Friday, September 14, 2012

But will China's smart, young automotive managers ever get to lead?

There is a great piece by Automotive News China Managing Editor, Yang Jian, on their site this week.  (The full article is reproduced on the AdAge site here without restriction.)

Yang Jian notes that, at the recent Global Automotive Forum in Chengdu, a lot of senior auto executives couldn't be bothered to address the crowd, so they sent younger managers in their place. The result was a level of candor not normally expected of senior auto execs.

A few examples:

A Chang'an VP on electric vehicles: "you will find there are still a lot of problems with these vehicles when you develop them with taxpayers' money."

Chery's sales chief admitted to short-termism: "We strived to rank first or second in sales among domestic brands,...but we forgot to ask what our future direction should be." (There are a few other examples in the original article.)

Yang rightly praises the pragmatism of this younger generation, and expresses hope that these younger guys will turn around the erosion of Chinese brands' market share when they get to the top. And I largely agree -- if they do get to the top, that is.

In order for that to happen, China will have to do a radical re-think of how SOEs are managed. 

The way it works now is that SOE (state-owned enterprise) leaders tend to be more politician than business person. Most of them held political positions before landing in or near the head office of an SOE, and many will return to political positions after their tenures are up. 

Unlike a lot of these younger managers, most of these senior managers didn't come up through the ranks in the auto industry. Even the few who may have worked in the auto industry when they were young may have possibly been just as pragmatic as today's younger managers, but something apparently changed along the way.

Leadership, unfortunately, tends to drive out a lot of idealism and replace it with survival instinct. The CEOs of state-owned enterprises work, not for a diverse group of shareholders who just want to get rich. They work for the Communist Party whose overarching goal is to remain in power -- a goal often at odds with efficient, productive and profitable business.

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