Jim Mann
Jim Mann
Beijing Jeep: American Business in China
ISBN: 081333327X
Beijing Jeep: American Business in China
Jim Mann examined an American-Chinese joint business venture in "Beijing Jeep: The Short, Unhappy Romance of American Business in China." Mann chronicled the relationship between the American Motors Corporation and the Chinese government in their production of Jeep motor vehicles. In his book he described the economic and cultural difficulties encountered in the relationship. What Western business saw as a vast potential market in China, soon gave way to the reality of daily business negotiations that were hindered by unforeseen obstacles.
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TRANSCRIPT
Beijing Jeep: American Business in China
Program Air Date: February 4, 1990

BRIAN LAMB, HOST: Jim Mann, author of the new Simon & Schuster book "Beijing Jeep," why did you write it?
JIM MANN, AUTHOR, "BEIJING JEEP": Well, even before I was headed for China in '84--I knew I'd be there for several years--and while I was getting ready to go, I found countless American businessmen who were either getting ready to do business in China, dreaming of doing business in China, already set up--and I became curious about how this was going to all work out. Things were just starting up then. I knew I'd be there. And I wanted to track American businesses as they went through setting up operations in China and moving along.
LAMB: What was the political atmosphere in 1984 in China?
MANN: Entirely different from today. I would say '84, when I arrived, was the height of the perception in the West--misperception, really, that China had completely transformed. If you'll recall in '84, which was the time of President Reagan's trip to China, there were columns in the Western press saying that China had abandoned Marxism, that it was no longer a Marxist state and that China, in some way, had completely abandoned the traditions of the previous 40 years.
LAMB: The subtitle on this book is "The Short, Unhappy Romance of American Business in China." Why was it short and why was it an unhappy romance?
MANN: Well, short in Chinese terms or in historical terms. I would say the romance was from '79 to '89 or possibly even shorter. The really, the disappointment began to set in by the late '80s--'85, '86, '87. Unhappy because it didn't fulfill the expectations that people came in with. And certainly, people came in with the romantic expectation that they were going to finally fulfill that old dream of developing a China market of a billion people.
LAMB: Why the Jeep?
MANN: Jeep was really the leading joint venture--manufacturing joint venture that was set up in those early years, and it was the--it was the one that was most closely watched. There was a front-page story in American newspapers when the deal was signed. And executives at American Motors, which set up the deal, suggested that this was going to be a big turnaround for their company; that their China venture was going to be the vehicle, so to speak, for them to beat the Japanese in Asia; that the--China was going to be their base. They'd be expo--be exporting to Southeast Asia, all over Asia. That China would provide low labor costs and that this was going to be the turnaround for their company. So it was because of those expectations that I decided to watch it. It was also -- it was the largest joint venture--manufacturing venture in Beijing, where I was living. So in a--from the standpoint of a writer, it was very convenient, as well.
LAMB: Who are, say, a half-dozen of the players in your book?
MANN: Well, y--on the American side you have the vice president who was in charge of negotiating the deal; Todd Claire is his name. And then I would say the other leading figure in the book, Don St. Pierre, who was the person who took over and managed the joint venture in Beijing, beginning in '85. On the Chinese side you have a chairman; his name was Woo Jong Leong. He's the person who stormed out of meetings in Las Vegas, saying the Americans were spending too much money, were too extravagant. Then there was a there's a Chinese manager named Chen Zu Lin, who came to manage the joint venture with the sponsorship and help of the Americans. There are other characters who run through the book. Lee Iacocca made a ill-fated trip to China. George Bush visited this joint venture at one time. Virtually anybody who was involved in China and doing business in China in the '80s it's--one way or another visited "Beijing Jeep" or got involved in it.
LAMB: Let's go back to the--the two people you mentioned first. Todd Claire...
MANN: Mm-hmm.
LAMB: ...who worked for American Motors.
MANN: Right, he was their vice president for international.
LAMB: Based where?
MANN: Based in Detroit; Southfield, which is the suburb of Detroit.
LAMB: And Don St. Pierre was based where?
MANN: He was--at the time covered in the book, he was based in Beijing.
LAMB: At some point in your book you talk about the difference of understanding between a Todd Claire and a Don St. Pierre.
MANN: That's right.
LAMB: What is that? And you mentioned it about a lot of American businessmen and their attitudes about China.
MANN: I think--that's right. And this--this applies to more than business. But in business terms, there is always a difference between the visitors to China, the foreigners who see China on visits, and the perceptions of people who live there. The--the people who live there tend to become very frustrated with the lack of progress from day to day. China is extremely good--maybe the best in the world--at entertaining visitors. A--whether it's businessmen, secretaries of state, visiting publishers, whatever--and very good at saying, `We have certain problems now, but things are about to improve. Please, hold on. Please, be patient.' These differences are not new now; not even new to the past decade. If you go back to the '40s, you have the differences within Time magazine between Teddy White, who was covering Chiang Kai-shek and his publisher, Henry Luce. And, in fact, you can go back on this into the 19th century. The are--there are always these differences.
