Transcript of ASIMCO: Developing Human Capital in China

Environment Case Study Update Situation Country Situation Company Profile Jack Perkowsky ASIMCO business partners competitors Jack Perkowsky "New China" Managers Management Development Restructuring Company Culture Development and Implementation of Management Tools 1 2 3 From 1997 to 2002, Asimco replaced all senior management staff with "New China" managers 1997 2002 1999 Management Problem The Expatriate Team The Local Team More expensive. Lack of knowledge about China, its language and culture. No experience, credibility and perseverance to deal with Chinese business Skilled in many corporate disciplines Lacked of international background Corruption Short-term Vision Very entrepreneurial Local knowledge Contacts INEFFECTIVE The head of an Asimco JV, opened a manufacturing plant that compete directly with the JV. UNSUCCESSFUL "You don't understand China!!!" "You don't understand the rest of the world!!!" TURNING POINT 1997 Asimco replace general manager of one of its factories in Sichuan. He creates the new chinese managerial way of working New China Managers Replaced under performance Renegotiate suppliers agreements Cut costs Improve payment and delivery terms Control manufacturing costs Create new products Old China Managers The new manager was a local chinese financial representative with previous experience at GE China. Inspiration Chinese Managers Foreign Managers "New China" Managers Open mindset Mature and Experieced (aged 30 - 50) Experience in SOE's and Global Companies Exposure inside and outside China 1998 2000 Conflict: Ninguo Asimco spent US$18 million to acquire 80% stake. Rubber Plant Soon after acquisition, the manager set-up competing factory on the other site of the town. The manager had cultivated close political allies in the township. After acquisition, on 2nd December 1998, he cut off the factory's electricity and sent

workers home before Perkowsi arrived with the new management team. City: Company: Situation: Solution: Perkowski appealed to the local Communist Party and warned that Asimco couldn't guarantee jobs for the 3.000 workers if the general manager remained in charge. (larger employer in the area) Communist Party, restored the electricity and the general manager was dismissed. ASIMCO business Company description by 2008 ASIMCO had 17 manufacturing operations and 52 sales offices in China, US, Europe and Japan Plans to go public in 2009 BOSCH: Ligh duty breaks Caterpillar: coinvestment in Engine Blocks and Heads Chicago Rawshide: sub-joint venture in Oil Seals Delco Remy America: Starters Delphi: sub-joint venture for produce Alternators Honeywell: propietary manufacturing various products Nippon Piston Ring: steel rings Conflict: Shashi Asimco failed to gain municipal support in disputes with plant managers. Hubei When Asimco tried to oust the old manager in October, the workers through bottles to the new management team. City: Province: Situation: Solution: Perkowski persuaded a group of chinese journalist to pressure the government to investigate the case. The authorities under the pressure, investigated the case and forced the old manager to leave the company. CONCLUSION The person you're in conflict with, has their set of relationships, so you have to get yours. Jack Perkowski, CEO Asimco Process almost complete about giving operational control to the "New China" managers Strategic shift from being an investor in a portfolio to a Corporation that manage the creation of the portfolio. Asimco got effective use of operational control from their JV companies. Asimco was able to implement financial transparency and efficiency. Vision Create manage culture and vision (1999) 6 months of goup meetings with managers. Objective: How: Achievement Conversations about what they like about the company and why they want to stay. Core Purpose Core Values Goal Create unique company because of its ability to combine the best of China and the best of the World. Teamwork Personal responsibility Continuous improvement Accomplish significant goals Become a a global leader. Target market: Foreign invested companies in China & customers overseas. More than 50% sales from global customers within 3 years. Hybrid Organization Local Managers Western Managers Manage manufacturing operations in China. Integrate operations into global economy "New China" Managers Programme

Training Leadership Development Program Incentive Compensation Commitment and Trust Performance Management System Quarterly General Managers Meetings Increase of the equity value of their operating units. Improve productivity. What they had to do? Helps to balance the salaries of managers with different backgrounds. Why is good? Managers share 40-50% company's bonuses Bonuses = 7% Asimco profits Cost for the company? Body Political changes Economic Changes Demographics Social Changes ASIMCO strategy Cling-Seal Manufacturing Dongying Xinyi Auto Fitting CTOR International Ltd Guangzhou Yize Trade Co. Ltd. Luoyuan International Guangzhou Proflux Filter China Auto Parts Industrial Cnflap Engine Parts Booming Machinery MFG Diron Parts Bexon Industry & Trade HAP - Honre Auto Parts Co., Ltd. Dino-Power Industry & Trade Ningbo Ji Ye Automobile Component Ningbo Siming Auto Parts China Qingdao Guosong Machinery Parts Qingdao KST Technology JiangNan Automobile Manufacturing Every 3 months When Meetings of Two- to three-day period on the premises of one of the operating units. How it works Create a forum in which discuss about: Strategy Review Quarterly results Best practices New management concepts Objective Provide customers with products and services at the highest quality and attractive prices. Objective How Functional Training Quality Training Managers In areas as:

