February 14, 2008 -- Beijing-based ASIMCO is a foreign-invested company established in 1994 specifically to serve the Chinese automotive components market. ASIMCO has 17 factories in eight provinces around China, and has a strong reputation for training managers and being a good place to work.

Before coming to China in 1991, Perkowski spent twenty years on Wall Street. He was a partner at a leveraged buyout firm, and the head of investment banking at Paine Webber (now part of UBS). Perkowski lives in Beijing with his wife. He also has three children and a grandson.

Emerging China: Why did you first decide to come to China?

Jack Perkowski: When I started out, I was really looking at Asia in general -- not necessarily China. All my trips at that point were to Southeast Asia, Taiwan, South Korea and so forth. When I moved to Hong Kong in 1991, the first question I had to answer was where do I focus? It's a big region, with lots of different countries, economies, and opportunities. Unless you're going to be an expert on all of them, you have to pick a country. Back then, you really had to think about it -- and not many people were thinking about China. The only people who were, were the overseas Chinese businessmen.

EC: What differences do you see between then and now?

JP: It's just dramatically different. [One] difference today versus then was the amount of money -- capital -- that is now in China. Capital was very scarce when I first went to China. Turning up with money really got you entree to a lot of different places -- places where you wouldn't get an entree today because there's so much money. You could see that there wasn't much money around, just by the way people dressed. Prominent government officials, businessmen, you name it, just looked poor.

And it was much more difficult to set up businesses in China at that point. You couldn't do a wholly-owned foreign enterprise. Even getting majority ownership was very very difficult in most industries. So that's another thing that's changed. Now, it's very easy to set up a business in
China just from a mechanical point of view. If you want to set up a company in China, i can take you to one of a one hundred development zones and introduce you to the officials ... you could be in business within six months, literally, given the speed of construction in China. China is probably now the easiest country in the world to set up a factory

The bigger problem was how to develop the management. That hasn't changed.

Another big difference is the infrastructure. If people come to Beijing or Shanghai today, you could be in any international city. But in 1993 or 1994, if you flew over Shanghai you wouldn't know you were in a city because there were no lights

EC: Why do you say that management is still a problem?

JP: It's not necessarily a problem for us, but in general terms of doing business in China. I'm talking about people who are able to operate in a global world, to understand the rules of a global economy, to manage a business. It wasn't until the early 1990s that China set up its first business school. It's kind of an indication that in China, before 1990 say, management wasn't even considered a subject that you would teach at a university. So China is kind of new to this as far as developing management -- not only to manage China, but to meet the requirements of a global world.

In 1990, if you were doing business in China, you were doing business in China. If you do business today in China, you're more likely than now to do business globally.

EC: What about ASIMCO? Have you become an export-oriented company?

JP: Even today, 85 percent of our sales are in China. In the auto parts business, everybody recognized that the auto industry in China was far behind the United States.

That's because auto parts are critical, and many of them are safety items. If the brakes on the car don't work, someone is going to get hurt. Even today, the exports of components are very small number. Clearly, a lot of parts are being exported from China, but mainly they're going into the aftermarket, where the quality requirements are not as rigorous. When you add in the subsidiaries of major [international] companies, you would start to have more [exports] – but even then, they tend to set up those operations for China, not to export back to their home countries. The quality standards for the purely local China market were vastly different from the international market. There are still differences, but the gap is closing.

EC: Are you becoming more active globally?

JP: Yes. We're by far the largest supplier of components to the commercial vehicles industry, and that industry is almost local Chinese companies. And we're finding that our Chinese diesel engine customers are now exporting to Russia, Southeast Asia, to the Middle East. And their customers are all exporting as well. Last year China exported 600,000 vehicles -- that's more than China produced when I first got here. The big growth is to Russia. A lot going to Middle East. Southeast Asia and Africa. Not yet as much to United States and Europe, but that's only a matter of time.

EC: Can you talk more about the management development issues you mentioned earlier?

JP: We just basically decided we had to do it ourselves. We ended up buying existing companies in China, so we had a big pool of managers. The key was how to develop those managers into managers who had to adhere to global standards. To jump-start our program, between 1997 and 1999, we recruited 50 individuals we called "new China managers," mainland Chinese who were open minded, and had some kind of management training and had worked in multinationals in China, they knew where China had to go. We brought 50 of them in to get our program started, then developed our own management development program. We now promote internally -- we've now internalized our development.

EC: Do other companies try to poach your employees?