LAMB: You also mentioned General Stillwell. Who was he and what was his difference with the American government?
MANN: General Stillwell was the main American--he was the--the military officer assigned to -- in World War II to work with Chiang Kai-shek in fighting the Japanese, and he came to feel that the nationalist government was not doing enough, that in--often it was holding back on fighting or on equipment in order to preserve what they had to fight the Communists in a civil war. And once again, he came to have a very different perspective from Franklin Roosevelt and--and people in Washington who seemed to think that he had soured on China; that things were about to get better; that the people on the spot--General Stillwell and his people--had become too negative.
LAMB: Take us through what happens to somebody like maybe a Todd Claire, who was based in Detroit--would come to China go to the Great Hall of the People, vs. the Don St. Pierre who had to go the factory every day. What was the difference in what they saw about China?
MANN: A visitor like Todd Claire would come in, he'd be often met at the airport by senior officials. He would spend a week, 10 days there. He was not naive. Not--he's a very smart businessman, but by the very nature of things, what he got to see was, in many ways, what the Chinese wanted him to see or only what he could see within 10 days. Someone who lives there gets to see the lack of progress from week to week, from month to month and becomes very frustrated.

And, also, I would say when you live there you see some of the--of the false fronts that get put on for foreigners. To take a very different example. I noticed in China that in the three years that I was there, environmental groups, copyright groups would often pay visits to China; say, `Look, we'd like to do what we -- whatever we could to help you improve your environmental policies. We've got problems with your copyright policies.' And it was a regular routine. The China Daily, which was the English language paper published for the benefit of foreigners, would have a front-page story the day---the day the group arrived saying, `China plans to do X within two years.' `China plans to improve its copyright laws.' `China plans to improve its patent laws.' `China is starting new environmental policies.' And this would set the tone for the trip--that, `Really, we know you've got complaints but things are getting better.'
LAMB: Talking about a new book by Jim Mann, who is with the Los Angeles Times, and it's called "Beijing Jeep." We'll get into the specifics of this story in just a moment. But I want to ask you, Jim Mann, about your own experience. What'd you think of your tour in China?
MANN: I would--it's the most interesting thing I ever did. It was--it was wonderful for--for journalism. It's not an easy place to live. I was living there with family. Like anyone else living there, I was frustrated with the restrictions placed upon me in reporting, although I must say those restrictions were far less than people face now. I was, in many ways, there at the most open time of the past decade.
LAMB: How many years were you there?
MANN: I was there for three years.
LAMB: And when you went, how many kids did you take with you and how old were they?
MANN: I took two kids. At the time they were one and a half and nine.
LAMB: Where did you live?
MANN: We lived in one of the mai--there are--there are three or four compounds set aside for foreign diplomats and journalists. Businessmen were not--and are not allowed to live in them. At the time that--of normalization, establishment of diplomatic relations with China in '79, American correspondents first began to come into China. At that time, for purposes of housing, they were classified as diplomats. I'm not sure that anybody actually complained about that. It meant they got housing finally. They were--there was and is a severe housing shortage in Beijing. That's now been eased somewhat. They built some housing for businessmen. But there is--you're locked in--locked in. It's a little bit pejorative. You're--you are in a compound with Chinese guards at the gates monitoring who comes to visit.
LAMB: Is there an LA Times reporter in Beijing right now?
MANN: Yes, there is.
LAMB: Living in the same environment?
MANN: Right.
LAMB: Same a--same apartment?
MANN: Same apartment, same office. The office is in the same--in another building, in the same compound.
LAMB: How'd you get around?
MANN: Well, within China, traveled by--usually by plane. Train trips are actually very pleasant in China, but tend to be too long--take too long for a--for a newspaper reporter. You need to get somewhere and back. When I first arrived there China was still organizing trips for journalists. The most common way of visiting a place was in an organized Foreign Ministry trip--15, 20 journalists at a time. As things began to open up, that no longer was necessary. One would travel either on your own or with a couple of other reporters.

Even so, the controls remain such--there was one time--I'll tell you a story of--around '85 or '6 China began to boast that, really, you didn't even have to go through local officials anymore. There were some cities that were open and you could just go to them. And I'd had an outstanding invitation from a Chinese entrepreneur I met in Beijing. He lived in another city, Dalian. He said, `Please, come visit me.' And I was getting ready to do a story on private businesses, how small they still were but how they were moving along. I called him up, said, `I'm coming to visit.'

