Bruce Peters, Director of Global Strategic Product Alliances at General Motors, once liaison between General Motors and RPI, talks about cultural differences, managing employees from different cultural backgrounds, challenges and lessons of doing global businesses, and R&D in China. Bruce has spent his career in five different countries, including four years in China; and speaks four different languages. Jackson used to work for him. In the picture is Bruce (right) and Jackson.
Jackson: Could you give us a brief introduction of your career in GM, highlighting your experience in China?
Bruce: My first job with GM came after I received my Bachelor’s degree. I worked for GM’s proving ground in Milford, Michigan doing crash studies in the safety engineering department. After one year I decided that that was not what I wanted to do for the rest of my life, so I went to the University of Wisconsin-Madison for a PhD and ended up doing a postdoc in Romania for a year. Then I came back to GM, taking a position in the corporate research laboratories and I worked there for 14 years. Next, I moved to the powertrain product engineering area in GM and worked on a variety of projects in the USA until late 1999. Then I started what turned out to be 11 plus years of foreign assignments. Initially, I accepted a three-year assignment in Germany. However, after 2 years, we set up a new JV in Italy and I transferred to Italy for five and a half years. Next, I moved to China for a four year assignment, and finally, moved back to Detroit. My background in graduate school was in thermal science, and I pretty much worked on advanced powertrain concept work most of my career, including my time in China.
Jackson: Did you have any cultural shocks working in these countries, especially in China? And how did you overcome them?
Bruce: Not really. The experience in Romania probably prepared me for the rest of the assignments. It turned out that the Romanian school had not been completely forthright with the governmental people regarding their capability to do the project, which was sponsored by the Romanian and US governments. When I got there I realized that we wouldn’t be able to do the project as it was defined. So I contacted my lead professor in the University of Wisconsin-Madison. He told me there are two parts to this kind of foreign research endeavor. One is the technical execution of the work and the other is the cultural part. That is, learning about how people live and why they do what they do. And he told me that it was completely up to me to be successful with the cultural part. Thus, I should make sure I learned about the culture while doing the best job I could on the technical work. That was good advice for me.
As I moved to the other countries, I always tried to understand what factors really influenced the way people reacted to situations. I’ve learned that no matter where you live, people make rational decisions in doing what they do and it is just the environment around them that causes them to do things differently in one country than another. So I tried to learn as much of the local language as I could, I tried to understand the cultural impact of religion, the structure and impact of the government, the role of family relationships and those kinds of things. I’ve also learned there is always more than one way to do things. I didn’t try to force my standard American way of thinking in these different areas, but tried to be flexible and accommodate myself to the local conditions. In summary, I tried to appreciate what people do. Also, the longer you live in some place, the more comfortable you get, and the more willing you become to try different things.
Jackson: You mentioned about forces influencing people’s decision making in different countries. There are two powerful forces in China: “guanxi” and “mianzi”, or relationship and giving face. Are there any good stories that you can tell?
Bruce: Both of these forces are factors that are extremely important in several countries. I think Americans tend to be organized and act by sets of rules. The USA is a little bit like Germany in that respect in that people think that they can separate personal relationships from business relationships. Therefore, in the USA you can do business with somebody you really don’t like. But I think in places like China, Japan, maybe India, you have to establish relationships first, because relationships count more than organizational structure and people basically don’t want to do business with somebody that they don’t feel comfortable with. Also Americans live in a legalistic society so they try to document agreements in detail. While details are also important in China, I believe Chinese people are not quite so concerned about possible terms, as they rely more on personal relationships. Chinese believe that if have a good relationship; they can always work out issues, regardless of the terms of the agreements.
So I think if an American company plans to do business in China, it’s good for them to get to know the people in the first meeting, before doing business. It is common that the first night when businessmen arrive at the Chinese company’s location, they probably will go drinking and basically just have a great time. Business will be successfully done the next day. It’s difficult to reach a final agreement at the first meeting. For example, on one project I worked on in China with one of our JV partners, it took three or four meetings before my colleagues from our partner company started to be more open. I think that’s really typical.
