Relationship between Job Satisfaction and Employee Job Performance: An Automobilecompany in China - Essay Example

http www.cheryinternational.com/company/ Overview Chery Automobile Co. Ltd was founded on Jan. 8, 1997, with registered capital of RMB 3.98 billion. Plant construction commenced on March 18, 1997, the first car came off the production line on December 18, 1999, and on July 27, 2011, the three-millionth car of Chery rolled out the assembly line successfully. At present, Chery possesses an annual production capacity of 900,000 cars,engines and 450,000 transmissions. Cherys products cover passenger vehicles, commercial vehicles and minivans. Currently, there are more than 20 models of Chery available on market, and in addition, dozens more will be released successively. Chery has accomplished a sustainable way of development by doing research and preparation while producing autos at the same time, which supports Chery updating its auto-making technology and making its products always follow the trend. Taking Safe, Energy-saving and Eco-friendly as product objective, Chery has successively obtained quality certifications of ISO9001 and German TUV Rheinland ISO/TS16949, etc. For many years, Chery products which take Zero Defect as objective have won great favor of the vast customers. Chery has been recognized and accepted by customers from all over the world. In 2011, Chery sold around 643,000 units both home and abroad, winning the top title among independent automakers for 11 consecutive years. In 2011, Chery sold around 160,200 units in overseas markets, up 73% year on year and exceeds the number of 135,000 in 2008, making a great new record. In addition, the total export number of Chery since 2001 has achieved around 700,000 units by the end of May 2012. Chery has been top Chinese vehicle exporter for 9 consecutive years. Chery also won the golden medal of sales among China self-owned brands for 11 consecutive years, and has been occupying the biggest proportion of China passenger vehicle exportation. Independent innovation is the core of Cherys development Strategy, as well as the source of momentum of Cherys supernormal growth. Since its foundation, Chery which has always stuck to independent innovation has developed an R&D system relying on Automotive Engineering & Research Institute, Central Research Institute, Planning & Design Institute, and Testing Center. Under the system, Chery jointly designs key parts with holding companies and suppliers, and carries out cooperation combining production, study & research with domestic universities and scientific research institutes. Till now, Chery has set up an R & D team of more than 6000 members, and acquired core technologies of finished vehicle and key parts development. Through independent innovation, Chery has accomplished many breakthroughs on cutting edge and core technology such as TGDI, DVVT, CVT and new energy, which boost all Chery products into new generation. In addition, Chery also attaches great importance to conception innovation and management innovation, keeps perfecting system & mechanism, inspires the innovation vitality of the enterprise, attracts and retains numerous engineering and managerial talents to work for it. In 2008, Chery was included in the first batch National Innovative Enterprise of China; Energy-saving & Environment-protection Auto Platform Building, and Key Technology Research & Engineering Application of Independent Car Development System of Chery won the first and second prizes of National Award for Science and Technology Progress respectively. By the end of June 2011, Chery has applied 6083 patents and been authorized 4230 ones, leading Chinese auto enterprises. Globalization is the strategic goal of Chery. Forging “International Namecard” is what Chery bears in mind for its strategic plan. Commencing from the initial development stage, Chery pays attention to exploiting both domestic and overseas markets and takes initiatives in implementing the strategy of "going abroad". It became the first Chinese auto company to export CBU, CKD, engines and car manufacturing technologies to foreign countries. Presently, Chery is actively carrying out its globalization strategy. It has exported its cars to more than 80 countries and regions all over the world and the number of CKD factories built or being built is up to 16. Through the radiating capacity of these production bases, the auto markets of Asia, Europe, Africa, South America and North America will be ranged over in depth. The total number of exported vehicles has reached 660 thousand, which is on the top of the list among all China Vehicle companies. While Chery is enhancing its hard power actively, it also pays close attention to fostering soft power. Inheriting the idea of "Extensive Marketing", Chery keeps upgrading the platforms of "Brand, Quality and Service" comprehensively, and promoting brand and corporate images. Chery pays much attention to the brand promotion while seeking independent research, innovation and globalization. Through continuous efforts on