As is common with--for foreign correspondents, I wanted to do more than one story at a time, so I called--there is an American manage--is an American management school in Dalian. I called them, said I might be stopping by. They said, `Well, we're in recess.' I booked my plane ticket, booked a hotel, arrived at the airport and there was someone from the Dalian city foreign affairs office saying, ` MANN , we welcome you to the city of Dalian. We understand you'd like to visit Dalian's famous private entrepreneur and we've arranged for you to do that,' at exactly the time I'd arranged to see him. `We understand you want to visit the management school. I'm afraid that that's closed, but we have made other arrangements for you to visit our special economic zone, our economic affairs officials.' They had arranged the trip anyway.
LAMB: How did they know that you were going?
MANN: Well, they were either told by the Chinese officials at the management school, the entrepreneur or they heard it on the telephone. One never knew.
LAMB: What's an American management school?
MANN: The--there's a special program that was set up by SUNY, State University of New York at Buffalo, I believe, to teach management to the Chinese, and it is in the city of Dalian. It's a special program.
LAMB: Is it still there?
MANN: Yeah. I'm a little out of touch in the last six months and what's happened to--specifically to it since last June. But as far as I know, it's still there.
LAMB: When was the last time you were in China?
MANN: I was there last May and June.
LAMB: So you were there right during the Tiananmen Square episode?
MANN: Right.
LAMB: When was the last time you wrote a word in--that went into this book? I mean, what was the--what was the last day that you actually did some writing on this book?
MANN: I think that was in July. I got back, I wrote a chapter on Tiananmen, a chapter of conclusions. And other than proofreading, the book was finished in July.
LAMB: What's the Chrysler Motors Corporation think of this book? Have they commented to you on it?
MANN: They haven't commented. I think--they haven't said anything, that I'm aware of. I think probably that they take the position that this didn't happen on their watch. This was--this was American Motors and they're keeping hands off.
LAMB: But they did buy American Motors right in the middle of the Jeep project.
MANN: Right.
LAMB: What year was that?
MANN: That was '87 they bought American Motors.
LAMB: Would you go back to your--one of your opening--I don't think it's a chapter, I think it's a prologue--and tell the story of the Las Vegas automobile dealers' show?
MANN: Sure. In the--in the mid-80s--'85--by that time Chinese and Americans were holding regular business meetings together--usually in China, once in a while in the US. The ones in the US had always been in Detroit, at AMC--American Motors headquarters. '85, people at American Motors had a--had a new idea. They were ha--they were having their regular annual dealers' show for American Motors domestic dealers in Las Vegas and they figured, `Why don't we have our board meeting with the Chinese in Las Vegas?'

And they had a business purpose in their mind, which was, `Let's let them see what American marketing is like.' This was going to be the annual dealer show. They had the Beach Boys do a concert. They have a--rent out a large hall. Wine and dine the domestic dealers. Beach Boys come out driving AMC cars with girls in bikinis on the back, and to them this was--here they'd been trying to teach the Chinese, `Look, you got to think about how to market your cars, how to advertise.' Chinese, of course, were used to producing cars and turning them over to the state for distribution, under central planning.

However, what they didn't calculate was the Chinese reaction. At the time the Chinese were hoping to persuade the Americans to put more money into Beijing Jeep. They really wanted to see how much American investment they could get and how much American Motors was willing to put in. And the night of this big dealer show, the Chinese took a look at this display of opulence and got up and walked out. And the chairman, Chairman Woo, later came up to the head of American Motors and said, `I can't believe you're wasting so much money on this show. You're not willing to put money into China but you're blowing money on--on wining and dining dealers,' so on. So it was in many ways a symbol of the cultural conflicts you had between the Chinese and the Americans.
LAMB: How many Chinese were there in Las Vegas?
MANN: About seven, I think.
LAMB: Did they gamble?
MANN: No, they didn't. As far as I know, they didn't. No one saw them gambling.
LAMB: What did you talk to the Chinese about that experience?
MANN: I talked to Chairman Woo about it. He still remembered it. This was--when I talked to him about it was two or three years later. He still remembered all the gambling and how much money--could not believe that American Motors spent $1 million on that show.
LAMB: Did that particular event have any impact on the relationship between the Chinese and the American Motors people from that day forward?
MANN: No, I don't think that was a landmark event, changing relations between the Chinese and the Americans. I think it was typical of and very illustrative of the relationship and the cultural conflicts that they had.
LAMB: At the beginning of this book, as most authors do, you have a dedication. `In memory of my brother Ron, who died at home while I was stationed in China.' What were the circumstances there?--show the audience.
MANN: Well, certainly after I got to China, I found out that my younger brother had cancer, and for the--two of the three years I was there he was fighting off cancer and finally died of it.