“Giving faces” can also be difficult for Americans, and maybe for Germans. It is not good to embarrass people in front of others because it is really humiliating and can impact their future career. It is also humiliating to Americans, but they are kind of used to it. Americans doing work in China must choose their words carefully, even if they don’t agree. Japan is similar to China in this way. I have a story. I used to work quite closely with a talented engineer in Isuzu when GM owned a substantial part of the company. It took me about two years to establish “guanxi” with this person so we could actually have a serious discussion. If I had not known him well, when I asked a question, instead of saying no, he would say it is really difficult. That was his “mianzi” way of trying to say it is impossible, let’s just drop it. So you have to listen to the words and look at facial expressions. This is why face-to-face discussions are extremely important during cross-cultural meetings.
One more related point, in China people are very superstitious compared to Americans. They are concerned about numbers, colors, locations, etc., things Americans don’t tend to think about. So Americans would sometimes give a clock as a gift but Chinese would never want to receive it as it suggests death is coming. Also, Americans might name a product 44, but Chinese would never do that as the word for four sounds like the word for death. These beliefs do exist in Chinese culture, but not in North America.
It just takes a while to build a relationship. You’ve been in US for a while now I think what you learned here is that Americans really don’t have many really good personal friends. People here have more acquaintances they may call friends, people they may have dinner with once in a while or do some sports together, but they are not really close. In other cultures, people will have some really good friends that basically become part of their family and that a less likely to be the case in the USA.
Jackson: The media sometimes show bias on China. Did anything change your view of China after you came to China?
Bruce: As I mentioned earlier, I try to learn some things about a new country before I go. When I arrive, I look for markers of culture that stand out and they usually are the results of the cultural influences. So you start to look at these things and try to understand what they mean and I think these are the things that you didn’t know in the beginning. Some of them are simple and some of them are not so simple. It depends on your experience.
Take food for example, food types in China depend on which region they come from. I never found a restaurant in China served the Chinese food that I had in the USA. So I think I never went to a real Chinese restaurant in the USA. There is a lot of variety in how food is presented. Chinese people think the meat next to the bone is the best and having bones in one’s mouth is tasty. That is just opposite to what I learned as a child and still follow. And some of the food is extremely spicy. In my mind, the local Chinese dishes were not good or bad, but one of the differences that I understood a little bit better after I had lived in China.
Many countries have a local drink, as vodka in Russia, tequila in Mexico, and in China it is baijiu. I usually try to drink the local drink, but baijiu is beyond what I could handle. I tasted several kinds of it but I could never really drink it. Thus, one of the things that I learned is that I should not ever drink baijiu. Another thing, briefly back to food. There was always way more food served then one could ever possibly eat in a meal. My wife and I would probably eat ten percent of the food and we always felt guilty at the end of the meal because we didn’t eat more. And the last thing served is a slice of watermelon. So we could always tell it was the end of the meal, when they brought the watermelon.
Jackson: You have to pay over a certain amount. Otherwise they don’t serve it.
Importantly, there are cultural differences within China. I understood that there were minority groups in China before I went there, but I think some of the differences between Chinese people were a little greater than I had anticipated. If you go down to southern China people actually look more like Vietnamese compared to Han Chinese and in far western China there is a large Muslim population. There is a variation also in local languages in China. For example, I learned that there are no characters for the local dialect in Shanghai, Shanghaiese, which completely surprised me. Most of the countries I’ve lived in also have local dialects, and they often have different words for the same noun. But if I understood Shanghaiese correctly, you would have the same characters but different pronunciations, so for me, that was a surprise.
Jackson: You have managed employees from different backgrounds. Are there any differences in managing Chinese, American, German, or Italian employees? How about our group?
Bruce: Our group in China started out with only me and grew to 13 with a couple more open positions, at the time I returned to the USA. In addition, we had people from Korea, Australia and India in the group, so we had an international group. I didn’t really notice any differences in the management issues in China verses with engineers from other countries. I think I was fortunate in that I had hired everyone in the group. I tried to hire a certain kind of people which created a cohesive group.
