A review of
Designated Drivers: How China plans to dominate the global auto industry
by G.E. Anderson, PhD

Designated Drivers is an academic business book, and as such threatens to be dry and formal. While the text is in places a bit repetitive and theoretical, the insight that Andersen offers stands as an excellent counterpoint to the entertaining but more anecdotal American Wheels, Chinese Roads. Like Dunne, Anderson has long business experience in China, and he offers an informed insider's view of how automotive business is transacted in China and what the likely future trends are.

Anderson approaches the Chinese automotive industry from a historical and political perspective. While automotive manufacture and export have long been national priorities, the government's former view of car factories primarily as generators of jobs and producers of foreign exchange credits obscured the fact that better products are critical for building a new industry. Viewing car manufacture as a "pillar industry", the Central Government intended to control and plan all activities from Beijing. The Government invited foreign automakers to form joint ventures with state-owned companies with the hope of learning how to design and build cars in the process.

What actually happened makes for a fascinating story that is peripheral to Dunne's book. While the Central Government intended to keep a monopoly on pillar industries, provinces and municipalities formed their own car companies, some independent and some joint ventures. SAIC, for example, China's largest carmaker, was started by the city of Shanghai, and has successful joint ventures with GM and VW, the former of which is detailed at length by Dunne. Anderson describes a far longer list of joint ventures, both successful and unsuccessful, and relates the tangled history of provincial and central government wrangling over newly formed unauthorized enterprises. The Central Government benchmarked its progress against Western and Asian countries and aspired to have just a few powerful manufacturers, but it worries about full employment, and was inclined to let unpermitted but established factories continue.

The most fascinating stories of all, perhaps, are the independent automakers like Geely and BYD. The Central Government has stated goals for international auto sales and renewable energy, and has tolerated the independents since they have pursued these goals more agressively than the centrally planned factories. These tensions between idealism and pragmatism, between the provinces and Beijing, and between members of the joint ventures dominate the narrative.

All in all, I found Designated Drivers highly readable. Anyone who enjoyed American Wheels, Chinese Roads should pick up a copy of Anderson's work as well.

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alison@she-devel.com (Alison Chaiken)