LAMB: Was it difficult for you being that far away or did you --were you able to come back home while you were in China at all?
MANN: I did come back home once, especially to see him, and once as part of regular home leave to see him. And then I came back a couple weeks before his death. So I saw him a few times but, yes, it was difficult.
LAMB: When you were in China, did you know you were going to write this book?
MANN: After a year or so I knew I was going to write this book. I thought about it and I talked to people at Beijing Jeep and decided to go ahead.
LAMB: What was the reaction at Beijing Jeep when you said you were going to do a book on it--on the whole project?
MANN: Actually, at the time--and this is linked, in some ways, to the politics of Beijing Jeep. In '85 and '6, American Motors was very interested in attracting press coverage--they thought of it as newspaper coverage--to Beijing Jeep. They felt that the more they could make Beijing Jeep the model or the test for what happened to American business in China, the better off they were because the Chinese might grant some special concessions to them. That turned out to be correct. There was a fairly well-publicized dispute in which American Motors said, `Look, we can't continue to operate. We don't have any--enough foreign exchange to operate here.' And after months of tension in which American Motors finally went public with its complaints, the Chinese did work out an arrangement to keep American Motors in China. Because American Motors was willing to cooperate with foreign correspondents and press coverage, they were also willing to cooperate with this book.
LAMB: When you say they were willing to cooperate with press coverage, were they--which side of this story was more willing, the people that lived in China or the people that lived in Detroit?
MANN: Well, originally it was people in China who wanted to go public, but eventually and for purposes of this book it was both. People in Detroit were also happy to cooperate.
LAMB: You do say, though, that this was written from a Western perspective. Why did you make that point?
MANN: Well, I try to give the Chinese perspective wherever I can in this and I think that it's there. But I think a reader ought to know. I don't think that an author should try and be omniscient. And I think it's only fair to tell a reader, `Look, I talked to both sides in this, but I had much better access to the inner thoughts of the American side than to the Chinese side.' I talked to sources on the street, executives, officials on the Chinese side. Even so, there is still a cultural distance. I wasn't sitting down with Chinese officials and talking to them with a tape recorder for hours at a time, as I did with some of the American officials.
LAMB: Did you have anybody in this project that just said, `I won't talk to you at all,' and that's the gap here?
MANN: No, not really. There are some people I wish I'd talked to more, but there was--I can't--there was no one who completely refused to cooperate. Now the Chinese side, yeah, there's one official--not actually at Beijing Jeep--official named Chen Zu Tou who was a automotive industry official I tried to interview and he put it off. So that's another--again, that's an example of not as much access to the Chinese side, and I wanted to be honest about that in the book.
LAMB: Tell us about Chairman Woo. What's he like? What--how old was he? What was his job?
MANN: Chairman Woo was a very nice, polite man. His job was--he was originally in charge of the joint venture and Beijing's auto industry, which means other Chinese enterprises that make parts and so on, in Beijing. As often happens in the interaction between foreigners and Chinese, Todd Claire personally negotiated the original deal and dealt with Chairman Woo over the years, came to like him, respect him a great deal. I'd say the people in China who dealt with him from day to day sometimes felt that he was stalling or wasn't coming through and, most of all, felt that it wasn't--he wasn't making the decisions, that it was a mistake to think of him as the decisionmaker because the way China worked, the decisions were being made by the government, by the Beijing municipality, by ministry officials, but not by the individual enterprise.
LAMB: When was the first time the Chinese ever had automobiles built in the country?
MANN: Well, these--this Jeep plant was g--dates back to the '50s when the Chinese began making Jeeps with Soviet help. They also began making Jeeps up in northeastern China, in the town of Changchun. But again, this goes back to the '50s. There's nothing before that. There's no--certainly no tradition of going back to the '20s or '30s.
LAMB: Any way of describing how many automobiles or Jeeps or vehicles there are in China that you've seen--either you've seen around Beijing or throughout the entire country?
MANN: Yeah. I think, you know, some of your--some people watching are aware; others may not be. China certainly is not a place where everybody owns a car--far from it. It's indicative that what American Motors wanted to make was a four-wheel-drive vehicle that could be used by work units, by businesses. And most of their competitors, as well, quite a few, were selling vans. Toyota sold quite a few.
LAMB: In--in China?
MANN: Yeah. Shanghai set up a Volkswagen plant making passenger cars, but these passenger cars, in particular, are used by--are owned by work units, by enterprises, what we would call companies, not by individuals. Certainly everybody knows most people ride--might ride bicycles or buses to work, not cars.
LAMB: When was the first time you can remember getting the Beijing Jeep or the American Motors story in front of you? When was--what's the first memory you have that this was--that this was even going on over there?
