Strange Stones: Dispatches from East and West (P.S.)

by Peter Hessler

  On a street in the development zone, he ran through a series of checks: accelerating, braking, turning. “It’s picking up a wheel,” he said, in the middle of a tight turn. “The wheel is spinning. You need a limited slip differential for that.” I did my best with the translation, Detroit to Chinese. We passed a tractor cart full of bricks, a new air-conditioner factory, and a boy pissing in the grass. Dinkel sped up and swerved; a bus honked. In the back, the three engineers clutched at the ceiling. Finally one of them asked me to pass along a request: “Do you think we could go to a place without any other cars?”

  That was easy: in China, there was always another, newer development zone just down the road. We drove north, past bulldozers, earthmovers, and the skeletons of future housing complexes, to Baoshun Road. Dinkel said: “Tell them the gearbox is very notchy from second to third, and from fourth to fifth.”

  Dinkel was alert, soft-spoken, and small-framed. As a graduate student at the University of Michigan at Dearborn in the late 1960s, he was the only guy in the emissions laboratory who could fit into the driver’s seat of a Mazda Cosmo. When I asked why he had originally studied engineering, Dinkel said, “I didn’t have a very bright guidance counselor.” In those days, people believed that anybody with good math scores should become an engineer. After briefly working at Chrysler, he switched to journalism. He was at Road & Track for twenty years, including two as editor-in-chief. “I’ve tested cars for thirty years,” he said. “I’ve driven practically every car that’s ever been on the road.” He told me that Wuhu’s empty streets reminded him of the old days in California, when they could still test cars in the bean fields of Orange County.

  At the west end of the factory strip, between the nail factory and the air-conditioner-cover plant, stood an empty roundabout. To John Dinkel, it looked a lot like a skid pad. He accelerated to forty miles an hour, past a tepee of stacked bamboo that would be used to scaffold the next construction project. He held the turn, tires squealing, and the roundabout flashed by: Nails, bamboo, air-conditioner covers. Nails, bamboo, air-conditioner covers. The three Chinese engineers were thrown together against the right side of the car. They still weren’t wearing seat belts.

  The one in the middle was named Qi Haibo. He could have fit into the driver’s seat of a Mazda Cosmo, along with a sack of groceries. He was twenty-two years old, and he had grown up on a farm in Inner Mongolia. His grandfather had moved there from Shaanxi Province (“probably because of famine or war”). Qi Haibo’s father had a fifth-grade education and his mother had attended one year of elementary school. They grew wheat, corn, and sunflowers.

  As a boy, he had always been the top student in his primary and middle schools. After high school, despite having no special interest in engineering, he attended Wuhan Polytechnic University. “I wanted to go to a good university, and I heard that computers and electronics were the best subjects for careers nowadays,” he said. “So I chose those specialties when I took the examination.”

  A year ago, during his last term in college, he attended a job fair and met some Chery recruiters. “They offered me a job, and people at the school said it was a new company, a company that was developing fast. So the next day I signed a contract. I figured that a young person could learn a lot there.” By Chery standards, he wasn’t particularly young—the average age of a company employee was twenty-four. Qi worked six days a week for a salary of less than two hundred dollars per month. He lived in a factory dorm room with three other engineers. He would have preferred his own space, but the dorm conditions were a lot better than anything he’d known in Inner Mongolia, and he hoped for a long-term future at Chery. “I also like the fact that it’s not a joint venture,” he said. “It’s China’s own auto company.”

  After the test drive, I asked Qi Haibo what he had learned from John Dinkel. Qi said that the T-11 had a slight problem with driveshaft length, which meant that the outside wheel slipped a little on tight turns. The rear end of the B-14 had a tendency to float at high speeds. In particular Qi admired Dinkel’s skills behind the wheel. The Chinese engineer, whose job involved quality control and test-driving, had received his license only one month earlier.

