Beijing Jeep Review

Book Report on Beijing Jeep by Jim Mann

MBA 663 -International Business

Andy Gruenbaum

November 3, 1998

  • Synopsis
  • Critique
  • Lessons Learned

 

Beijing Jeep: The short, unhappy romance of American business in China by Jim Mann;

Published by Simon & Schuster in 1989; ISBN Number: 0-671-62027-4.

Synopsis

The book traces the enthusiasm generated in corporate boardrooms when China opened its doors to trade in the late 1970’s. Although the focus of the book is specifically on the AMC joint venture known as Beijing Jeep, the book gives a broad history of the Sino-American relationship during the 1980’s. The book describes how AMC dealt with: financing a joint venture; the Communist Parties presence within their manufacturing plant; concerns about Chrysler buying out Beijing Jeep’s parent company; and the challenges of having Americans living in a foreign country.

Besides AMC, the joint venture consisted of a jeep manufacturer in Beijing. The company used very primitive equipment and methods that presented immediate challenges to AMC. Unfortunately, the company was not the complete problem. The Chinese government was a source of many of AMC’s problems. But eventually, the management team learned the extent of their power and developed a rather amicable relationship with the Chinese government.

The book closes shortly after the Tiananmen Square massacre. At this point, the author was firmly convinced Western success in China was not possible. Mann states, “The historical cycle in Western attitudes toward China–of romance and attraction giving way to disillusionment and fear–is so firmly established that it may never be broken.” However, nearly ten years later, Beijing Jeep still manufactures vehicles in China. The competition and challenges have continued. As of January this year, there were 123 car plants on mainland China. Additionally, due to better roads, the need for jeeps is limited to more remote areas where the people are mostly poor and financially incapable of purchasing a jeep. With 1997 being its worst performance in its fourteen year history, the future of Beijing Jeep is still far from certain. But due to the recent merger of Chrysler, one of Beijing Jeep’s parent companies, and Daimler-Benz, Beijing Jeep may see an infusion of money. The money would be due to Daimler-Benz wanting a manufacturing base in China. Thus, as the companies involved with Beijing Jeep become more international, the future of Beijing Jeep is even more difficult to determine.

Relationship to International Business

Although the book’s title gives an almost obvious relationship to international business, each chapter reinforces this fact. When AMC left the confines of the US and set up its joint venture in China, it was conducting business internationally. Every American Jeep kit shipped to China for assembly reinforced AMC’s commitment to international business. Despite the challenge of doing business in China, AMC and Chrysler have persevered.

Critique

Beijing Jeep was an informative book to read. It provided a good historical summary of automotive industry in China. The author peered into the “good, the bad, and the ugly” of doing business in China. The “good” was the chapters dedicated to providing “business-at-large” information on China. The “bad” was how the American slant of the author failed to capture the true “Beijing Jeep” story. And the “ugly” was how the author completed the book assuming the Beijing Jeep manufacturing plant would close.

The author did an excellent job providing background information. For this reason alone, the book was worth reading. The beauty of the book is that it did not dwell exclusively on Beijing Jeep, it also provided brief snippets of other American companies successes and failures within China. This background allowed the book to serve as a primer on the general business climate in China during the 1980’s. Furthermore, with a limited amount of additional research, the Beijing Jeep story was made current. Additionally, I found the information on the role of the Communist party very helpful. This is information has an application for whatever business is being pursued in China. Although reforms may make the information of lesser importance, it still opens the eyes of a capitalist to the grasp Communism has on every aspect of a Chinese citizen’s life.

Because the author was an American, the occurrences were viewed through the eyes of an American. The author could not help but interpret the facts through his cultural leanings. The same would be said if a similar book existed from the Chinese side. We all carry cultural baggage. Authors are not immune to such things, and neither was Mann. Mann presently the facts as honestly and sincerely as he could. He interviewed people from both sides of the joint venture, but the normal human response is to temper facts that are less favorable to your point of view. No amount of diligence could completely remove the author’s bias. Accepting that fact, I believe the author presented the facts as honestly and completely as possible.

Mann’s conclusions were the true weakness of the book. The secondary title “The short, unhappy romance of American Business in China” immediately shows the author’s closed-mindedness. After the Tiananmen Square massacre, the writer believed the U.S. and the rest of the West were just participating in a cycle that made leaving China the only option. Many companies, however, saw opportunity where others saw failure. While the automotive manufacturing capabilities of China have continued to grow, so have many other industries. As China becomes a more developed country, foreign money will continue to flow into its borders. This is where Mann really missed it. As companies need to continue to expand their markets, they need to go to markets where expansion is possible. China offers one of the last untapped countries with incredible growth potential. In the mid-20th century, walking away from a business challenge may have been a viable option. Not now! The level of competition has forced all global companies to seek out ways to cut expenses and to develop new customers. If Mann focused on the business factors rather than the political factors, he likely would have written the book with more hope rather than the dismay that filled the book’s last pages.

Lessons Learned

Several lessons can be learned from the true story of the Beijing Jeep venture. The first lesson is that no single culture is the best culture. Second, a huge population does not guarantee a company’s success. Lastly, situations encountered in international business can have parallels in all of our professional lives.

In the most general sense, the book teaches you not to assume similarities between cultures. AMC went into China using negotiation techniques it would use with other Americans. This assumption and others made by AMC compromised the original deal and forced some uncomfortable moments. These moments were only resolved when AMC out-maneuvered its Chinese hosts. This out-maneuvering was only possible when a consultant was used who was proficient in dealing with the Chinese. This advice should be heeded when any company is going outside of its borders. Quite likely, failure of a company to seek the advice of professionals well-versed in the business culture of the foreign country will result in a slower and more costly entrance into such country. Thus, a consultant can help a company assimilate into a culture much more quickly.

A huge population base does not translate into incredible successes. Beijing Jeep experienced this is in numerous ways. The inefficiencies of the manufacturing process and the government’s production quotas made the first few years unprofitable. Once changes were made to the employment structure and in the currency exchange rate, Beijing Jeep’s situation improved. The point being, even if AMC did everything right with Beijing Jeep, they still might easily have lost the company. Many companies do what almost every MBA would say is the “right thing”. Unfortunately, no doctor saves every patient, and not every business makes it to its first anniversary. Circumstances change and unexpected variables have more value that the brightest people could have expected. Thus, most failures are just a pessimist’s view of learning.

Finally, as I begin my new consulting job as a webmaster at Battelle, it is good to get a reminder how to proceed into new territory. From previous experiences, I have a variety of notions of how politics function. As I become a part of this new “country/company”, I have my ideas what a culture is telling me when it reacts in a certain way. To be successful, I will need to proceed slowly and not make judgments about the activities within the company. As I begin to understand the informal and formal management structure of Battelle, I can begin to interact with more confidence. I can assert my opinions and market my expertise to other groups. This is very much as a company functions when it does business internationally. A company (me) realizes the profitability of its product (Internet skills) and seeks out new markets (companies) to enter. Of course, if I need help entering new markets, I can always hire a consultant.

Bibliography

 

Beijing Jeep: The short, unhappy romance of American business in China by Jim Mann; Published by Simon & Schuster in 1989; ISBN Number: 0-671-62027-4.

BRIEFING – ASIA AUTOMOTIVE – JULY 28, 1998 , 07/28/98, Asia Pulse

CHRYSLER HOPES TO HIKE OUTPUT AT BEIJING JEEP by DAVID MURPHY, 07/06/98 Automotive News

South China Morning Post, 01/21/98, MARK O’NEILL in Beijing

Beijing- Chrysler link `to be extended’ , 02/14/97, China Business Information Network

 

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