MANN: Well, in--shortly after I got there, I guess in '85, American Motors launched the production of this Cherokee. I went down to the plant; they had a big ceremony. About every year or so--and this was common with other companies doing business in China--they would have some ceremony to mark a new stage of the deal. In this case, it was the Cherokee coming off the production line. I went down to the plant. They had gongs and dragons and officials taking a look at the joint venture, and I began wondering then how this one was going to come out. It looked to me like there were some problems. You had American mechanics who were in on short-term duty, kind of mopping their forehead and saying, `We almost didn't get this one working. We forgot to tighten the clutch on the first one off the assembly line.' And that's the first memory I have of it.
LAMB: Describe to us what the plant was like. How big was it?
MANN: The plant was a--well, much smaller than--than any American plant. It was very much an old-style Chinese work unit. A--if--you'd show up there in the morning and you'd find women doing t'ai chi; you'd find people riding bikes into the plant with kids on the back to go to the local kindergarten. You had banners up on all the--on all the walls with slogans. The slogans, of course, had changed. It wasn't Maoist slogans; now it was `Time is money, efficiency is life'--slogans of the 1980s. But this was in no way a sterile, sanitized American plant. This was an old-style, grimy Chinese factory.
LAMB: How many workers?
MANN: Well, at Beijing Jeep itself there were about 4,000 or 5,000 workers. For the whole Chinese unit, which was also making old Jeeps--old Chinese Jeeps--about 11,000 or 12,000. One of the problems that the Americans had to come to grips with was that it was way overstaffed.
LAMB: With Chinese?
MANN: Right.
LAMB: How many Americans worked there?
MANN: Americans was--never got higher than eight, so you had this...
LAMB: Eight people?
MANN: That's right. So the Americans had the sense of being overwhelmed. And you could go into the lunchroom, the cafeteria, and there would be Chinese outside looking in at these American executives--just kind of staring in. Really, the--I think the people coming in or in some way hearing about Beijing Jeep had no sense of how overwhelmed the Americans were coming into that environment.
LAMB: How did the joint venture work? How much did American Motors own of the company?
MANN: The original deal, American Motors owned a little over--well, it was 34 percent, 35 percent or 36 percent; Chinese had, of course, the rest, the majority share. American Motors put up its technology or the value of its technology and about $8 million in equity. Chinese contributed the value of the factory, the plant and equipment.
LAMB: What did these Jeeps sell for?
MANN: That tended to vary. The--but the new Cherokees--well, up around $19,000.
LAMB: Thousand?
MANN: Yeah.
LAMB: In China?
MANN: Yeah.
LAMB: Who could afford to buy them?
MANN: Work units.
LAMB: Paid for in what kind of money?
MANN: There were running disputes about that. That varied. The Americans wanted to be paid in foreign currency and usually insisted on it, although they--apparently there were some occasions in which the Chinese would pay a portion in Chinese currency. Now again, as part of this deal, the--American Motors took over the existing production of old Chinese Jeeps and those were sold for Chinese currency, which is not convertible into dollars, yen or anything else, and sold them inside China.

And, oddly enough, one of the great ironies of this whole thing, that became their lifeblood. Once they got a special deal, enabled them to convert this Chinese money into dollars, they ended up making good money by producing these old Jeeps. So you have Americans coming in with the assumption that `We are going to bring new technology to China,' and then years later saying, `Hey, let's take a look at this deal. We're doing just fine selling these old Jeeps. We don't want to phase that out.' And whenever the question came up, `Should we do away with production of the old Jeeps?' the Americans said, `No, we're doing just fine with those.'
LAMB: What do the old Jeeps sell for?
MANN: Much less. Again, those prices are in renminbi, in Chinese currency, but down around I'm guessing around--well, less than $10,000. When you ask about the sale, though, you have to remember that it's something that often got lost in the shuffle. Many of these Jeeps were simply distributed, assigned around the country by the Chinese government. There was still--people would read in this country. They'd pick up their news magazine and read that China's done away with central planning. But it was a gradual process and it never went all that far, so even at the height--well, in the mid to late '80s, most of those Jeeps were still being distributed around the--simply turned over. The factory would make the Jeeps, turn them over to the state to be distributed and assigned to work units.
LAMB: All through this process, by the way, what was the American Embassy--and I believe Winston Lord was the ambassador at that time in China--the American Embassy, the American State Department and the president of the United States, Ronald Reagan, doing about things like American Motors and the Beijing Jeep? Were they helping at all?
MANN: The--in general, the attitude of the American Embassy, the State Department, the White House was to encourage as much as possible American commercial interest in China. They wanted to do that for its own sake; they also thought it had a very specific strategic purpose, which was that it would further the relationship between the United States and China. China was becoming increasingly nervous about the idea of a relationship based on opposition to the Soviet Union, and economics became a new rationale for the relationship between the United States and China. So in general, the attitude was to encourage this.