My observation in most jobs that I have had is that people want certain things out of a job. They generally invested a lot of time in learning the engineering skills they need and they want to do something meaningful with those skills. My job as a leader is to provide these people with a job in which they can do something meaningful, and provide a good working environment so people feel good at work. I think people would like to have colleagues that they can be compatible with. I didn’t see anything different within our group in Shanghai.
I think there were some administrative challenges in China that were a little bit different. GM is a global company with established company policies and GM tries to apply the policies uniformly throughout the world. An example where this approach can lead to problems is in salary administration. In the USA, engineers generally receive starting salaries out of universities that are quite high, and they don’t change much with time. I can recall when I was young, I got a small raise after one year, but then I learned that new people coming into the department were making almost the same as me, even though I had more work experience. In the USA, if you can get a promotion, the increase in salary is usually less than 10-15%. In China, the starting salaries for engineering students are very low. However, after people have four to five years of experience, the salary levels can be two or three times higher than those received immediately after school graduation. In China, GM applied standards on how many people could be promoted and the maximum salary changes. While in the USA, this approach was valid, in China it made it very difficult to keep new employees more than a year or two. I think that was one of my most frustrating management issues in China.
Generally the home country headquarters’ functions, regardless of the country you are in, tend to control budgets. When you are at a remote site it is much more difficult to get the resources needed, and get the credibility for the staff to carry out the work. That is not necessarily unique in China, but if you are away from the home base, one better be prepared for a lot of argumentive discussions with your home country management.
Jackson: Were there any other challenges, for example dealing with the government, because I remember we had a big issue importing the Fuel Cell Equinox?
Bruce: It’s interesting to me that China has such a huge amount of materials exported but the government does not seem very well equipped to handle small items. As you mentioned, importing one car, or exporting one car, involves more issues than in the USA or Europe. In USA, for example, the license plates on cars are sold by states and so states like Michigan, that have a large auto industry, have what are called manufacture’s license plates that companies like GM can purchase. If one has a test car, the state allows you to drive on the roads with such license plates, even if it is an experimental vehicle. When we were bringing vehicles into China, there was no simple way of getting a license plate for them. This made even short test drives very difficult. This is an example where one needs guanxi with officials so they are helpful in resolving the issues. Currency exchange is another issue for importing parts and equipment. If you do a purchase order and if it’s in a foreign currency above a certain amount, you have to obtain a very high level approval from the government to pay the bill. Another thing in China that is difficult is that sometimes people expect you to give small gifts, or not so small gifts. But American laws prohibit American companies from bribing, even if the amount of the gift is relatively small. The USA government applies the same rules to Americans doing business outside the US. Therefore, you have to be very careful when dealing with Chinese colleagues and venders. Many Chinese were surprised when I explained these rules to them.
Jackson: But would that put GM in a bad position compared with Chinese car companies?
Bruce: It might be. But more importantly, you have to develop a longer term relationship with the people, or “guanxi”, so that the government starts understanding that you are a good company to have in the country. Generally, though issue resolution might be slow, the government will in the end approve what you’ve been asking for. With the good reputation of GM in China, we found, generally, but not 100%, that the government would support what we needed to do. If we were allowed more freedom it might make things easier, but it’s just one part of doing global business. I also think that relationships, once established, lead to trust, but you can’t buy the trust with a gift.
Jackson: You talked about it is difficult for China to export just one car, is it truly difficult, or is it because GM hasn’t established guanxi with the right person?
Bruce: Well, I think the Chinese government does not have a long history of doing international business. The Cultural Revolution ended in the 1970’s, so you are looking at maybe 40 years. The huge development in Chinese industry has occurred very quickly. During that time, the government has moved a little slower, so the current rules don’t always correctly address new issues. When you are looking at countries like the USA, Germany or the UK, they have had 100 or 150 years to establish all of these things. So, I think in a lot of cases there hasn’t been enough time for China to figure out how to do all these things. Therefore, it’s a developing situation now.
Jackson: Do you feel things are getting better?
Bruce: You learn how to do things faster than the rules change. For something like a license plate on a truck or after you’ve done something once or twice, you learn what you have to go through and who in the office you should try to talk to. Eventually, you learn how to get these things done. In that respect, experience in China is invaluable. If you look at GM China leadership and you will find that generally the people have a long period there and they have had enough time to establish relationships and build the company trust. I think you certainly want to think about longer-term assignments when you send to people to China. You want to send people that enjoy working in another culture, and you want to give them time so they can actually be effective.
