Eccentric billionaire takes great leap forward

Disciplined leadership is the key to success of China's top car maker.

Disciplined leadership is the key to success of China's top car maker.

Wang Jiangwei recalls spending last northern summer sweating through a month of military drills conducted by Chinese People's Liberation Army instructors. Wang isn't a soldier, he's a researcher at Great Wall Motor Company.

His Baoding employer is so profitable it generates a fatter margin than any listed carmaker in the world. Behind the success is chairman Wei Jianjun, who has built China's biggest sports utility vehicle maker with a leadership style that stands out for its emphasis on discipline and frugality.

"The military training is pretty serious and tough," Mr Wang said. "Not only new hires but people who get promoted, even those becoming department heads, need to redo training."

Great Wall represents a rare breed of Chinese automakers independent of foreign partners and government, sparing it from having to split profits and endure extra bureaucracy. With the stock surging sixtyfold in Hong Kong since its 2008 low, Wei has become Asia's wealthiest car executive, with an estimated fortune of $US6.5 billion ($7 billion) as he strives to create China's first global automotive brand.

"Wei is a real professional, a real entrepreneur," said Bill Russo, the former vice-president of Chrysler Northeast Asia and now president of automotive consultant Synergistics in Beijing. "If there's one or two automakers able to survive the competition with foreign rivals in the next decades or so, Great Wall will definitely be one of them."

Targeting Jeep Great Wall could become the next Hyundai, the Seoul, South Korea-based auto maker, he said.

Mr Wei has signalled Great Wall will eventually outsell Chrysler's Jeep and is targeting sales to double to 1.3 million vehicles by 2015.

Though lagging behind the big automakers in scale, low costs gives it an operating margin of second to none - even Fiat SpA's Ferrari. It will probably top the industry this year at 16.4 per cent, Max Warburton, an analyst at Sanford C. Bernstein said.

Chinese auto makers are a decade away from delivering their first globally competitive vehicle, though that's only one or two product cycles in the auto industry, Mr Warburton said. He hired specialists to tear apart and test a Great Wall H5 in February and found the SUV's gearbox had "truly awful" vibrations and poor braking, though it drove well.

Despite the H5's shortfalls, it made a "massive leap forward" in quality with the newer H6, he wrote.

While the company has had its share of growing pains - it recalled thousands of vehicles in Australia last year after regulators found asbestos in parts - Mr Wei said Great Wall's ability to develop technology will determine its future.

"We have to own core technologies and make breakthroughs," he said. "The biggest risk we're facing is possible complacency." Net income will probably rise 24 per cent to 7billion yuan ($1.2billion) this year after surging 66 per cent in 2012, the average of 16 analyst estimates compiled by Bloomberg found.

Mr Wei, born in Baoding in 1964, said he was greatly influenced by his father, an artillery soldier who went out on his own to make boilers.

At 26, he took over a small car-modification business and turned it into a van maker. He later shifted focus to utes after seeing their popularity in Thailand. Great Wall's Deer was China's most popular ute by 1998.

Then anti-pollution laws restricted trucks in main cities, prompting Mr Wei to switch to SUVs. Today, the company is poised to lead the nation's SUV market, the fastest growing segment of China's auto industry, for an 11th year.

The billionaire also knows when to wait, Mr Russo said, recalling when Mr Wei visited Chrysler LLC's headquarters in 2008.

Asked by Tom LaSorda, then chief executive of the Auburn Hills, Michigan, company, why Great Wall didn't join Chinese carmakers in showcasing vehicles at the Detroit car show, Mr Wei replied they weren't ready. "They don't try to overreach," Mr Russo said.

As Great Wall grew, Mr Wei recruited Wang Fengying, 43, his top sales chief for the past two decades, who says she doesn't shy away from telling her boss that he's wrong.

"We argue all the time," Ms Wang said. "Our goals are the same, so we can always find common ground."

Ms Wang said five years ago she opposed the rollout of a Gwperi endorsed by Mr Wei, who overruled her, only to see the subcompact flop. The debacle is engraved in red at Great Wall's two "Boulders of Shame", one listing big failures in product development and the other identifying officials jailed for accepting bribes from suppliers.

Mr Wei has more eccentricities, says Zhang Yun, who has advised him for five years on strategy. The billionaire is so frugal he smokes 10 yuan-a-pack cigarettes and once scolded a group of dealers for leaving too much food on the table after a meal. He sleeps most nights in a room connected to his office and starts work at 7am in a grey uniform, Mr Zhang said.

Then there's the discipline. In Baoding, famous for donkey burgers and home to the oldest military academy in modern Chinese history, Great Wall makes recruits endure foot drills and push-ups.

The idea is for them to build endurance, increase willpower and understand the corporate culture.

"I have gone to other factories in China and when it's time for lunch, everybody runs to the cafeteria at the same time," Mr Russo said. "They don't do that at Great Wall."

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