Now there were--there was some mistrust of American Motors and Beijing Jeep on the part of the American Embassy and State Department, Commerce Department. That is, they felt when American Motors complained that it was getting not a good deal--a raw deal--in China, the response of US officials was, `Well, you negotiated this deal. You were getting exactly the deal you negotiated. If you don't have foreign exchange, if you don't have enough money to operate, that's the deal you negotiated.' So I wouldn't say that they were -- they came in and supported American Motors, they presented American Motors' complaints, but there was some skepticism about just how valid those complaints were.
LAMB: When Ronald Reagan went to visit China did he say anything about the Jeep?
MANN: He didn't--George Bush, as vice president, visited Beijing Jeep. It was right after the Cherokees began coming off the assembly line. He got in one and in a George Bush fashion drove it off and said, 'Off to the Beijing Hotel.' It was at just that time that American Motors was beginning to run into trouble and Bush didn't get involved in it; may not have been aware of it. I--Reagan visited in '84 and didn't--was not involved in Beijing Jeep but, during his trip, really set the tone for many of these false impressions about China. There are a couple of incidents--after he left, he got on the plane; he referred to China as the so-called communist country, suggesting that in some way China had abandoned its political system.

While he was there--I remember being his last day in Beijing, he traveled through Tiananmen Square. It was May Day; it just worked out that way. Big posters of Marx, Engels, Lenin and Stalin up there. Reagan's motorcade goes right through Tiananmen Square and a couple of us asked Larry Speakes, his press secretary, what Reagan thought of those posters. And Speakes said, `Well, he thought they were the Smith Brothers.' So you have the administration creating the impression that the system had changed more than it had.
LAMB: Go back to the plant again. Eight Americans, the most that were ever there; were they all there at one time?
MANN: Not always. Sometimes it was fewer than that. I mean, the most there were ever--the most was eight and often one person or more than one was off on vacation or home leave or whatever.
LAMB: Who had the last say-so? I mean, who was in charge of that of the Cherokee--the AMC Cherokee Jeep?
MANN: Well, the American but the deal that was negotiated was the Americans would have the first president. And, in fact, they went through three different presidents first. And then the Chinese, after a period of three years, the Chinese got to appoint the president. The first--all through these initial years this the head AMC guy in China, who was--who was ultimately in charge...
LAMB: Don St. Pierre?
MANN: He was the third guy. There were two managers before him. But...
LAMB: What happened to the other two?
MANN: But all through--well, in both cases it didn't work out. And--first guy in stayed--I'm trying to remember--six months or a year; next guy, another year or so. And finally, St. Pierre came in and stayed three years--about three years.
LAMB: Who set the time of the hours for work?
MANN: Those were really fixed by the Chinese. The general work day didn't--the hours didn't change. One thing that did happen, the Chinese were very ccustomed to taking a nap after lunch, particularly the cadres, the officials who worked in the office building. One of the first things the Americans did--one of the first cultural conflicts was about that nap, so the Americans who first arrived discovered beds in Chinese offices and began asking them to take out the beds. Finally in frustration, I think one of them went through and started pulling beds out of the office. Chinese had paper over the window in the doors and Americans didn't like that either. It wasn't--that's not open management. But one way or another, the Americans objected to the nap after lunch and that was one of the low-level cultural fights.
LAMB: What kind of productivity did the Chinese workers have?
MANN: Well, the Americans complained that the productivity wasn't high. Now the Americans ended up with some of the best Chinese workers. They were paid--people who worked at Beijing Jeep, this joint venture, were being paid more than ordinary Chinese workers or even ordinary Chinese workers in the auto industry in Beijing.
LAMB: What'd they make?
MANN: An ordinary worker might make 100 to 150 yuan, which would be like, oh, $40. These workers were being paid...
LAMB: A what? Forty dollars...
MANN: A month, excuse me. These workers were being paid--oh--sometimes 200 or more than 200 yuan, which would be like $60, $65 a month. It's obviously nothing in American terms. That $65 a month was a lot in Chinese terms.
LAMB: Did they know that a Detroit autoworker would make that, maybe, in three hours? I'm not sure, but I know that they make--What?--$18 or $20 an hour.
MANN: I had one conversation with some workers where they actually undershot. They said-- one of the things that you discover when you talk to workers in China is they feel exploited by everyone and they felt exploited by the Americans and by the Chinese. It's this common bond of `We Chinese, we know how to'--the Chinese have an expression: (Chinese spoken). `We know how to eat bitterness. We know how to do hard work.' They didn't like--the Chinese workers were young, sometimes very tough and very hostile to authority of any kind, certainly their Chinese leaders, and also the Americans.

