Why is Chery Losing Talent?

A few days ago, the Wall Street Journal's ace auto journalist in China, Nori Shirouzu, reported that Beijing Auto has recruited away Chery's current Chief of R&D.

While this news, in and of itself, is certainly no cause for alarm, it seems to be part of a larger trend that may portend difficulties for Chery. According to several well-placed insiders with whom I have recently spoken in China, Chery may be having a bit of a problem hanging on to its talent.

The R&D Chief who has recently left, Gu Lei, brought with him to Chery 11 years of experience at Ford Motor Co. Mr. Gu's predecessor was also highly sought after to run Chery's R&D, but he departed for academia after only three years -- and several very successful model launches, I might add.

Some of the discontent -- and this is only speculation -- may be arising from Chery's ambitious launch schedule. The company has announced that it would launch an astounding 15 new models this year -- a schedule that, at this point, no longer looks possible, but which nevertheless may work Chery's people to death as they attempt to achieve it.

One Chery insider, who also recently came from a foreign producer, confessed to me that he no longer has weekends off since he joined the company. While he's excited to be working for a domestic automaker, he wasn't certain how long he could keep up the pace.