aspects of technology, quality and services, the brand of Chery has been established and promoted. Recently, the qualities of Chery auto products and CSI have been improved greatly, helping Chery won applauses from the customers. In 2006, Chery was recognized as "Chinese Famous Brand" and ranked 62nd among "500 Most Valuable Brands of China". In 2007, Chery was selected in "Top 20 Globally Most Competitive Companies of China" and "Top 100 Most Competitive Companies of Developing Countries". In 2010, Chery was chosen as the "Most respected Chinese Company"by Fortune magazine for the 5th time, and at the same time, listed in "Top 10 Globally Most Competitive Chinese Companies" for the 2nd time in the latest research report released by world-renowned Roland Berger Strategy Consultants. Also in 2009, Chery topped the compact car and the premium compact list with QQ3 and QQ6 in the “Report of 2009 China Initial Quality Study (IQS) SM” released by J.D. Power Asia Pacific, the authoritative rating agency for auto companies. It was the first time for Chinese independent brands to win the first place in the two market segments in 10 years since J.D. Power first released the Report, representing a historic breakthrough. In 2010, Chery was awarded by Fortune magazine as “Most Admirable Chinese Companies” for a 5th consecutive year. Meanwhile, Roland Berger, a worldwide-known Strategy Management Company, has issued its latest report where Chery’s name appears in the list of “Top 10 Chinese Companies with Global Competitiveness” for 2nd time after 2007. With vigorous culture of innovation, Chery has realized the great-leap-forward development and has received deep concern and great attention from the leaders of the country and the Party. Hu Jintao, Wu Bangguo, Wen Jiabao, Jia Qinglin, Li Changchun and Li Keqiang, etc. had paid visits to Chery successively. They all positively recognized and thought highly of Chery and also expressed their higher expectations. Chery will continue its objective of “Independent Innovation, World First Class, Serving Mankind”, keep carrying forward the spirit of hard work, and make constant efforts to realize its phase-III goal of becoming an international famous Chinese brand. Title: Selling Chinas cars to the world: An interview with Cherys CEO. By: Gao, Paul, McKinsey Quarterly, 00475394, 2008, Issue 3 Database: Business Source Complete Selling Chinas cars to the world: An interview with Cherys CEO Yin Tongyao explains how his fledgling automotive company Learned to profit from adversity. Few people took Chery Automobile seriously when it was established, a little more than a decade ago, in the city of Wuhu, in Anhui Province, China. Chery was a newcomer in a small area that had little tradition of manufacturing and was far from the countrys traditional centers of auto production, in Beijing, Changchun, Shanghai, and Wuhan. When the start-up failed to find buyers for a motor engine it had developed, there was little choice but to manufacture a car of its own so that the engine could find a home. After this first car had been built, bureaucratic obstacles prevented the company from selling it. As chairman and chief executive officer Yin Tongyao puts it, "Chery kept hitting the wall over the past decade. Every time we hit a wall, we just reoriented and moved on." Chery truly has moved on. In 2007, it sold 381,000 passenger cars, generating $2.86 billion (20 billion renminbi) in sales and ranking fourth in the domestic passenger-car market. (The top three are brands associated with joint ventures between Chinese and foreign automakers; Chery is an independent manufacturer.) The company is among a handful of Chinese carmakers that have proprietary technology to build core components, such as engines, gearboxes, and chassis. It has also been the top Chinese passenger-car exporter for five consecutive years--in 2007, it sold 119,000 units abroad, accounting for 30 percent of that years total sales. Today, Cherys Tiggo, Eastar, and A5 models can be found on the streets and roads of nearly 70 countries, and the company has seven foreign assembly plants, in Egypt, Indonesia, Iran, Russia, Ukraine, and Uruguay. Over the past two years, Chery has accelerated the pace of its globalization by entering into an agreement with Quantum, an Israeli holding companys US subsidiary, to produce 150,000 cars jointly and by talking with European and North American companies about the possibility of cooperating with them. All of those moves have one objective: developing overseas markets. In a recent interview at Cherys headquarters, in Wuhu, Yin Tongyao shared his recollections of the companys difficult early days in a conversation with Paul Gao, a McKinsey principal, and explained his vision for the automaker and the challenges it faces in going global. The Quarterly: Chery has just passed its tenth anniversary. What do you recall most vividly from the companys early days? Yin Tongyao: We started from scratch and had a lot of bad luck. But I think its the inferior position that we were stuck with at the beginning that