Wang Hongbiao says he learnt about the UK in his native China by reading books about the “dust and dirt” of the industrial revolution. Now he is at the vanguard of another revolution: the first takeover of a western car brand and its assets by a Chinese manufacturer.
In late May or early June his company, Nanjing Automobile Corporation (NAC), is due to restart production of the iconic MG TF sports car at MG Rover’s former factory in Longbridge near Birmingham.
The company has already begun making a slightly modified version of the MG TF and a saloon for the Chinese market in Nanjing. In one of the industry’s largest physical moves of a manufacturing plant, in early 2006 it packed up and shipped an entire production line to China in 4,900 shipping containers after buying MG from the bankrupt UK company’s liquidators the previous year.
As head of Nanjing’s UK operations, from which it hopes to relaunch the MG brand into Europe, the relatively unknown 44-year-old Mr Wang is poised to become one of the car industry’s most closely watched new figures. The task of reviving MG and leading the first investment by an emerging Chinese automaker into an established foreign marque will test to the hilt the skills of the 20-year NAC veteran, who until his posting to the UK two years ago had never worked outside China.
Mr Wang’s success or failure at Longbridge will also be watched intently at home, as MG gives NAC a chance to settle scores with bigger competitors. State-owned NAC is seen as an underdog alongside bigger Chinese manufacturers such as SAIC, as reflected in its sliding position on industry league tables.
Established in 1947, NAC produced China’s first light truck (the Leap Forward), during Mao Zedong’s Great Leap Forward – when Chinese workers were urged to “catch up with the British and overtake the US”. The company celebrated its 60th anniversary last month in an increasingly confident China whose manufacturers are rapidly pushing their way up the value chain to produce some of the world’s most sophisticated consumer goods, including cars.
NAC’s acquisition and relaunch of MG marks a historic “third road” for China’s car industry, says Mr Wang. Joint ventures with foreign carmakers came first – including NAC’s own partnerships with Italy’s Fiat and Iveco – followed by the emergence of local-branded domestic production. “We will still have the latest technology and products,” he says over tea in Longbridge, seated beneath a photo of an MG TF. “However, as an independent company, we will own the rights to the product and the company,” he says. “We will have the leading platform.”
NAC will begin by producing the MG TF model in Longbridge, moving to the MG7 saloon and MG3 compact car, and sharing parts and processes with its bigger Nanjing-based operation. By 2009 it will develop “a very good sports car that would fit in well with the brand,” Mr Wang says. “The next model will be a possible opportunity to enter the US market” – where MG has a fervent following and where Nanjing is in talks with a local partner for licensed production. He hopes to return MG’s annual sales in the UK and Europe to the brand’s pre-liquidation levels of about 50,000 within two years.
“We believe that, with the love and the passion we are putting into this project,
we will be able to make it work,” he says, speaking through an interpreter in spite of good English learned during his two years in the UK.
Few doubt Mr Wang’s professional credentials: he holds a bachelor’s degree in management and a master’s in economics and has spent his entire career at NAC, heading its finance and legal affairs before moving to the UK as NAC’s top executive. Richard Cort, chairman of the MG Rover Dealers Association, says he has been impressed by his desire to make the project a success, and describes him as “very polite, very honourable and with a real willingness to listen”.
More than passion or good manners, however, Mr Wang will need unfailing business judgment – not to mention impeccable diplomatic skills – to make the new Chinese-owned MG work. In a business marked by a glut of capacity and competition that spoils car buyers for choice, most European and US car companies operate on razor-thin margins. The MG TF will be re-entering the hard-fought high-performance car segment, where companies with much longer track records than NAC’s have struggled, as seen in Ford Motor’s mis-steps with Jaguar since acquiring the brand in 1989. NAC has struggled in recent years and Fiat, its foreign JV partner, has been an underperformer in China.
MG’s loyal fans could prove an asset for NAC but also a liability if it fumbles on quality, service or brand positioning; motoring blogs and reviewers can be corruscating in their criticism and as a group are cruelly dismissive about the abilities of China’s emerging producers. “The badging looks like it was put on by a blind man in a rush,” one commenter opined in February in response to “spy” photos of the Nanjing-made MG7 posted on the China Car Times website.
