Why Jeep Hit a Dead-End in China

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.

Mann states that the Chinese workers considered themselves to be oppressed, and that they used this sense of oppression as an all-purpose ideology. It gave them both a belief in their ability to do hard work and at the same time a justification for not working very hard. Further, nearly every office that housed the factory's management team had a bed inside it. The beds were used for afternoon naps, or what the Chinese called xiuxi.

AMC/Chrysler experts realized that any chance of long-term profitability was unlikely.

IT is difficult to categorize this book. Its style is reminiscent of much of the writing of David Halberstam in its endless restatement of key points. And at times one is reminded of a latter-day Hedrick Smith, as Mann analyzes China in the mid-'80s.

Mann's style is mostly hodgepodge - but somehow it is a workable hodgepodge. He uses footnotes, but his style is not academic. At times he jumps from third to first person, which can give the book an odd ``I sometimes was there'' feel. He occasionally editorializes, without providing substantiating information.

Mann uses the journalistic inverted pyramid style to tell his story, stating the thesis, and then repeatedly elaborating on this thesis. Some readers might wonder why they should continue reading after the first few pages, where the guts of the reasons for AMC/Chrysler's joint-venture failures are clearly laid out.

``Beijing Jeep'' works largely because Mann is a good writer. He uses an example the reader can understand - a case study of the problems encountered when one well-known company tries to begin operation in another country - as a springboard to discuss the reasons he feels foreign companies will be unsuccessful in manufacturing their products in China for either internal consumption or for export.

Mann, now stationed in the Washington bureau of the Los Angeles Times, doubts that foreigners will be able to capture a huge, unified market in China, especially when the Chinese have been unsuccessful in capitalizing themselves on their own market. Given the poor track records of overseas companies that have tried to set up shop in the Middle Kingdom, his pessimism seems justified.