alison@she-devel.com (Alison Chaiken)
American Wheels, Chinese Roads is Michael Dunne's remarkable description of how General Motors rocketed up from the first vehicle rolling off a Chinese assembly line in 1999 ("Job One" in industry lingo) to market leadership there in 2005. Dunne, who has lived in China and speaks fluent Chinese, is an automotive insider whose local experience makes him uniquely qualified to explain to a Western audience the rather tortured history of GM's partnership with Shanghai Automotive Industry Corporation (SAIC). The native business culture of indirection and evasion required a gigantic adjustment on the part of relocated Detroit executives. "Upside-down" hardly suffices to describe the foreignness of the Chinese market, where luxury models dominate over economy vehicles, where most buyers pay cash and where almost all cars sold are black. The tale of how GM's China subsidiary managed to achieve such success at a time when the domestic operations were marching towards insolvency makes for a gripping story. GM's highly profitable, rapidly growing Chinese subsidiary saved the disastrous North American operation from an even more ignominious bankruptcy.
The dominant fact of Chinese business is that foreign companies must form partnerships with local ventures, and SAIC already had a successful partnership with Volkswagen when GM came on the scene. New Partnerships furthermore must be approved by the central government -- except when they can be approved by the provincial or city governments. The partnerships were often tense, and western managers had to adjust to relationships were no decisions were ever final and the parties' underlying motivations were often hard to discern. One of the book's most entertaining chapters relates how Peter Badore of Chrysler turned the tables on his Chinese counterparts in Beijing Jeep, achieving something of a moral victory at the same time he created profits for his company. Dunne vividly relates how other foreign managers like Philip Murtaugh and Rick Swando developed cordial and mutually beneficial working relationships with their Chinese counterparts.
The historic prestige of the Buick brand and General Motors names in China will be a humorous surprise to American readers. Despite the author's focus on GM's partnerships, the side stories of all-Chinese upstarts like Geely and Chery are the most intriguing. While government-sanctioned foreign partnerships were struggling to import the engineering know-how to create entirely new models, Geely and Chery forged brashly ahead. Notably Geely purchased Volvo in 2010, and in 2003, Chery managed to ship a Chevy Spark (branded the "QQ") before General Motors did. American Wheels, Chinese Roads prognosticates a bright future for Chinese car-makers in foreign markets, but brands like the electric Coda and the Buffett-backed BYD have struggled to gain a foothold here.
Informative graphics accompany the text, but are never never discussed or explicated. As with so many recent volumes, the book suffers from an unfortunate lack of editing. The pages have some unnecessary repetition of facts in some places, and then in others, allusion to entities whose identity and significance is never explained. Dunne worked hard to avoid writing a memoir, and always refers to himself in the 3rd person or anonymously, to the extreme that he does not mention that Timothy Dunne of Automotive Resources Asia is obviously his brother working in his employ.
Happily, Dunne brings the narrative to life by focusing individual chapters on stories of particularly significant individuals or business developments. The timeline does consequently jump around, but the overall thread of the narrative is coherent. American Wheels, Chinese Roads will be a lively but quite sobering read for any businesspeople contemplating operations in China.
Thanks to John J. Zhuang, Rutland Group for sending me the link to an (indirectly sourced) China Economic Review article which mentions the book.
See also review of Designated Drivers: How China plans to dominate the global auto industry by G.E. Anderson, PhD