Mr Wang and his colleagues will also have to deal with the raw nerves surrounding one of Britain’s biggest business failures in recent years. MG Rover’s bankruptcy, which followed BMW’s sale of the company in 2000 to UK investors who failed to make it profitable, left more than 6,000 people without jobs.
NAC will be reviving MG in much-diminished form, with about 115 UK and 25 Chinese employees, and a headcount of 500 to 800 at most once production is in full swing. It uses only a portion of MG Rover’s sprawling old site. Its cavernous assembly hall was still empty and silent last week, although about 25 workers were busy commissioning equipment in neighbouring body and paint shops.
Much of the cars’ technology and design will still be developed in the UK, which has a surfeit of car industry expertise – due in part to the collapse of MG Rover. Maintaining a strong British pedigree for the cars may help NAC cope with the scepticism with which some car reviewers are likely to greet them. “Longbridge is the core of this project – this is where the brand was born,” Mr Wang says, emphasising his company’s commitment to MG’s historical home base. “As long as MG brands exist, Longbridge will always play the biggest role in the MG project.”
Even assuming they get the automotive side of the business right, MG’s new owners will have to cope with the challenges of working in a radically different business environment. Here, Mr Wang’s lack of overseas credentials before coming to the UK could prove costly.
Few Chinese managers have wide experience dealing with media, trade unions or other unruly democratic institutions. NAC’s UK bosses are no exception and have already mis-stepped at least once.
After buying the MG brand in 2005, the company initially neglected to appoint a public relations firm to deal with the local community and the media complained they had to struggle to glean basic information from NAC. In a dramatic gesture, the Birmingham Mail went to the length of printing questions for which it sought answers from the company’s managers in English and Chinese on its front page.
NAC now has an American spokesman on its staff in Longbridge and Mr Wang displays an amiable and easy manner during the interview, even when pressed on difficult questions.
The company also says it is prepared to deal with trade unions, which Mr Wang says have “historically been involved with the MG Rover Group”. Most importantly, he says, “we need to pay respect to our employees.”
Perhaps even more importantly for the success of the MG launch, Mr Wang says that NAC is staying focused on its customers. This may entail some tweaking of the cars’ DNA as the company seeks to ramp up sales in Europe and China. For example, in China, which has greater extremes of temperature than Europe, soft tops are “tricky,” Mr Wang says, so the MG TF may get a hard top. “We are taking traditions from the British, and we are positioning it as a Chinese model.”
At the same time, he says, the Chinese recognise the need to retain the brand’s British heritage. “We are looking for a good balance between heritage and creativity,” Mr Wang says. “This creativity will include both a Chinese distinctiveness and a British distinctiveness. The balance between the two is a very tricky balance.”
■Recipe to improve co-operation:
Asked about the differences between life in Britain and China, Wang Hongbiao offers some polite comments praising the UK’s fresh air, beautiful countryside and practical people. But when pressed about less pleasant experiences, he is franker, recalling with a grimace some “cold sandwiches” his team was served during a gruelling working day early in its engagement with MG back in 2005.
NAC has since brought two Chinese chefs on to its staff, who dole out delicacies from home at Longbridge alongside the standard British fare on offer. A number of NAC’s British staff opt for the Chinese food; many of the operation’s top non-Chinese managers have served stints in Nanjing. Most of NAC’s Longbridge-based Chinese managers are taking English lessons, while some UK managers, Mr Wang says, are “trying to learn Chinese”.
Mr Wang praises Britons for their practicality, noting that an Englishman (unlike a German, for example) will cross on red if no traffic is coming.
However, some differences and, apparently, tensions persist within NAC’s multinational staff. Whereas “the British people spend a lot of time before they implement plans, the Chinese go straight into their work right away”, Mr Wang says. While the British approach might make sense for bigger problems, he says he favours the Chinese approach for smaller ones. “What we are looking for are combined better methods,” he says. “Our team of Chinese and British colleagues need to strengthen their understanding of one another.”