eventually led to todays success. Ten years ago, Chery had almost nothing--no state support, no deep funding sources, no technology, not much of a staff, not even any formal production ability. Plus, Chery started in a small place like Wuhu and was run by a few young, inexperienced people. No one really had much faith in Cherys chances of success. If we had to go through all this again, we probably wouldnt have the guts to do it. The Quarterly: Why did you choose to keep going? Yin Tongyao: For one thing, our local-government leaders were confident and promised to be supportive. This was one bit of good luck for us-the local government both allowed us to pursue our ambitions in manufacturing and invested in the undertaking. Although we didnt have a clear plan, we did have a simple idea about how to proceed. We thought we could buy a second-hand production line and the technology to produce engines. Later on, however, we found that it was not easy to buy useful second-hand technology or production lines. We first spent over $20 million purchasing a used production line from a foreign company, but that turned out to be obsolete. We trusted foreigners and hired an overseas technology and engineering company to help with the installation and commissioning. However, that company repeatedly asked for more money, even though the project was only halfway done. When we said no, it quit and left. The only thing we could do was to proceed on our own. When we finally made the engine, nobody wanted to buy it, so we decided to build our own cars. We negotiated with a European OEM in hopes of buying tools and technology for one of its models. The company rejected us on the grounds that such a deal would be inconsistent with its strategy. We were rejected by an American OEM for similar reasons. Chery once again had no choice but to develop car technology on its own. We worked very hard and also hired a few small European and Taiwanese companies to work on the car design. Finally, our first car, Feng Yun--meaning "wind cloud"--came off the production line in 1999. However, the car was not allowed on the market, since it was not listed in the state catalog, so we had to figure out how to get it listed. We finally managed to have ourselves affiliated with the Shanghai Automotive Industry Corporation (SAIC) and thus were able to get the cars "birth certificate." The Quarterly: What inspired Chery to go global when Chinas domestic auto market was just starting to blossom? Yin Tongyao: To be honest, our move into global markets was not planned, and our global strategy was not as systematic as it is today. Our global strategy now has four aspects: technical cooperation with overseas enterprises, car exports, overseas assembly plants, and equity joint ventures. Technical cooperation began earlier, with the design of our own engines--the first batch of engines was developed in partnership with AVL List, a European design company. That cooperation enabled our engineering and engine teams, as well as our suppliers, to improve their capabilities. Eventually, we became a leader in engine technology in China. Later, we cooperated with Italian companies on car design. To lower costs, we outsourced only part of the design and tried to do everything else ourselves, so all of our employees were able to improve their skills. Its in this way, I think, that being in an inferior position helped Chery to grow. The Quarterly: When did Chery start to develop a global strategy? Yin Tongyao: Our global strategy came about quite by accident. At the beginning, we only had our eyes on the domestic market. We did not come up with the "brilliant idea" of starting to export to developing markets before breaking into more mature ones, because we were not that business savvy. In 2001, shortly after Chery was permitted to sell cars, a Syrian car dealer saw the first model of our cars in Beijing and wanted to import from us. With no prior international trading experience, we almost refused him. Eventually, this car dealer bought 10 cars from us in that year, 100 cars in the year after, and over 1,000 in the third year. Gradually, Iran and other countries began to show interest in Chery. This is how we broke into the Middle East market. Its the same for other markets--instead of our reaching out to car dealers, they came to us first. The Quarterly: Exhaust emissions and global warming are critical social and environmental issues. How is Chery acting in response to these concerns? Yin Tongyao: Weve made some breakthroughs in areas such as engines. Chery will continue to increase its R&D spending to reduce carbon dioxide emissions by creating new types of engines, gearboxes, and electric controls, as well as hybrid cars and cars running on alternative fuels. Our R&D is based on Europes latest emission standards and we have developed new plans for using alternative fuels. Chery cars meet Chinas current emission requirements, and we are trying to upgrade to the highest European standards and to Californias emission standards in preparation for entering European and North