Beijing Auto maps out a global expansion
- Source: Gasgoo.com
- [08:30 October 10 2009]
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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 US-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 US 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.
