilliance. “It would be bad for China’s internationalization effort.” That should offer a nice safety net, even for a man determined to succeed by profits alone.