American markets. The Quarterly: Over the past year, the Western world has become increasingly concerned about the quality of products made in China. What has Chery done to tackle the challenge of quality? Yin Tongyao: We are aware that people have concerns about products made in China. To respond to these concerns, we must overdesign, overtest, and overservice. We think concerns about the quality of goods made in China will quickly disappear if consumers cannot find problems, even with very picky eyes. In our recent joint-venture negotiations with a foreign OEM, our foreign partner put forward quite a few requirements, and we agreed to all of them. If we are able to meet stricter requirements from foreign OEMs like this, it should demonstrate the improvements that Chery has made. The Quarterly: Chery is known in China as a company that makes its own models and brands. Recently, however, Chery signed several joint-venture contracts as well as a deal to supply cars to Chrysler. Does that mean Chery has shifted its philosophy? Yin Tongyao: During our beginnings, being independent or self-reliant was not really what we meant to achieve. At that time, in fact, we wanted to find a "sugar daddy," local or foreign. We failed because of our own weaknesses and were then forced to rely on ourselves. Now, although Chery has reached a certain scale, we are still not wed to the notion of independence and are open to other arrangements. That said, we insist on two points: first, the technology should be our own, and, second, the brand should also belong to us. The Quarterly: Looking forward, what are Cherys biggest opportunities and challenges? Yin Tongyao: Environmental pressures and high oil prices will force people to buy cheaper and smaller cars. The big cars will be penalized. For example, the last oil crisis helped cement Toyotas position in the United States because the company could offer high-quality, smaller cars at a time when the competition had few to provide. In my opinion, the looming energy crisis could help companies like ours. The large-size and luxury-car manufacturers do not have any advantages over us. It is very difficult for them to make smaller and midmarket cars, but we could make bigger and more high-end cars. Indeed, this is a rare opportunity for us. From my perspective, Chery has four major challenges. First, we are facing a shortage of qualified people. To deal with our rapid growth in both domestic and overseas markets, Cherys management and technical specialists all have to take multiple positions, some of which they may not be good at, and that is not sustainable. Second, theres an issue with brands. Chery brands already enjoy good awareness in China for inexpensive, low-end cars. We want to move gradually toward the higher end of the market but still ensure customer loyalty and sustained growth. Related to that point is product quality. Chery must improve its product quality along the whole value chain instead of just focusing on the production line. This requires fundamental improvements in important processes such as product development, supplier management, logistics management, production management, and sales and after-sales services. Finally, Chery needs to raise huge amounts of money to maintain its growth. The cash flow generated from day-to-day operations would not be sufficient to support our global ambitions, so Chery needs better access to the capital markets, perhaps by being listed on domestic or overseas stock markets or both. Despite the challenges, I am confident that Chery will gradually become a well-known international brand. We are aware that people have concerns about products made in China; to respond, we must overdesign, overtest, and overservice Related articles on mckinseyquarterly.com Leading change: An interview with the managing director of Tata Motors Chinas refrigerator magnate Global sourcing in the auto industry Yin Tongyao Education Graduated with BS in automotive manufacturing in 1984 from Hefei University of Technology, Anhui Career highlights Chery Automobile • CEO and chairman (2004-present) • Executive vice president (1996-2004) FAW-Volkswagen (1989-96) • Head of assembly workshop and director of logistics division (1991-96) • Overseas training in Germany and United States in preparation for establishment of FAW-VW Hong Qi Passenger Cars, FAW • Technician (1984-89) Fast facts Won Chinas prestigious National Model Worker award (2005) Won National Labor Medal from All-China Federation of Trade Unions (2004) EXHIBIT; Chery Automobile Vital statistics • Created in 1997 • Location of headquarters: Wuhu • 6 subsidiaries; ∼23,000 employees • Total 2007 assets: $26 billion(n1) • Ranked no 4 within sector worldwide in sales volume of passenger cars in China Chery sales revenues, $ million(n1) 2004 617 2005 1,074 2006 1,966 2007 2,860 (n1) $1 = 7 renminbi. Source: Annual reports; company Web site; McKinsey analysis GRAPH: EXHIBIT; Chery Automobile PHOTO (COLOR) PHOTO (BLACK & WHITE) ~~~~~~~~ By Paul Gao Paul Gao is a principal in McKinseys Shanghai office. Read More