The first three S’s could probably be found in MBA textbooks and company brochures in many countries and many languages. But the fourth S was highly unusual, especially in China.
4. Shanghai GM. The fourth S was the name of the 50-50 joint venture company itself. Point number four was far and away the most important S. This S said that every employee of the joint venture should put Shanghai GM first, above all. “When you came to work for SGM, you were no longer an employee of the shareholders (SAIC or GM),” explained a veteran GM executive in 2010. “You worked exclusively for Shanghai GM.”
With that simple yet powerful four-point message, Murtaugh and Hu dared to challenge convention they were declaring plans to build a close cooperation — a kind of cooperation never before witnessed in China’s automotive industry. From the top down, all employees were required to put Shanghai GM first.
Let’s get this out of the way first — American Wheels, Chinese Roads spends a lot of time focusing on my dad. In the index, he has the fourth-largest entry, right behind Buick and right ahead of United States of America. Michael Dunne’s book tells the story of General Motors rise to success since 1996. My dad was in charge of the operation for its first decade, and his job made me and my family move to Shanghai when I was 15 years old, so it’s impossible for me to read it without intertwining my own narrative with the book’s. For example, Dunne talks about a company Christmas party to illustrate the collegial atmosphere GM expats built — I remember it as the time my friend Warren and I snuck away from our parents and cadged drinks from the bar.
So take it with a silo full of salt that I found the book fascinating. Dunne lays out the history of the Chinese automotive industry, including several failed forays there by foreign manufacturers, before delving into how GM successfully built a partnership there that has propelled China to the world’s largest car market and now accounts for 40 percent of GM’s profits.
The tale is full of tight turns and skids, as American businessmen have to learn how to handle unpredictable government decisions and Chinese executives who sometimes prioritize boosting the Communist Party above making money.
While the story is fascinating, it’s a little less than breath-taking. GM found success early on, and rarely found itself in do-or-die scenarios that make for compelling narratives. The most dramatic aspect of the book is in its coda, as GM’s bankruptcy in 2009 forces it to cede control of its Chinese operation to the Chinese government. Dunne writes convincingly of how China has lured GM and thousands of other foreign companies to invest hundreds of billions of dollars in industrial infrastructure there, and wonders aloud if the Chinese government might find the companies no longer useful to keep around in the near future.
That part of the story is yet to be acted out, though. Dunne’s book is useful as a microcosm of China’s transformation over the past 20 years from a place where people “who could hardly afford a bicycle in the 1990s are today laying claim to Buicks faster than they can be built.”
