Back in WiC182, we mentioned the media stir when Terry Gou, chairman of electronics manufacturer Foxconn, called in the head of Taipei’s zoo to talk about his management techniques.
Gou’s critics insisted that the request revealed a lot about how Foxconn thought of its employees. His PR team quickly sought to explain that the tycoon’s reference to the “one million animals” in his workforce was meant in jest. But Wei Jianjun, company chairman at Great Wall Motors, is notably unabashed in outlining his views on how the animal kingdom equates to his own labour force.
In particular, Wei would like to see plenty of wolves and rabbits at work on the factory floor. According to Global Entrepreneur magazine, Great Wall’s training programme explicitly seeks to develop an animalistic intensity at the company, in which the “spirit of the wolf and the rabbit” is demanded of employees. Like wolves, workers must be ready to attack any opportunity. But like rabbits, they must be alert to every danger, ready to trigger their survival instincts at any moment.
Great Wall is doing much better than merely surviving. In January the Hebei-based carmaker announced sales of almost 625,000 vehicles last year, making it the fastest growing of China’s native car producers. Deliveries were up a fraction over 28%, well above the industry average, and net profit for the year increased by almost two-thirds to $934 million.
All three of its vehicle divisions have been showing growth. But while sales of passenger cars increased by just 2.8%, it was pickup trucks (up almost 13%) and sports utility vehicles or SUVs (up by 71%) that really drove performance.
WiC first mentioned surging Chinese demand for SUVs a year ago in issue 148. Great Wall has found its own success in selling its Haval series, priced at the lower end of the market in the $13,000-$24,000 range. While wealthier Chinese have opted for foreign models, Haval is the dominant entry-level brand for local buyers, an audience that Great Wall courts assiduously. This is part of a plan developed in conjunction with a strategy consultancy set up by Al Ries, a marketing guru from the United States. Ries argues that companies lacking a dominant position in an industry must find an unoccupied space in which they can establish a leadership role. Then the task is to focus on securing a unique position for their brands in consumer perception, Ries says. Companies who offer a simple and consistent message have a better chance of achieving this.
Like much marketing spiel, that all sounds pretty straightforward, although executing on the philosophy may be less so. Great Wall started out with a focus on pickups, a trend that has led to its Wingle series becoming top seller for 14 years in a row. But establishing itself in this niche was almost accidental – as a privately-owned producer, Great Wall couldn’t get a licence to make sedan cars in the early days, so it opted for pickups instead.
More recently, the focus on an underserved segment has been applied more deliberately, this time for SUVs. Again, Great Wall has been able to establish a leadership position and the Haval series has been China’s bestseller for 10 consecutive years.
Five years ago Great Wall tried to compete more expansively in the sedan segment. But it had a change of heart, choosing to concentrate more of its energies where it was already ahead, particularly SUVs.
“We could fully see the size and potential of the Chinese market and, in 2010, it seemed like a company could succeed making any kind of vehicle. But that might not be the case long-term,” Great Wall’s president Wang Fengying explained to Advertising Age last month. “So we focused our resources on creating Haval SUVs and pulled back on other products, losing sales in the short-term. But our main objective was to build long-term brand value.”
This decision to “put all its eggs into one basket” had another key benefit, says Xinhua Auto, as sales of mass market SUVs and pickups got a boost from a series of purchase subsidies offered by local governments.
What is unusual about Great Wall’s approach is its combination of the kind of marketing theory espoused by strategists like Ries alongside the homespun wisdom of ‘wolf and rabbit’ encouraged by Wei himself.
So says Global Entrepreneur, which took a detailed look at Great Wall’s headquarters in Baoding last month. Like a number of self-made businessmen in China, Wei cultivates a militaristic style. Even his name Jianjun denotes a man with a military background (Jian means “to build” or “to construct”, while Jun means “army”). But Wei has extended his military bearing to Great Wall’s corporate culture. “We feel like an army,” one staff member confided. “We work as if we are going to war”. Preferring to hire locals from the Hebei countryside, Great Wall puts its new recruits through a month of “devil training” before they start work – it’s a programme designed to foster a commitment to “obedience” and “execution”.
Daily operations on the production line sound regimented in the extreme, with employees moving around the factory at a designated speed (“seven steps in five seconds”) and risk punishment for getting out of elevators on the wrong floors. There’s also more than a hint of a Big Brother presence with a mysterious ‘spy department’ monitoring daily operations. It has sweeping powers, fining workers who forget to switch off their computers at night or punishing staff who ride motorbikes into work without their helmets.
Employees on business trips can also expect to get text messaged reminders of strict company rules on accepting gifts from clients. “It is no exaggeration to say that if a Great Wall employee accepts a cigarette from a business partner, he will be immediately dismissed, and the partner put onto a blacklist of companies with whom Great Wall will no longer cooperate,” Global Entrepreneur suggests.
As a privately-owned firm competing against state-owned rivals and powerful international brands, Great Wall has also sought to cast itself as an outsider, struggling to survive in the face of its more weighty competitors. Whether that classification is accurate is open to debate. Wei was one of the privileged few to vote on the new leadership line-up at the 18th National Party Congress last October, making him one of a rare breed of billionaire businessmen with direct access to the highest echelons of power (here he compares to Liang Wengen at Sany Group, see WiC170).
Nonetheless, Wei seems keen to keep his employees alert to the potential for disaster. For instance, Great Wall has erected a “shame column” at Baoding that seems intent on recording the failures of the past, with the implicit warning that they must never happen again. One of the entries etched into the concrete rap sheet highlights the poor sales of a compact sedan launched in 2007. ”Because of an inadequate identification of customer value, [the car’s] positioning was faulty”, the inscription recalls darkly. “These failures were the errors of the decision-making team,” company president Wang Fengying explained to the reporter. “It warns the employees that however rapidly an enterprise develops, the results are only temporary. The enterprise is at risk at any time.”
Signposts around the headquarters (‘Risk Road’ and ‘Lean Lake’) offer a similar warning against complacency. “Great Wall’s introspection is based on a sense of crisis,” company boss Wei concludes.
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