This book is a must-read for anyone seeking to work in or via China. The personal experiences of a pioneering manager can also help management to see the transformation of China in a new light. Anybody wanting to be successful in China should heed the practical lessons that Martin Posth draws.

--Prof. Dr. Eberhard Sandschneider

Otto-Wolff-Director, Research Institute

Executive Officer, German Council on Foreign Relations (DGAP)

In establishing Volkswagen in Shanghai at the beginning of Dens Xiaoping’s reform era, Martin Posth made a breach in the wall behind which the People’s Republic of C’hina had dug its trenches up until then. His experiences are useful for anyone wanting to work the Chinese market with any degree of success. The fascinating reading that his report makes, and heeding his lessons, can help any entrepreneur to avoid costly mistakes.

--Dr. Theo Sommer

DIE ZEIT, Editor-at-Large

When Martin Posth was given the job to lead the first Chinese-German automobile factory, Shanghai Volkswagen, back in the 1980s, he had no idea what lay ahead of him: unclear political power structures, irritating entrepreneurial rules, an obscure mix of planned economy and business-driven requirements.

How can one gain a foothold in a completely alien world? How can you lead employees whose language you don’t even understand? And above all, how can you win the trust of a Chinese partner that you are totally dependent on? This book shows you China like it really is: inviting and fractious, dynamic and backward, totally exhausting but incredibly exciting.

Martin Posth describes key scenes from the early days of the enterprise and shows what managers today can learn from them. A must-read for anyone looking to do business in China.

Foreword

Preface

Abbreviations

Chapter 1: China’s Dream of Detroit--Wolfsburg’s Gateway to Asia

First sight of the factory in Anting

History behind the deal

Spurned by the Japanese: Citroen or Volkswagen?

Setting the foundation

A Volkswagen pioneer for the Middle Kingdom

Not a fairyland but an entrepreneur’s playground

Partnership premier for the group

Vision of the future

Round the transatlantic world of Volkswagen

Quick lessons: Prepare your China engagement thoroughly

Chapter 2: Culture Shock--Chaotic Beginnings in Anting

Arrival in a strange and fascinating world

Living conditions in Shanghai then

Piano, ballet in Shanghai, 1,000 year-old eggs

Shopping, haggling, Hollywood at the Bund

Fitting derelict buildings with modern machines

Santana in China from below zero

Mercury rising

Delivery kinks

The struggle for change

Leadership with "scientific management"

Model discussions at the dinner marathon: Santana or Audi?

Audis battle Santanas on Chinese ground

Quick lessons: Avoid unnecessary start-up problems

Chapter 3: Talent--The Secret of Our Success

Changing a comrade’s mindset

The forgotten equation

Laying the foundation for training

Woes of the expatriates

Too many Germans

Faults and conflicts

German expat solidarity

Transferring management know-how

Deja vu

Quick lessons: Forget China if you don’t have China-compatible staff

Chapter 4: Cash Shortages and Risky Financial Maneuvers

Messy hand of central planning

Budget blowouts and money problems

The Chinese accepts higher costs

Maiden bonds

Quick lessons: Make sure your business in China is profitable

Chapter 5: "Big Project" Poker

Competition

Dr. Hahn’s ideas for reinforcing the partnership

Building container ships

Dealing with Beijing, central government

Expedition to SAW in Shiyan

China’s automobile agenda 2000

The curse of waiting

An "unofficial visit" to Changchun

FAW and Volkswagen

Quick lessons: Gain in-depth understanding of the nature of competition in China

Chapter 6: Two Partners, One Dream: The Most Modern Automobile Factory in China

Misunderstandings and red tape

The battle against mistrust, fear and ignorance

The problem with responsibility

Big wolf

Pioneering work in management

Shanghai Volkswagen: Dreaming the same dream?

Quick lessons: Create a solid foundation for intercultural cooperation

Chapter 7: The Open Secret of the Learning Factory

Interesting find

Paul’s intelligent production design

Japanese in Shop 54

Capacity limits

In search of perfection

Introducing market mechanisms at the factory floor

How to break the "iron rice bowl"

Leadership: Encouraging partners to act

Quick lessons: Use your "zero hour" in China

Chapter 8: The Joint Venture and Its Parents

The genie in our bottle--the spirit of collaboration

Loyalties and conflict

Principle of consensus versus pressure "from above"

Putting forward one voice

Clear words from Beijing and an official complaint from Wolfsburg

Media distortions

Quick lessons: Make sure local management has autonomy to act

Chapter 9: The Santana: Trendsetter for Motoring

Map to market

Of markets and pricing

Fighting central planners

Advertising cars, the Chinese way

The birth of customer service

Dream car

Dream Ship and a vision for China

An Audi flag in Anting and its consequences

Surprise session

Quick lessons: Identify a specific and direct path to the customer and build on it

Chapter 10: The Long March to Localization

Fragmented auto supplies industry

No compromises

Beyond the Bund

Pressure for progress

Slow breakthrough

Rev up from Zhu Rongji

Quick lessons: Localization is the key to cornering the market

Chapter 11: In The Dragon’s Den: Politics in Deal-making

Big trouble with the horn and the steering wheel

A venture is like marriage

Power of Shanghai municipality

Shanghai Volkswagen runs out of time

Waiting for the carrot, or the stick

The end of Luo Pu Road

Quick lessons: Secure political support for your project

Epilogue: At the End of 1,000 Days

Report card

The factory--a role model of modernization

Where East meets West

Quick lessons: Enjoy sustained profits from your China operations

Endnotes 

Index