This piece was written by long term China Car Times commentator August Schwartz who has been following the Chinese auto industry closely and from affair for the past decade.
The last week or so I have had a burning desire to do something I have not done in a very long time. It has been nearly five years since I wrote my last piece on Lifan, or any article for that matter. I have not lived in China in almost an equally long time and have dropped many of my connections to the country and region. I have neglected to read the Chinese automotive press with the exception of what is brought to me via google news.
I have found myself by the virtues of poor luck as a student, again, engaged in the activities of vocational rehabilitation and for the first time several weeks ago writing again. The topic at hand was an interesting one, which drives my other passion of logistics systems and air transportation, had me thinking again about China.
I have been, well maybe Iâ€™m not so sure of the word to describe the feeling so Iâ€™ll use re-enlightened, in my interest in the growth of China, its infrastructure, ethics, technological and social gains. Although I had once considered myself partially assimilated into Chinese society maybe perhaps today I am again an outsider as I have yet to even set foot in the country since November of 2008. With this being said I would like to share a bit of what might be generalization of theory.
Very few companies I see in society today have what I would consider to be a relevant commitment by way of values to the stakeholders. Â A current shining star of such things would be Southwest Airlines; employee first, not just a motto but the first ingredient in the companyâ€™s business plan. Responsible management of a company by way of treating employees as the primary stakeholder leading to operational management run primarily by needs determined by the employees.
A second example would be the now world famous Boston Beer Company, proud makers of Award Winning Samuel Adams. This company also empowers its employees by focusing on enjoyment and the art of crafting the product, be it actually crafting beer. The great product is a result of the brewers aiming to make the best product possible by way of enjoyment and pride and not the result of the marketing department determining that winning such an award would reflect positively on branding and finance determining that it would thus drive higher profit margins.
What does this have to do with China? or cars for that matter? These are two very different companies in a very different country, however they are also companies in two very different industries as different as the countries we are looking at that share similar characteristics. People first: the company is driven through the empowerment of those who work within by always attempting to make the best possible product as a matter of pride not accounting.
How does this relate to cars? Many believe that for very many years until the recent past BMW allowed the engineering department to determine what the marketing department would promote and that finance took a back seat to product development. This concept of empowerment led to the benchmark 3 Series; at the time not driven to be the sportiest or luxurious or economical, reliable or the like; but to be the best possible product for the given purpose of being a car.
Perhaps Subaru and without a doubt the Toyota of yesteryear had similar products on the market. Consumer products that were determined only by the passion of engineers developing them. Engineers designing what they knew they would wish to have in a product not being dictated by finance or marketing; designing what is correct.
I was deeply saddened a few weeks ago while reading about a nationwide recall in Australia of all Great Wall and Chery cars due to asbestos. Engineers, scientistâ€™s researchers etc. all have determined one thing in regard to asbestos in breaks; it is effective, cheap and hazardous.Â The industrialized world determined this years ago. Why would a manufacturer at any level, let alone those with very high publicity in a test market allow such a product to be used? Is the drive for shareholder short term gains that demanding? The decision to allow this product to be used has potentially put the future of the entire Chinese domestic auto industry at risk
The Chinese automotive industry is driven by a minimal number of factors besides the producing basic transportation. Face, esteem and privilege of shareholders have determined that short term profits trample the fostering of positive sustainable development. The desire to create the next Audi scenario, the most desirable brand in China due to its esteem and history of luxury yet not due to being the best possible product is of keen interest placing national pride second.
Buicks most successful market was built on its reputation of nearly 80 years ago; selling a poor product that other markets rejected was successful due to brand recognition and reception. A good product is a good product and a bad one should be called for what it is. GM has since revitalized Buick and they are making the best product they have in years and true this is much to the credit of the Chinese domestic markets reception of the brand.
The Chinese auto industry must modernize its thinking to create its own BMW scenario; this may be the only way for it to break into the international market with any success other than undercutting the competition.
The automakers of China have the talent, and can develop the knowledge to do such a thing. They must redefine why they produce cars in order to produce great cars. They must redefine the ethics involved. They must produce a product worth producing for the stakeholders; the employees, the customer, the passenger and the driver. China and the world will continue to reject the products of domestic Chinese automakers, other than purchases driven by financial reasons alone, until a manufacturer becomes Chinas shining star.
China has done such things; look at the recent success and international rakings of Chinas major airlines. The world may be well served by a true Chinese competitor on its stage.
Iâ€™m not exactly sure who will read this as of now but I do know two things; I have enjoyed my Samuel Adams while writing this and that my thirst for writing has been quenched for now.