Finance Marketing Exports and Logistics Provided by Asimco's internal quality team. Managers were encourage to pursue MBA and take courses. 10% 3.2% The provision of quality training represented part of Asimco's efforts to localise management. Country Economic Reform ASIMCO (Asian Strategic Investments Corporation) was founded in February 1994 Deng Xiao Ping in 1978 This system formalized different systems for: goal-setting performance feedback coaching performance review performance driven pay 1994 Joint Venture Which are the reasons of this radical change? Starts in June 2001 Create an acceleration pool of high-potential candidates for managerial jobs. Objective The goal of the Chinese economic reform ASIMCO (cc) image by nuonsolarteam on Flickr The pool helped to expand and develop Asimco's business. Gave to Asimco's workers first consideration when new opportunities arose at the company. Reduce risk of recruiting outsiders. Trust reinforcement and high retention rate. Why LDP is useful for Asimco? GENERAL ELECTRIC PENSION TRUST TRUST COMPANY OF THE WEST Selection of 24 individuals from middle manager level or below. How it works? IN 2002 is the largest automobile industry supplier lower costs by locating component production in china Creation a pool of candidates from middle low level, recommended by the general managers. work with its international customers to lower costs through China sourcing initiatives. Stagnant and impoverished China's planned economy The selected received formal training in leadership and then put their training into practice by leading a project. Srategy: to work with its customer to develop new products that met the needs of the rapidly growing china market. goal: to be able to provide value added products and services in a timely manner with

competitive price "The reason why they work for Asimco is not because we pay the highest wages. The reason why they work for us is because of the opportunities" Jack Perkowski into a market economy, capable of generating strong economic growth and increase the welfare of Chinese citizens Show predictability in their economic, financial and monetary policy behavior as a state to avoid uncertainty. Offer greater guarantees to foreign investment and generating positive incentives for foreign capital Greater openness of China to its regions and to the world. From Pittsburg, Pensilvania 2004 2006 Business transformation from an investment-oriented company to an industry-focused company. Renamed to ASIMCO Technologies Limited. 2005 Ranked 3rd on the ranking of the "Ten Best Employers in China". Kevin Li Scholarship Fund and Innovation Award. Assistance to eligible children of ASIMCO employees to help them pursue their scholastic dreams in the disciplines of science, engineering and technology 2008 Gary Riley - President and CEO of ASIMCO Technologies Limited. graduate from Yale in 1970 MBA in Harvard 2009 Jack Perkowski leaves Asimco and Leland Lewis replace him as a non executive chairman of the board of directors. Investment banker at Paine Webber, now part of the USB 20 years career in Wall Street Since the economic reform, China has experienced a significant growth in its economy. foreign investments development Very interested in China. Studied through many years opportunities to invest in the country Arrived Beijing in 1993 Create ASIMCO in 1994 Perkowski Lewis 2010 Wang Bin - President and CEO of ASIMCO Technologies Limited. GDP increased 10% per year lower level of consumption (7%) Nowadays Fifty-two sales offices Unique company because it is a foreign-invested company built to specifically to serve the Chinese market. High savings High levels of investment One of the most important players in China's automotive components industry China brings a 1.4% of increasement of the 4.9% increasement of the Global Economy. Seventeen factories in eight provinces large population with a relatively

small youth division, which is partially a result of the China's one-child policy 1.3 billion people Population growth rate is only 0.47% The new rich Chinese people: 2.7 million willing to spend on travel health education luxury 85% plan to send their children abroad Because of these significant changes: state has implication in:production quotas, providing capital, sell products and control benefits Non competitive Lack of human capital in managerial and entrepreneurial skills. Increasing the level of labor dispute Traditionally, HR functions were limited and had no autonomy, especially in SOEs. Chinese companies are beginning to behave more strategic in managing their workforce. New generations of executives tend to take more risks and be more independent. Chinese executives tend to be less individualistic and more group-oriented, and their approach is influenced by Confucianism. ASIMCO CASE DEBATE Alba Salesa Mireia Sanchez Carla Scholtus Josep Samblas Protectionist and Communist China Protectionist and Communist China Mass immigration from the countryside to the city SUBSIDIARIES ASIMCO NVH Technologies Co., Ltd. (Anhui) ASIMCO NVH Technologies Co., Ltd. (Wuhu)

ASIMCO Camshaft (Yizheng) Co., Ltd. ASIMCO Casting (Beijing) Company Limited. ASIMCO International Casting Co., Ltd. (Shanxi) Trademark of ASIMCO Meilian Braking Systems (Langfang) Co., Ltd. TRADEMARK CONCLUSION Western practices can not easily be applied in China. Therefore, the current Chinese state and Chinese companies required: the development of original theories and models for the management of companies in China. Trademark of Hubei Super-Elec Auto Electric Motor Co., Ltd. Trademark of Export Products of ASIMCO Shuanghuan Piston Ring Co., Ltd . New China Trademark of ASIMCO Shuanghuan Piston Ring Co., Ltd. Trademark of ASIMCO Tianwei Fuel Injection Equipment Stock Co., Ltd. (Beijing) SEOs Chinese culture is characterized by collectivism, the distance of the power and the importance of relationships. (Guanxi) Thank You Conclusion Asimco's management team and management system were the major competitive advantages of the company. It's programme for fast-tracking future leaders increased loyalty and produced role models for lower ranks of management