Authors: Tim Clissold
I was shocked and angry but I knew that we had to react cautiously. After several anxious discussions, we decided to stall for time. Li Wei and Ai Jian went down to Ningshan to commence phantom
negotiations. We had to put Shi to sleep and buy some time to think.
We were in a hole. We had eighteen million stuck up in the hills, in the clutches of someone who was by then in open revolt. I wasn’t sure what to do, but I knew that we couldn’t let
this become another Harbin. With all the other factory directors watching from the sidelines, there was no way we could buckle in to Shi’s demands. It would lead to similar claims from all
our other factories across China and then we would have a revolution on our hands. I needed a man of steel, a man of unbending obstinacy, tough enough, maybe even reckless enough, to take on Shi on
his own ground.
I met Chang Longwei through an agent. She sent me a copy of a two-page article from
Time
magazine, about the reform of China’s state-owned enterprises up in the
northern rust-belt city of Shenyang. A local bus factory had been chosen as the example of a success story. It was called the Jinbei Bus Factory.
In the early 1990s, after years of massive losses, Jinbei had been taken over by a Hong Kong group and, just after Deng’s Southern Tour, it became the first Chinese company ever to list in
New York. The bus factory used the money from the Stock Exchange to buy new technology from Toyota and its new minibus had grabbed over half the Chinese market in three years. The man behind the
turnaround, so the article said, was Chang Longwei.
Chang was born in Beijing in 1946. In his late teens, he had been sent to Datong to work in a state-owned gearbox factory. Datong was in Shanxi Province, not so far from the place where Ai Jian
had worked with the peasants. I had been there when I had been studying at the university in Beijing. I remember an overnight train journey that seemed to move several hundred miles northwest and
fifty years backwards. Outside the train station there were rows of people squatting around red plastic buckets and eating. When I got close, I saw that they were gnawing on rabbit heads. Datong is
in China’s interior coal-mining region so not only was it poor, it was black. Coal dust had worked itself into every pore of every face. It clung to buildings and windows, it hung in the
stairwells and clogged the drains. Chang had emerged from the gearbox factory after twenty years with iron in his soul.
The
Time
article included a picture of Chang over the caption: ‘New Revolutionary at his Jinbei Factory.’ It said that ‘when the plant, burdened with seven thousand
workers making shoddy cars no one could afford, foundered in the early 1990s, a Hong Kong company took over. It went out looking for a mainland manager and found Chang.’ Chang was quoted as
saying: ‘Management is the key. Subject to the Board, I can make all the decisions. I don’t always have to listen to the Government.’ Workers were shocked when he downgraded the
first lazy mechanic. ‘If you don’t work hard here,’ he said, ‘you can work hard finding another job.’ His managers also had to shape up and he sent them on training
courses at Toyota. The article reported that corruption still plagued the Jinbei plant, but also said that Chang was determined to stamp it out. ‘If I hear of it, I fire them,’ he said,
‘no matter if they are a Party member or whoever. The highest cadres can’t be corrupt, because if they are the rest are.’ When he was asked about the Party, he replied, ‘Oh,
our work has no relation to all that!’
I didn’t take to Chang on first meeting. He was like the Chinese equivalent of a northern mill-owner and seemed to treat me with an earthy disregard despite the fact that I was meant to be
interviewing him. Gradually I became more impressed. I could detect an immense strength of will in his rugged features and lumbering gait. He seemed an extraordinary mixture of obstinacy blended
with a thirst for learning new things. More importantly Jinbei was a well-known company, a success story and the biggest problem with removing Shi was coming up with someone who would be remotely
credible as his replacement. We needed a real heavyweight. Although Chang was clearly a handful, I thought that he was just the man we needed at Ningshan. So we drew him in, and finally he agreed
to go up to the mountain valley. It was quite a coup.
The stage was set. We held a planning session in Beijing in great secrecy. As at Harbin, our contracts allowed us to dismiss Shi if we could hold a board meeting, but for that
to happen Shi would have to attend personally. If his suspicions were aroused, he might refuse to come.
In the middle of November, we formed a team of eight to take over the factory. Chang had persuaded a few loyal colleagues to move over from Jinbei, including an engineer called Yang Bai. She was
thirty-six when she came down to Beijing to meet with me. During the interview, I asked her whether she thought that a woman might have particular difficulties managing workers in a place where
traditions remained strong. She looked at me scornfully and asked whether I really thought that a bus factory in Shenyang was so easy. I liked the reply and she joined the next week.
The team carefully laid plans for seizing control of bank accounts, stabilizing workers and lobbying the local government once Shi was out. The whole operation required meticulous attention to
detail. We drafted several different notices for posting on the factory gates, each one anticipating different reactions from Shi: one in case he agreed to resign, one in case we had to fire him.
