“When I first started back in 1992-1993, everyone thought the hard part was to actually find and gain access to opportunities in China,” recalled Perkowski. It turned out that there were opportunities aplenty but a critical shortage of Chinese managers who understood how to run an auto parts factory along capitalist lines, with an emphasis on exports and making world-class products for the Chinese market. As Perkowski put it, the easy part was setting up shop in China. The hard part was getting the right local managers who could run the store. So when he initially started buying majority ownership in Chinese auto parts companies, Perkowski began by importing managers from abroad. Bad idea. It was too expensive, and operating in China was just too foreign for foreigners. Scratch plan A.
“So we sent all the expats home, which gave me problems with my investor base, and went to plan B,” he said. “We then tried to convert the 'Old China' managers who typically came along with the plants we bought, but that didn't work either. They were simply too used to working in a planned economy where they never had to deal with the marketplace, just deliver their quotas. Those managers who did have an entrepreneurial flair got drunk on their first sip of capitalism and were ready to try anything.
“The Chinese are very entrepreneurial,” said Perkowski, “but back then, before China joined the WTO, there was no rule of law and no bond or stock market to restrain this entrepreneurialism. Your only choices were managers from the state-owned sector, who were very bureaucratic, or managers from the first wave of private companies, who were practicing cowboy capitalism. Neither is where you want to be. If your managers are too bureaucratic, you can't get anything done-they just give excuses about how China is different-and if they are too entrepreneurial, you can't sleep at night, because you have no idea what they are going to do.” Perkowski had a lot of sleepless nights.
One of his first purchases in China was an interest in a company making rubber parts. When he subsequently reached an agreement with his Chinese partner to purchase his shares in the company, the Chinese partner signed a noncompete clause as part of the transaction. As soon as the deal closed, however, the Chinese partner went out and opened a new factory. “Noncompete” did not quite translate into Mandarin. Scratch plan B.
Meanwhile, Perkowski's partnership was hemorrhaging money– Perkowski's tuition for learning how to do business in China-and he found himself owning a string of Chinese auto parts factories. “Around 1997 was the low point,” he said. “Our company as a whole was shrinking and we were not profitable. While some of our companies were doing okay, we were generally in tough shape. Although we had majority ownership and could theoretically put anyone on the field that we wanted, I looked at my [managerial] bench and I had no one to put in the game.” Time for plan C.
“We essentially concluded that, while we liked China, we wanted no part of 'Old China,' and instead wanted to place our bets on 'New China' managers,” said Perkowski. “We began looking for a new breed of Chinese managers who were open-minded and had gotten some form of management training. We were looking for individuals who were experienced at operating in China and yet were familiar with how the rest of the world operated and knew where China had to go. So between 1997 and 1999, we recruited a whole team of'New China' managers, typically mainland Chinese who had worked for multinationals, and as these managers came on board, we began one by one to replace the 'Old China' managers at our companies.”
Once the new generation of Chinese managers, who understood global markets and customers and could be united around a shared company vision-and knew China-was in place, ASIMCO started making a profit. Today ASIMCO has sales of about $350 million a year in auto parts from thirteen Chinese factories in nine provinces. The company sells to customers in the United States, and it also has thirty-six sales offices throughout China servicing automakers in that country too.