  Chery’s early strategy—gleaning useful information from the wreckage of troubled automakers around the world—culminated in a tiny vehicle called the QQ. In the 1990s, Daewoo Motors, the South Korean company, tried to expand rapidly around the world, investing in factories in Vietnam, India, Poland, Romania, Ukraine, and Uzbekistan. Soon, they realized that they had overextended themselves—Uzbekistan, it turned out, wasn’t a great place for a car factory—and Daewoo declared bankruptcy. The big American firms took their time picking through the wreckage, watching the prices drop. In 2002, after studying the situation for more than a year, General Motors finally acquired a controlling interest in Daewoo Motors. GM took the platform of a Daewoo minicar known as the Matiz, repackaged it under the name Chevrolet Spark, and prepared to start production in China.

  In June of 2003, half a year before the Spark went on the market, Chery unveiled the QQ. It looked almost exactly like GM’s car but retailed for a quarter less: about six thousand dollars. Chery also introduced a sedan that appeared suspiciously similar to the Daewoo Magnus. Chery named that car the Son of the Orient.

  Chinese consumers never took to the Son of the Orient, but the QQ was an instant success. At less than twelve feet long, and with a 0.8-liter engine, it was even smaller than the Mini Cooper. The car was perfect for China’s fledgling urban middle class, which hadn’t been able to afford the expensive joint-venture products in the past. In 2003, nationwide passenger-car sales jumped by 80 percent, allowing Chery and other small manufacturers to establish a strong position in the low-end market. In 2004, Chery sold five times as many QQs as GM sold Sparks.

  In December of 2004, GM Daewoo filed a lawsuit in Shanghai, alleging that Chery had developed the QQ “through copying and unauthorized use of GM Daewoo’s trade secrets.” Simple copyright violations were rampant in China, but this case was more complicated: Chery had essentially bootlegged a car before the original even made it to market. The implication was that top-secret designs had leaked out of South Korea, probably during the year when GM had negotiated to acquire the bankrupt company.

  When I visited the GM China offices in Shanghai, Timothy P. Stratford, the company’s general counsel, handed me two photographs. In the first picture, two cars were parked side by side: the green one was the QQ, and the black one was the Matiz, the South Korean original. In the second picture, the doors had been switched: green on black, black on green.

  “You would never find two competitors’ cars where the doors could be swapped,” Stratford explained. “It means that not only do they copy the door but everything else that is necessary to form the opening for the door. A door opening is kind of like a fingerprint for a car.”

  Chery executives hadn’t made many public statements about the case, apart from saying that they had received Chinese patents for the QQ (a point that would be moot if designs had been obtained illegally). When I spoke with Lin Zhang, the general manager for Chery’s International Division, he emphasized that the QQ was already on the market when he joined the company. But he denied that there had been any wrongdoing, and said that it was natural for a young company like Chery to legally develop something similar to a car that had been successful elsewhere.

  “That’s how you get started, at a primitive level, and then you move to another level,” he said. “It’s like when you start drawing. You don’t begin by drawing a beautiful picture of your own—you imitate another picture. It’s in the nature of any industry. It’s how Sony and Hyundai and Toyota got started. They all started with something. And it’s something they abandon quickly.”

  Zhang had joined Chery a year earlier. Born in Shanghai, he had a PhD in mechanical engineering from the University of Michigan at Ann Arbor. He had worked for nine years for DaimlerChrysler in Detroit. He had two children, aged eight and ten, and they
had been happy in American schools. But every year, when Zhang visited Shanghai, there was some new part of town that he didn’t recognize, which made him think about how much he was missing. After a friend—another American-trained Chinese engineer—accepted a job at Chery, Zhang followed suit.

  “If I stayed, I could see what I’d be doing in five or ten years,” he told me. “The life will be relatively easy but it’s missing excitement. I thought that risk and reward usually come together.”

  Risk was part of Chery’s culture, and even the QQ may have been a calculated gamble. Several independent analysts told me they doubted that the Chinese legal system was sophisticated enough to handle such a case. In addition, Chery was government-owned, and the Chinese had always dreamed of having a true national brand. GM Daewoo hoped to have its day in court, but there was no guarantee that the foreign company would be treated fairly. And since Chery didn’t intend to export the QQ to the United States, there wasn’t much recourse in the American legal system.

