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And they are spending big money to lure them, too. "These people are not cheap¡ªin order to get them, you have to give them competitive salaries, put their kids in international schools, and convince them to move over here," says Shanghai-based Lubo Li, senior director, market and business development, at JD Power Asia Pacific, which like BusinessWeek, is owned by the McGraw-Hill Companies (MHP ). "So they not only talk the talk, but walk the walk."
NEW DIVISIONS The talent raid is already paying dividends. Take Brilliance Auto (CBA ) which has experienced some bumps in the road recently, and last year actually lost money. Quality problems in their vehicle lineup over the last few years led to declining sales for both its minivan and Zhonghua model sedan, but they also helped convince Brilliance top management to hire former Daimler Chrysler research executive Frank Zhao to revamp their product engineering and research and development departments.
Zhao has overseen the creation of a Shanghai design center and an expanded $27 million R&D center at headquarters in Shenyang. As well as doubling the number of engineers to more than 600, Zhao, who now serves as both vice-president of product engineering and general manager of R&D, added entire new divisions to the center, including product development (which before was all done by outside companies) and vehicle engineering.
All of this has allowed Brilliance to deal more quickly with potential product glitches as well as respond to market trends, says Zhao. He cites both the speed with which Brilliance decided on, and then rolled out, lower displacement, gas-conserving models of its latest Zhonghua model, the Junjie. The company also quickly fixed a headlight glitch after discovering there was too large a gap between the light and car frame. "If you don't master the car design, then you just can't fix it. We were relying on foreign companies that were tens of thousand of miles away¡ªthat didn't work when we faced problems," says Zhao.
SPLENDOR ON BACKORDER "The Zhonghua was developed by foreign engineering companies¡ªit was a great package, but when we tried to localize it, we faced challenges," says Zhao. "At the time we didn't have enough engineers to fix the problems we faced."
"Actually, that realization was the original motivation to build this new tech center, and even to bring me back," says Zhao, noting that the Junjie (also known as the Splendor) is now selling so well that there is a 10,000 unit back log of orders from dealers. "We believe the new generation of Zhonghua sedans, Junjie, will be a strong success," wrote JPMorgan in an April analyst report, which also predicted the company will turn around this year.
Meanwhile, scrappy private auto company Geely, run by colorful farmer-turned-entrepreneur Li Shufu, has hired John Wilmer, a former lieutenant governor of California who served under Ronald Reagan, to heads its international operations. Geely is already test marketing its vehicles in Puerto Rico. (Li reportedly had exploratory talks with Murtaugh about hooking up with Geely.)
NOT A CURE-ALL And after joining Geely as vice-president two years ago, Shim Bong Sup, the former Daewoo executive, has overseen a doubling of R&D staff to 600 people, as well as a new emphasis on ensuring quality in the design and production process. "I have helped Geely make a lot of changes in the quality conception in production," says Shim. "For example, when you are styling a vehicle, you have to get others involved¡ªall the related engineers have to participate, to check on the feasibility." Shim says this was not done at Geely before his arrival.
To be sure, conquering the China market, let alone overseas markets, will hardly be easy for the Chinese players, which together have less than one fifth of the mainland sales. There is no guarantee that overseas talent will excel in China, or that U.S.-trained Chinese executives will do well if they return home. "Chinese companies have this illusion that they can cure all their problems by simply importing talent with foreign experience," says Jia Xinguang, a Beijing-based auto analyst. "But there are huge differences in the markets and the levels of development between China and America."
Adds Kenneth Hsu, vice-president for public affairs at Ford Motor (China), "We and GM have tens of thousands of researchers, engineers, and designers in our centers. It will take them a while to catch up." That's no doubt true, but with experienced executives like Murtaugh and others now moving to work for the Chinese upstarts, Detroit and Japan had better take notice.
And they are spending big money to lure them, too. "These people are not cheap¡ªin order to get them, you have to give them competitive salaries, put their kids in international schools, and convince them to move over here," says Shanghai-based Lubo Li, senior director, market and business development, at JD Power Asia Pacific, which like BusinessWeek, is owned by the McGraw-Hill Companies (MHP ). "So they not only talk the talk, but walk the walk."
NEW DIVISIONS The talent raid is already paying dividends. Take Brilliance Auto (CBA ) which has experienced some bumps in the road recently, and last year actually lost money. Quality problems in their vehicle lineup over the last few years led to declining sales for both its minivan and Zhonghua model sedan, but they also helped convince Brilliance top management to hire former Daimler Chrysler research executive Frank Zhao to revamp their product engineering and research and development departments.
Zhao has overseen the creation of a Shanghai design center and an expanded $27 million R&D center at headquarters in Shenyang. As well as doubling the number of engineers to more than 600, Zhao, who now serves as both vice-president of product engineering and general manager of R&D, added entire new divisions to the center, including product development (which before was all done by outside companies) and vehicle engineering.
All of this has allowed Brilliance to deal more quickly with potential product glitches as well as respond to market trends, says Zhao. He cites both the speed with which Brilliance decided on, and then rolled out, lower displacement, gas-conserving models of its latest Zhonghua model, the Junjie. The company also quickly fixed a headlight glitch after discovering there was too large a gap between the light and car frame. "If you don't master the car design, then you just can't fix it. We were relying on foreign companies that were tens of thousand of miles away¡ªthat didn't work when we faced problems," says Zhao.
SPLENDOR ON BACKORDER "The Zhonghua was developed by foreign engineering companies¡ªit was a great package, but when we tried to localize it, we faced challenges," says Zhao. "At the time we didn't have enough engineers to fix the problems we faced."
"Actually, that realization was the original motivation to build this new tech center, and even to bring me back," says Zhao, noting that the Junjie (also known as the Splendor) is now selling so well that there is a 10,000 unit back log of orders from dealers. "We believe the new generation of Zhonghua sedans, Junjie, will be a strong success," wrote JPMorgan in an April analyst report, which also predicted the company will turn around this year.
Meanwhile, scrappy private auto company Geely, run by colorful farmer-turned-entrepreneur Li Shufu, has hired John Wilmer, a former lieutenant governor of California who served under Ronald Reagan, to heads its international operations. Geely is already test marketing its vehicles in Puerto Rico. (Li reportedly had exploratory talks with Murtaugh about hooking up with Geely.)
NOT A CURE-ALL And after joining Geely as vice-president two years ago, Shim Bong Sup, the former Daewoo executive, has overseen a doubling of R&D staff to 600 people, as well as a new emphasis on ensuring quality in the design and production process. "I have helped Geely make a lot of changes in the quality conception in production," says Shim. "For example, when you are styling a vehicle, you have to get others involved¡ªall the related engineers have to participate, to check on the feasibility." Shim says this was not done at Geely before his arrival.
To be sure, conquering the China market, let alone overseas markets, will hardly be easy for the Chinese players, which together have less than one fifth of the mainland sales. There is no guarantee that overseas talent will excel in China, or that U.S.-trained Chinese executives will do well if they return home. "Chinese companies have this illusion that they can cure all their problems by simply importing talent with foreign experience," says Jia Xinguang, a Beijing-based auto analyst. "But there are huge differences in the markets and the levels of development between China and America."
Adds Kenneth Hsu, vice-president for public affairs at Ford Motor (China), "We and GM have tens of thousands of researchers, engineers, and designers in our centers. It will take them a while to catch up." That's no doubt true, but with experienced executives like Murtaugh and others now moving to work for the Chinese upstarts, Detroit and Japan had better take notice.