Jackson: People view China as a global manufacturer, rarely a leader of innovation. So what’s the role of Chinese R&D departments in multi-country companies, like GM?
Bruce: When you start building up industry, it takes a while to get the entire infrastructure in place. I think if you go back and look at the early development of the USA and Japan after World War II, these countries started development with manufacturing, because you can buy a license to build something and with some tools and you can produce useful products. In contrast, acquiring the skills to do original product development, or the more difficult task of doing research takes a long time. I think China’s reputation is that of a manufacturer, and as I said earlier, the time period for product development has been relatively short. I think you know better than me, but my observation of people coming from Chinese universities is that their theoretical background is quite strong and they understand the scientific basis for what they are doing. However, the laboratories in universities, until very recently, have not been very well developed. Also, if you take engineering students from the USA they may have had multiple electronic devices, motorcycles or cars so they have experience in fixing things. In contrast, in China and some other developing countries most families don’t have enough money to allow for that. For this reason, it takes a little bit more time for students from China than from USA schools to get familiar with a range of technologies. Time will soon change this situation as seen by the success of Chinese people in the USA where you have got A123, Yahoo! and all these companies very successfully started by Chinese people. There’s no genetic problem for Chinese to do R&D.
I think for projects in global company R&D departments, it is more important to consider political issues than talent issues. Because there have been many reported cases where Chinese companies pretty much copied the products from other companies, many western companies are really concerned about what kind of technology they want to work on in China. The more advanced the work, the more the concern. The other issue is export controls. Some of the things like satellite navigation systems and vehicle-to-vehicle communication protocols are regarded as military technology in China and you can’t export them. Thus, this type of work is normally done outside of China.
You need to ask yourself why you would want to do the projects in China. It can be due to the material resources, like rare earth elements, which puts China in a unique position in the world. Or perhaps you are developing products for a unique Chinese market. But, you have to be careful about the projects you select due to the export controls issue just mentioned. In GM we haven’t had to deal with many of these problems so far, it’s rather the bureaucracy we talked about early on that complicates doing research. Because of all these issues, the R&D departments of a lot of companies in China focus on modification of products for the Chinese market.
Jackson: So the last two questions are for car industries. Could you please talk about what’s difference between the US and China car markets?
Bruce: American people like huge cars and Chinese people mostly buy small cars. Part of that is economic and part of that is because of their different needs. I think marketing is quite different today. In the US, most of the cars are financed or under lease. In China, a very large number of cars are purchased by cash although financing is available. Also most Chinese are buying their first cars so the used car market is just starting. In the US there are lot of cheap used cars out there each year.
Jackson: At last, could you share with us your opinion on joint ventures.
Bruce: In China, foreign companies can have two joint ventures on cars and I think two on trucks. You have to pick and choose your partners carefully, and the JV’s must be approved by the Chinese government. For example, recent news articles have said that Fuji Industries, which builds Subaru cars, has had an issue in this area. Fuji is approximately 20 percent owned by Toyota. Fuji wanted to set up a JV with Chery. But the Chinese government said Toyota already had two licenses and since Subaru is counted as a Toyota company, Fuji/Toyota couldn’t set up one more JV.
I think it’s better to look at the partner than be concerned about required JV’s. If you are operating in a different country with different rules, it is very difficult and there is a long learning period. In this case, if you can get local partner, you can learn quicker and they can help you with things. I think GM is very fortunate to have very good partners in China. They certainly are knowledgeable about the Chinese market and how to work with the government. GM brought better vehicle and manufacturing technology to the businesses. The combination of these two capabilities has led to very successful JV’s. Other companies have not been as successful, for example, Fiat. Thus, you need a partner with a shared vision that wants to combine skills. I might add that the requirement for JV’s applies to automobile companies, but not to supplier companies. In the supplier business, some companies like Bosch have elected to work with a partner while others, like Delphi, have gone alone.
Acknowledgment: Yuqing Chang contributed most of the editing to this article.