I got into one discussion on the assembly line where some workers said, `We know th--American Motors is exploiting us. We know that your workers in Detroit, they earn even $10 an hour.' Well, they were undershooting. They had no idea. On the other hand, they had no idea--I had to ask--you know, how much a house costs in the United States. So they couldn't believe the level of wages in this country and they also couldn't believe the costs.
LAMB: Speaking of costs, you also talk about the amount of money that the AMC and other American workers had to pay for housing. Somewhere, did I read, that it was $125,000 a year for a hotel room?
MANN: When--that's right. When the businessmen first arrived, they had to stay in hotel rooms and it was either...
LAMB: But let me interrupt...
MANN: Yeah.
LAMB: ...just to ask you--and I said this earlier. Were there only businessmen? Were there any businesswomen?
MANN: No, there were business women, as well.
LAMB: There were?
MANN: IN fact, there were some very good businesswomen and there was--there were a couple of consulting firms that were all women. So...
LAMB: American?
MANN: Yeah.
LAMB: OK. Let's go--now that we've cleared that up...
MANN: Yeah.
LAMB: ...let's go back to the when the business people from America went over there, what kind of housing costs did they have?
MANN: They were living in hotels room that started out being--oh--in the late '70s may have been $30 or $50 a night, but the Chinese began to figure out, A, that the Americans--I say Americans--that all--that the Westerners were willing to pay more, a lot more, and that they could get it, and began charging $100, $120 a night. Now that's one thing for--for visiting businessmen for--for a week or so, but those who were living in hotel rooms for six months or a year at a time, that--that would add up so that--the example I used--I--I first did this in a newspaper story and people couldn't believe it; I included it in the book--it was a guy who was living at The Great Wall Hotel for $125,000 a year, it worked out to, and in '85 or so, when China first began opening up apartments for businessmen, the rents were $72,000 a year, $6,000 a month--astounding rents. And, of course, if you compared it to $125,000 a year, the guy was saving a lot of money.
LAMB: By the way, you also mentioned that AMC had all kinds of special financial benefits to somebody who left the States to go over there and work. Why did they do that and how much was it?
MANN: That was not uncommon for companies doing business overseas. They would have a--some kind of special stipend--hardship pay, home leave. They would have--sometimes--some companies would have per diem. That was what--is often what companies feel they need to do to persuade--to get personnel willing to work overseas, to uproot themselves and so on.
LAMB: You also talk about cleanliness of the factories and the country in general. What would be--have you ever been to the Detroit automobile factory?
MANN: Yeah.
LAMB: What's the difference? I mean, a--did you see any Cherokees being built in Detroit?
MANN: No. And, in fact, Cherokees are built at different plants around the--but no, I haven't seen Cherokees built in Detroit.
LAMB: What would the...
MANN: But it's...
LAMB: How would you describe the difference in just the overall cleanliness of American factory vs. the Chinese factory?
MANN: Well, what can I--the Chinese plants are not thatclean. It just--I think visitors to--to--to Beijing see that Chinese go on cleanliness campaigns once in a while. But streets are not clean and neither are the plants.
LAMB: You know, the reason I want to ask you if it makes a difference.
MANN: Yeah.
LAMB: I mean, we have--we're fastidious about cleanliness, and especially in factories in the--in the United States. Does it make a difference in the final product?
MANN: I--that I don't know. I'm not sure it makes that much of a difference. It--this is one of those things that affected the attitude of Americans coming in to work at Beijing Jeep. The Chinese felt that they'd built an entire new office building--they called it the White Palace, the (Chinese spoken)--for this plant. And it--the Americans couldn't believe it. They couldn't believe that it was only a couple of years old. They thought it was run-down and old and could have come from the '40s.
LAMB: Let me ask you a general question--we have about 10 minutes left. What's your favorite part of this story?
MANN: My personal favorite is the cultural conflicts that they had within the plant. I was fascinated to find specific events where you had entirely different perspectives or perceptions on the part of the Chinese and the Americans. One of the--there was a point at which the American newspapers ran a picture of a worker sleeping on an assembly line and Chinese s--and--to the Americans that was a symbol of--that China was of the lassitude and the indolence of the operation. Chinese said, `Well, you know, there wasn't any work to do that day. It turns out that that--that worker--we know that guy.' His namespecific worker--let's say--let's call him Wong. `Wong's a good worker. Everyone else went home that day. He was hanging around the plant till closing time.' Didn't see anything wrong with -- he--if he happened to take a nap for a couple of minutes and the photographer got there--that was unfair. That's the Chinese perception. American perception was that their presence and--was needed t--for the management of that plant. Chinese perception was, `Americans are expensive. They cost too much. They're not willing to live under Chinese conditions. They need to live in these special, new, fancy hotels. We're not sure they're worth $280,000 a year or whatever it's going to be. Just give us the technology, help us to use the technology. We don't need your management skills.'
