Beijing Auto maps out a global expansion
Beijing Automotive Industry Holding Co. is looking to its president, Wang Dazong, to steer its quest to grow bigger quickly as China seeks to boil down its sprawling auto industry into a smaller number of more-potent car makers.
"If you're an auto maker and want any chance in surviving, you really have to go global and become bigger," Mr. Wang said in an interview.
Beijing Auto became China's first auto maker to team up with a foreign counterpart—25 years ago with then-American Motor Corp. to produce and sell Jeeps in China. But despite that early break, it has failed to thrive, while rivals such as Shanghai Automotive Industry Corp. have roared ahead.
Mr. Wang may be Beijing Auto's best chance for a comeback. Tapped as president to revitalize the company, the U.S.-educated 55-year-old executive worked for General Motors Co. for 21 years before joining GM's Chinese partner, Shanghai Auto, in 2006 and then leaving for Beijing Auto early last year.
Even among a throng of Chinese-born executives now returning from Detroit and other troubled motor towns, Mr. Wang is a rarity in that he held a management position in GM's product-development division for more than a decade. Along with Wang Chuanfu of BYD Co. and Li Shufu of Geely Holding Group, Mr. Wang is a Chinese car executive to watch as China overtakes the U.S. as the world's biggest car market this year and as its car makers expand overseas.
"This is a challenging job for him," says Zhang Junyi, a Shanghai-based senior consultant with Roland Berger Strategy Consultants. Beijing Auto, owned by the municipal government of Beijing, is often a "politically charged" place, he says. Still, Mr. Wang "knows how to maneuver within China and on the global stage," he says.
A key challenge for Mr. Wang is strengthening Beijing Auto's brand, the Beijing, a minor player in China's domestic market that now has only a small lineup of aging sport-utility vehicles. Beijing Auto's main businesses are joint ventures with Hyundai Motor Co. and Daimler AG's Mercedes-Benz unit, as well as a heavy-truck producer called Foton.
To Mr. Wang, it is clear that the road to a strong brand is via foreign technology and know-how, best achieved by buying into a troubled overseas auto maker—similar to how Shanghai Auto developed its Roewe brand using technology from MG Rover.
"If you're an auto maker and want any chance in surviving, you really have to go global and become bigger," Mr. Wang said.
In July, Beijing Auto was set back in its global push when it was forced to drop a bid for control of GM's Adam Opel GmbH unit. GM, which sees China as a key priority and which plans to tap Opel's technology even after it gives up control, balked at creating a rival with similar technology, according to a person close to GM.
But Mr. Wang had a backup plan. The idea, which Mr. Wang says he and Beijing Auto's management team formulated with the help of investment bank Morgan Stanley, was to take a minority stake in Swedish sports-car maker Koenigsegg Automotive AB and help fund its bid for GM's Saab unit—an agreement Beijing Auto reached last month, although it isn't yet finalized.
"It was quite a coup," says Michael Dunne, managing director of China operations for J.D. Power and Associates.
Through its indirect link to Saab, Mr. Wang wants to gain access to Saab's vehicle technology, much of which comes from Opel and GM. In return, Beijing Auto will try to help revive Saab by boosting its vehicle sales in China.
This time, GM is supportive of Beijing Auto's move. That's because unlike Opel, Saab is to be sold off entirely and thus won't get technical updates from either Opel or GM after a certain period of time, the person close to GM says.
With access to Saab technology, Beijing Auto holds a decent chance of revamping the Beijing brand, says Mr. Dunne.
Mr. Wang wants to build the company's Beijing brand to sell well more than 300,000 vehicles a year, a level now achieved by only one Chinese auto maker, Chery Automobile Co. In total, counting Foton vehicles and others, Mr. Wang wants Beijing Auto to produce and sell two million vehicles by 2011, up from an expected 1.13 million this year.
Mr. Wang is driven by a determination for Beijing Auto to not only survive the central government's move to consolidate China's fragmented auto industry, now teeming with more than 80 auto makers of all sizes, but also to come out of the consolidation as one of China's top-tier auto makers.
Meanwhile, the government, which envisions a domestic auto industry made up primarily of what it calls Big-Four and Small-Four groups, has designated Beijing Auto as one of the latter.
Mr. Wang, usually affable, shows flashes of feistiness as he calls the designation "not a given." The company is happy to be designated, he says. "But that's not good enough for us. We want to be a top-tier auto maker, and we want to be there very quickly, OK?"
Mr. Wang's years in Detroit are now paying off as he builds the core of Beijing Auto's management and engineering teams by poaching talent, mostly Chinese, from Detroit, Toyota City and other motor towns around the world. One of his best catches so far is Gu Lei, an 11-year veteran of Ford Motor Co. who left Chery earlier this year to be head of Beijing Auto's product-development center. Mr. Wang says that 30 to 40 members of his team have experience outside China, mostly with Detroit.
"In Detroit, for the past 20 years, it's been all downhill, and it's no fun. That's why many people are leaving, and I am able to attract a lot of talent from Detroit," Mr. Wang says. "Here it's all growing, growing, growing."
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