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Why Jeep Hit a Dead-End in China

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CHINA'S 1.1 billion population has for more than a century been a prize sought by businesses around the world. Executives have salivated at the thought of the profits to be made supplying such a market with television sets, canned foods, helicopters - and Jeeps. Jim Mann, Beijing bureau chief for the Los Angeles Times from 1984 to 1987, tells of the efforts of American Motors Corporation (AMC) - and later Chrysler, which took over AMC in 1987 - to establish and run a joint-venture project with China to produce Jeep Cherokees.

In ``Beijing Jeep'' he explains why this project, carried out throughout most of the '80s, was largely unsuccessful. He cites everything from unrealistic expectations on the part of AMC/Chrysler to the structure of China's economic system as reasons the project never moved into high (or even second) gear.

Early on, Mann uses the Chinese slogan, tong chuang yi meng (same bed, different dreams) as a metaphor for his book. Jeep Cherokee executives dreamed of making a profit by tapping China's 1 billion-plus market. China, on the other hand, wanted to obtain the technology it needed to modernize so it could catch up with the West and with Japan. As Mann puts it, ``The ultimate question was whether two partners with such different dreams could last for long in the same bed.'' The answer to this question is repeated numerous times in every chapter of the book: ``No.''

The Chinese had hoped AMC would manufacture in China a four-wheel-drive vehicle with a soft top and four doors - the sort of car that could be used if necessary by the Army. The Americans wanted a factory that could produce the Cherokee (already being made in the United States) so that retooling would not be necessary, thus keeping costs under control and keeping the operation simple. AMC got its way, Mann says, in this and a number of other negotiating issues because it managed to turn the future of the joint-venture company, Beijing Jeep, into a test of China's open-door policy.

At the 11th hour of negotiating, AMC went over the heads of its Chinese partners and attracted the attention of Premier Zhao Ziyang. As a result, the Beijing Jeep joint venture was launched, becoming an officially approved example of cooperation between Western business and Chinese socialism. But American AMC executives soon realized that Chinese-produced parts were costly and poorly made and discovered that the labor force in China was unreliable.

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