LAMB: Did the Americans the eight--they all men? Eight men that from...
MANN: In this case, yes.
LAMB: ...the AMC?
MANN: Yeah.
LAMB: Were they all--were their salaries set by the joint company?
MANN: Yeah. And there were arguments about their raises and so on. They were actually the it's ironic, the deal that was worked out for them was that the joint venture would set their salaries, but they would be paid by American Motors. That allowed the American company to continue to work out to maintain the personnel operation, to continue to pay their salaries and so on. The direct--the paychecks came from American Motors.
LAMB: Did the American executives make more money than their Chinese counterparts?
MANN: Oh, vastly more.
LAMB: What's the difference? Did you find the--what the salaries were?
MANN: Sure. Sure. The Americans--well, the head of the joint venture was earning over--in six figures--over $100,000 a year. The head of the American venture wanted to raise the salaries of the leading Chinese cadres and he campaigned for it. He--this was everybody has their own--every foreigner ends up--try it or not--with their own campaign in China. His was to have set some kind of salary differentials that were at least vaguely like the Americans'. So they said, `Look, the head of this Chinese--the--the leading Chinese executive only earns less than $100 a month. I want to--I want to raise that. I want to double it. I want to get it up to over 600 yuan--$200 a month.' And same for other executives.

Chinese fought it like crazy. The Chinese president, who would have gotten the raise, being--who was a dedicated, loyal cadre, model worker in the old days, in the cultural revolution--it was one of the only things he fought with the Americans about--he didn't want that raise, and when he finally got a bonus, he gave it to the Communist Youth League. So that's another cultural conflict.
LAMB: Anybody that reads the book--it's an up-and-down account of the ebb and flow. I mean, we're--there's an awful lot we're not going into, but in the short time remaining, I think we ought to ask you whether or not American Motors Corporation slash now the Chrysler and Cherokee Jeep--did it make it? Is it still being built in China?
MANN: Yeah. Once they got a deal--it was a secret deal that was put onto paper but never made public--that allowed them to change their Chinese currency for foreign col--currency, for dollars--once they did that in '86, they were, in effect, being indirectly subsidized by the Chinese government. They ma--they made it; they continued to operate and they are--they continue to operate today. They have had--after June, like many other companies, have had severe problems--not so much political as economic. Severe austerity campaign--the Chinese press has just reported within the last couple of weeks, 'Well, Beijing Jeep's still there. It's still going.'
LAMB: How many do they make now a year?
MANN: They reported now they're making about--it's over 30,000, maybe 40,000 Jeeps, but most of those are still the old Jeeps, not the Cherokees.
LAMB: Roughly how many American businesses are operating in China, from your research? Do you know?
MANN: Well, you have to define operating. There were hundreds that went in, signing contracts and then either putting things on hold or not getting very far. The number that actually are doing substantial business in China is far less; less than 100. There are--a whole separate end of the business relationship between the two companies is offshore oil, so there are--there are oil companies also operating in China. But all in all, the number of companies doing serious, substantial business in China is far less than the hundreds that went rushing in.
LAMB: In consumer goods that we understand, who's the most successful?
MANN: There have been companies that went in making food products. Gillette went in there to make razor blades. People have gone in there to sell shampoos. All of those companies were really just beginning to get moving when the political and economic crunch of the last year or two hit. And so it's--I don't know anyone that's doing spectacularly well.
LAMB: After you've read your book, say you're one that's caught up in the romance of the--having a company based in China, even today after what happened over there last year, what's the lessons that can be learned from the Jeep experience?
MANN: Well, two, I think: one, not to expect too much. The other is not to--to--to apply to China the same business standards and business judgment that you would apply anywhere else, not to be so overawed by doing business--by China that you suspend your normal business judgments.
LAMB: Where is Chairman Woo today?
MANN: Still there. In China, personnel change--he ended up losing one part of his--of his multiple jobs. He no longer runs the auto industry in Beijing but he's still at Beijing Jeep.
LAMB: Where is the former Detroit-based negotiator of this contract, Todd Claire?
MANN: He has since--after Chrysler took over the company, he ended up leaving. He's now working for another company in the United States, doing business in Asia, and I believe in China; I'm not sure.
LAMB: And finally, where is the manager--one of the last presidents of the company based in China for American Motors, Don St. Pierre?
MANN: He ended up not--over a period of time not leaving Chrysler. He went to work for an American company, FMC, in Hong Kong.
LAMB: Jim Mann, author of "Beijing Jeep." Has a lot more information about the people we're talking about and a lot more narrative on the story. "The Short, Unhappy Romance of American Business in China." Jim Mann of The Los Angeles Times, thank you for joining us.
MANN: Thanks, Brian.


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