  Chery was still relatively small—eight thousand employees—but it had found a way to produce a hundred thousand vehicles a year without significant investment in design and engineering. Management appeared to be shifting strategies; an enormous R&D center had just been completed, and they had recently hired almost thirty foreign-trained engineers, like Zhang. The company was placing new emphasis on quality control, and every expert who visited their factories seemed impressed with the scale and sophistication. Ronald E. Harbour, an American consultant who specializes in auto manufacturing, told me that Chery’s aluminum-casting plant was so big that they were only using 10 percent of the space. “In China, they tend to build a lot of capacity ahead of demand,” he said. “They seem to have an endless supply of money. I don’t know where it comes from. Most Western companies would not be able to throw in that kind of money on the if-come.”

  As a state-owned company, Chery didn’t have to answer to stockholders, and it was unclear how much had been invested. One day, I visited the gigantic final assembly plant that produced the QQ and the Son of the Orient. A sign at the entrance said, in Chinese:

  WE NEED NOT ONLY HARD WORK, WE MUST ALSO BE DILIGENT,

  AND MORE IMPORTANTLY WE MUST HAVE A SENSE OF A NATIONAL MISSION

  Nearby, a digital sign noted that they were producing 253 QQs a day. Workers in blue uniforms moved the new cars along the assembly line. A manager named Hu Bin told me that over the past couple of years they had steadily picked up the production pace, to meet growing demand. In the beginning, assembly-line stations in Hu’s section had spent an average of three minutes performing their tasks; now they required only two minutes and five seconds. Hu Bin said soon Chery would start paying workers by the car instead of by the hour. He asked me if American manufacturers sometimes used that tactic to boost production; I said no, and mentioned the word “union.” Hu hoped that his section would drop eighteen more seconds by the end of the year.

  Another morning at breakfast in the Guoxin Hotel, Malcolm Bricklin said that Wuhu needed a new port on the Yangtze.

  “They have to dig deeper, pave big streets, put in lighting for security and for inspecting damage,” he said. “You have to be able to put five thousand cars on a ship in five hours.”

  In the United States, Bricklin was searching for dealers willing to pay up to $4 million each for the rights to sell Chinese cars. Visionary Vehicles also needed a new American brand name. “It’s got to be something that fits but doesn’t come from the name ‘tiger’ or ‘dragon,’ ” Bricklin said. “I happen to like the name Chery.” Not long after this conversation, GM’s lawyers sent Bricklin a warning to the effect that Chery, besides being one letter away from Cheery, was also one letter away from Chevy and another possible lawsuit. And not long after that, GM and Chery finally settled the Spark-QQ dispute out of court, with neither side making public comment about the terms.

  Such tensions were common between American and Chinese companies, who were still figuring out how to coexist in the same world. When I spoke to Michael Dunne, the president of the consulting firm Automotive Resources Asia, in Shanghai, he wondered if the appeal of Chery’s low cost would be significant enough to distinguish a new brand in America. There was a history of foreign automakers—Hyundai, for instance—stumbling upon their first exposure to American consumers, usually because of poor quality. Toyota had succeeded because of its meticulousness—something that Detroit lacked for a long time. Dunne believed that the Chinese shared Detroit’s flaw. “The Chinese are a little like Americans,” he said. “They want the touchdown. They want the home run. Women hen congming.”

  That was a phrase the Chinese sometimes said: “We are very clever.” Dune continued, “But I don’t see the patience and perseverance. It’s more like: ‘We can leap-frog.’ ”

  I understood what he meant: the longer I lived in China, the more certain aspects reminded me of America. There was the same boundless optimism and energy; both the Americans and the Chinese built wide roads across instant cities. They often had the quality of an upstart, and they believed that they could defeat time—in China, that characteristic sometimes seemed even more American than the Americans. Whenever the Chinese engineers stood beside the Visionary Vehicles crew, the men from the younger country suddenly looked old: jet-lagged, gray-haired, paunchy. They had already been around the block—Bricklin had been a millionaire and a bankrupt; he had been acclaimed as a visionary and condemned as a fraud. He talked so smoothly in part to keep the past at bay.

