01 Jun 2012
They Call Him Mr. Chinaby Roger ThompsonTopics:
Issue Focus: The Global Manager
On Wall Street, Jack Perkowski (MBA 1973) channeled capital to growing companies. In China, he set out to build one, and nearly fell victim to the management gap he both anticipated and greatly underestimated.
Against all odds, and the advice of many, Perkowski ditched his high-flying investment career and relocated to China in 1992 to chase his entrepreneurial dreams. A self-confessed “blank slate” upon his arrival—his first China trip—Perkowski built a $500 million auto parts manufacturing business, ASIMCO Technologies, and managed it with such dexterity that it was twice named one of the Best Employers in China.
But it wasn’t easy, especially for someone who didn’t speak the language. Perkowski spent nine grueling months on a 40-city tour visiting 100 factories before presciently fixing his sights on the growth potential in auto parts.
In the early 1990s, China manufactured only about 600,000 vehicles a year, mostly trucks, and parts makers remained small and regional. (Last year, China manufactured 18.4 million vehicles.)
With $150 million in US investor capital, Perkowski launched ASIMCO in 1994, quickly cobbling together a network of far-flung joint-venture factories, each number one or number two in its product category. And in each case, he managed to wrest majority control, unheard of at the time for foreigners but a condition of his investment. As it turned out, assembling the business was relatively easy. Managing it proved nearly fatal.
Perkowski was well aware that management training in China lagged decades behind the United States. Relying on conventional wisdom, he filled the gap with experienced managers from other countries. But by the end of 1996, it was clear that they had failed to master the task of operating Chinese enterprises. So Perkowski moved on to Plan B. He appointed a team of “Old China” managers inherited with the joint-venture factories and tried to upgrade their skills. That didn’t work either. They were too hidebound or too recklessly entrepreneurial, sometimes with felonious intent. As 1997 wound down, ASIMCO was hemorrhaging money, and Perkowski admits that he seriously considered giving up.
With the company’s fate at stake, Perkowski hatched Plan C, the “New China” strategy. It focused on hiring and empowering younger mainland Chinese with modern management training and experience and an open mind toward new ideas. It worked. Over the next two years, ASIMCO overhauled its management structure by bringing in more than 50 “New China” managers, and “our financial results began to improve almost immediately,” he recalls.
Looking back, Perkowski maintains that not speaking Chinese hasn’t hindered his ability to work in China. “Not knowing the language forced me to rely on others and learn who I could trust,” he says.
Perkowski poured his hard-won experience, and insider’s advice, into his well-received 2008 book, Managing the Dragon: How I’m Building a Billion-Dollar Business in China. But he derived his moniker, Mr. China, from a 2005 memoir with the same title penned by one of his former top executives. While he’s never named in the book, the Mr. China title stuck, something he doesn’t dodge.
No doubt it works to his advantage in his new pursuit. Mr. China retired from ASIMCO in January 2009. Three months later, he launched JFP Holdings, a merchant bank based in Beijing. (Bain Capital acquired ASIMCO in September 2010.)
Why walk away from the company he worked so hard to build? Simple. From Perkowski’s ringside seat inside the Middle Kingdom, the entrepreneurial grass now grew greener elsewhere.
While he was busy building ASIMCO, the Chinese economy took off with a galloping GDP and ballooning private wealth accumulation. Now, much of that wealth is being channeled to private companies, reminding Perkowski of Wall Street’s go-go years in the 1980s. “Today, there are over a thousand private equity firms in China. And the number of IPOs has tripled since 2009. Everywhere you look, there are pools of capital just looking for investment opportunities.”
That’s where JFP Holdings comes in. “You’re going to see tremendous development, primarily of private companies, over the next 10 years. As good an opportunity as auto components were in 1994 when I started ASIMCO, this one is even better.”
Perkowski counts among his clients both foreign and Chinese companies, all eager to tap his network and knowledge to grow their businesses. To foreign companies, he delivers some standard advice. “The first thing we tell them is to find a good Chinese manager,” he says. “It’s got to become a Chinese company if you want to have a chance to succeed.”
For those firms operating outside the major coastal cities, “the most important thing you can do is to get to know the local government officials, because they can be your biggest ally in growing your business.”
Peering into the future, Perkowski sees no shortage of investment prospects. “Even though China is now the second-largest economy in the world, it’s very embryonic,” he observes. “The reason I’m still here is that it’s very much a work in progress.”
Class of MBA 1973, Section J