JP: They try, but we have very little turnover. Our managers like the fact that they're empowered -- they're in positions of responsibility and have the power to carry out those responsibilities. That's the step that companies from outside China have difficulties doing -- it's hard to get that trust factor. And there's a lot of opportunity -- we're growing, we promote from within, and there's no bad feeling. They know that every job, including mine, is open to them. We're headquartered in China -- there's no headquarters somewhere else we're taking orders from. We're run on international management standards, no question. That's why companies around the world like to deal with us. but we're a Chinese company. We only have about two dozen non-Chinese in our company, and most of those are in positions in the United States, Europe, and Japan. It's a very unique company in that sense. That's why the Chinese customers like to deal with us -- we're a Chinese company and our cost structure is the same as the Chinese companies.

EC: Can you talk about what you're doing in second- and third-tier cities?

JP: We're in all of them. We have 17 factories, in eight different provinces. In Shanxi province, in we have a big foundry there. Another excellent company, in the fuel pump business, is in Hunan province. We're in a city in Hubei province, with the starter alternator business. We're in Wuhu with a rubber compounding business.

The second- and third-tier cities are more like the China I came into in 1992 and 1993. they've all changed, but the changes haven't been as great as in Beijing and Shanghai. The infrastructure has improved, but when you get to these second- and third-tier cities, the number of English speakers declines dramatically. So the language capability goes way down. However, everything -- everything -- in those cities is cheaper, starting with the management, workers, rental prices, construction costs, everything is much less than in Beijing or Shanghai.

The other advantage is that you don't' have the turnover. Because Chinese are no different than anyone else -- they prefer to work around where they grew up. And if they have families in Henan province, they'd just like to stay there. That's why IBM used to set up its plants in small cities in upstate New York -- people didn't want to leave there. We have much lower costs, less turnover, and a lot of support from local governments.

I'm a big believer in the big fish theory. If you're in Beijing or Shanghai, there are so many companies there, so many big investments, that it's easy to get lost. But when i go to any one of these factories in any one of these [second- and third-tier] cities, they literally roll out the red carpet.

EC: Can you talk about the recent snow disaster in southern China?

JP: This has been really dramatic -- we had several of our factories closed -- no power, can't get raw materials in, can't get finished goods out. Last week has been a struggle just to keep the factories running. Hopefully, it's going to get better.

EC: Why did it happen?

JP:I think it's partly a natural disaster -- the snow that came, came in parts of China that don't get that kind of snow. If you got that kind of snow in Atlanta, Georgia, you probably would have the same thing. [But] they don't have the infrastructure and fleets of trucks to go out and salt the roads the minute the snow starts. I was on a trip in the north of China and there was a snow storm and within three hours the roads were a sheet of ice They've build the roads, but in terms of maintaining them and keeping them passable in bad weather, that's an area where it needs a lot of improvement.

EC: Why did you decide to write a book?

JP: I had kind of a unique experience. Most foreigners come because some companies sent them. I came to China at the mid-point in my career, I just picked up and did something completely different and nobody sent me. And I built one of the most important companies in one of the most important industries in China. And when people hear what I've done, they say, I should write a book. But I didn't know whether people were saying that just to be nice. And then I got to know Tom Friedman, who was writing "The World is Flat," and he said, "Jack, you're got a book in you, you should write a book." And that's when I got serious about it.

I think it's very important, given what's happening in China and how China is changing the world, it's important for every person, every company, to become engaged in China. There are a lot of books written that dwell on the all the difficulties in China. And there are difficulties. But a book about how you can prevent them is important. This is a book that's written by somebody who has close to 15 years in China from a very unique perspective. And what I try to do in the book is explain what i went through and the issues we faced and how we dealt with them and how we solved them. at a time when people are trying to figure out how to deal with China, it's provides a different perspective.

EC: Why did you decide to do a blog?

JP: The blog came after. The blog was to promote the book, and it's taken on a life of its own. I don't tend to do personal issues in the blog, but I do tend to do that in the book. In the blog, I tend to keep it to more business kind of issues. The book tells a story. I think somebody who has absolutely no interest in business can pick up the book and enjoy it. That's what I tried to do to reach as many people as possible.

EC: How much time do you spend in China now?

JP: I have a farm in New Jersey, 150 acres and a bulldozer and two tractors. As bong as I get back here once in a while, that's enough for me. I spend about 70 percent of my time in China. I enjoy it. I enjoy my farm, but I enjoy China for entirely different reasons.

I like China because there's never been a country this size going through what China is going through in such a short period of time. That's never going to happen again. I think frankly, as much as happened in the last 10 to 15 years, what's going to happen in the next 10 to 15 years is going to dwarf that.

What's happening in China -- I think it's literally going to change the world. And I guess the thing that always kind of surprises me is how little people really understand about China.