  At the end of 2006, Bricklin’s relationship with Chery collapsed. Two years later, Visionary Vehicles filed a lawsuit against Chery, for an estimated $40 million in damages. Bricklin began chasing the next thing, plug-in hybrid vehicles. And Chery continued to grow, becoming China’s biggest car exporter. Over the years, they agreed to partnerships with Fiat and Jaguar Land Rover. But the vast majority of their exports were directed at the developing world—by 2012, they still hadn’t created a vehicle for the American market.

  When I was in Wuhu, I met with Yin Tongyao, the former VW employee who had risen to become president of Chery. He was known for avoiding the press, but late one evening he agreed to meet me and a few other reporters in a conference room at the Guoxin Hotel. He wore a suit and tie, as if he’d just left the office. He was in his early forties and looked younger. But when I asked about his education, he spoke as if describing ancient history.

  “At the time I left for college,” he said, “I had never even ridden in a passenger car before.” He explained that in those days the top graduates were assigned to jobs in truck factories, because China didn’t have a market for passenger cars. He had been a bad student, he said with a self-deprecating laugh, and thus he was sent off to the northeast. I asked about the company’s strengths.

  “All we have is our aggression,” he said. “We have no brand name, no recognition, nothing. We are simply aggressive.”

  I couldn’t sleep the last night in Wuhu. The long drive to Beijing lay ahead, and light and noise filtered into my room. At 4:30 A.M., I finally got up and looked out the window. Across the street, the Conch factory hummed with overtime labor; its workers were producing PVC window frames. The Visionary Vehicles team had left the day before. I was the last American left in the Guoxin Hotel.

  I walked outside and started the Jetta. A mist hung low over the development zone; my headlights cut across empty streets. The Chinese New Year was approaching, and many factories were working overtime in preparation for the holiday. The blocky buildings were illuminated from within, like paper lanterns.

  It was dawn when I crossed the new Yangtze bridge and got on the expressway. A few miles outside Wuhu, I passed an exit sign for a place called Wuwei. It was an ancient Daoist phrase: Do Nothing. In this region there was another city called Wuxi: No Tin. Once, in Sichuan Province, I took a bus through Asbestos. That was a tough name for a small city, but it was better than having nothing at all.

  Chinese Barbizon

  In t
he countryside southwest of Lishui, where the Da River crosses a sixth-century stone weir, the local government announced that it was founding a Chinese version of the Barbizon. The original French Barbizon School developed during the first half of the nineteenth century, in response to the Romantic movement, among painters working at the edge of the Fontainebleau Forest. Back then, the French artists celebrated rural scenes and peasant subjects. This wasn’t exactly the mood in Lishui—like most cities in eastern China’s Zhejiang Province, the place was focused on urban growth; there was a new factory district and the export economy was booming. But the local Communist Party cadres wanted the city to become even more outward-looking, and they liked the foreign cachet of the Barbizon. They also figured it would be good business: art doesn’t require much raw material, and it’s popular overseas. They referred to their project as Lishui’s Babisong, and they gave it the official name of the Ancient Weir Art Village. One party slogan described it as “A Village of Art, a Capital of Romance, a Place for Idleness.”

  In order to attract artists, the government improved some old riverside buildings and offered free rent for the first year, with additional subsidies to follow. Painters arrived immediately; soon the village had nearly a dozen private galleries. Most people came from China’s far south, where there was already a flourishing industry of art for the foreign market. Buyers wanted cheap oil paintings, many of which were destined for tourist shops, restaurants, and hotels in distant countries. For some reason, the majority of artists who settled Lishui’s Barbizon specialized in cityscapes of Venice. The manager of Hongye, the largest of the new galleries, told me that it had a staff of thirty painters, and that its main customer was a European-based importer with an insatiable appetite for Venetian scenes. Every month he wanted a thousand Chinese paintings of the Italian city.