We even hired our own transport in case Shi ordered his drivers to refuse to take us to the factory – or, worse, to take us off in the opposite direction. Finally the date for a board meeting
was set. It was 2 December 1998.
We had insisted on holding the board meeting in Hangzhou in order to avoid confronting Shi on his home ground. We had to pull him off his mountain perch. After a very bumpy
flight, we arrived with our nerves frayed. The air around Hangzhou was extremely turbulent and the aircraft shook violently before going into an unusually steep descent immediately prior to
landing.
Characteristically, Shi came alone. I remember catching sight of him in the restaurant the night before the meeting and feeling an irrational twinge of sympathy for this solitary and complex
figure. In spite of what he was trying to do to us I could not completely suppress my admiration for what he had built.
The meeting was held the following day in a little side room containing a slightly greasy table and a few cracked teacups. Pat said that he hadn’t slept all night but I felt curiously calm
now that the moment had arrived after so much planning. Shi arrived early and we chatted away about nothing in particular before the others arrived and we got down to business.
Shi started with a report about the state of the business, blaming the poor results on a general downturn in the rubber industry and high import prices. No one was listening, but a tape machine
turned silently on the table in front of us. When we came to the restructuring of the business that Shi had proposed, the mood changed abruptly. Pat said that we had thought about his ideas but
that we had made an agreement in 1994 and we should stick to it. We weren’t going to be pushed out. The first signs of puzzlement came across Shi’s face but he didn’t react except
to light up another cigarette. Pat went on but Shi soon lost patience. He repeated the same threats that we’d heard in Beijing. There followed a long silence as we stared at each other across
the table.
Eventually Shi broke the quiet and asked us what we would like to do. Pat said that Shi should resign to run his own business and that we should find someone else to run our factory. Shi would
just remain a shareholder. There was absolutely no reaction. He just sat for what seemed like an hour, wreathed in smoke, silently brooding. Eventually rousing himself from his thoughts, he asked
whether we had a replacement candidate in mind. This was the first time that Chang’s name was mentioned. Again Shi sat absolutely motionless, his hand in front of his mouth, eyes narrowed as
he drew slowly and silently on his cigarette. He asked where Chang was from and when we told him that he had been the General Manager of Jinbei, Shi seemed to crumple slightly. Then he once more
sat absolutely motionless for what seemed like an eternity with smoke curling up around him.
Shi eventually hit back with a comment that Jinbei was a badly run company and that we were taking too much of a risk. By then he was stalling for time as his mind raced through a thousand
calculations. After another five minutes, we gave him a simple choice: resign or be sacked. He extracted the odd concession and signed his resignation letter. We agreed to meet again the next day
up in the factory to make a joint announcement to the workforce and so the meeting concluded.
We subsequently discovered that, after effectively signing his own dismissal notice, Shi had been driven at lightning speed back to the factory, screaming down his mobile phone. His black
Mercedes flew through the villages and fields as our wretched minibus laboured up hills and we checked the maps. As we drove into Zhongxi Village at dusk with Chang and his team, we saw that Shi
had gutted the factory. The dormitories, which would normally have been alive with the sound of the evening’s cooking under way, were dark and silent. There was nobody there. The entire
management team had been ripped out and sent down the valley. My heart sank. That night, just before I went to sleep, I was called with the news that the boilers on the other side of the river had
been busy all afternoon. It looked as though a large number of books and ledgers had been burned.
Next day at an early breakfast, the electricity suddenly failed. All the workshops and houses throughout the entire village were stranded in the watery grey daylight of an overcast dawn. At
eight o’clock the workers arrived, but by now the word was out and everyone stood in doorways, gawping and gossiping. Notices had appeared all over the factory overnight announcing a four-day
holiday and the workers gradually drifted away.
Pat and I wandered over to the big moulding workshop on the opposite bank of the river where I had seen the cranes at work on my first visit four years before. It was dark and empty like the
rest of the factory. Our prospects looked bleak. No electricity, an absent management and the workers sent home. As we walked past the deserted workshops along empty paths, great snowflakes began
to fall mournfully from the leaden skies.
After the initial shock we rallied. There was no way we were going down without a fight. The first thing to do was to demand our electricity back. Talking to the Village Committee would be a
waste of time. They had been in Shi’s pocket for years after he had paid for some medical expenses for Madame Ye, the Committee Secretary. We went for the higher authority, the Government of
Ningshan, which was located at the railhead some thirty miles down the valley. Pat headed off to dig out the Party Secretary whilst I stayed at the factory and ransacked the offices for the
chops.
I was to get to know the Party Secretary of Ningshan County quite well in the following two years. Secretary Wu was a rarity in the Chinese political system in that, to the
extent possible within that world of constant intrigue, he appeared to say what he thought. In a tight spot, Chinese officials often disappeared from the scene for urgent meetings that were mostly
imaginary. Although the events up in Zhongxi Village could become a real hot potato for the local government, Secretary Wu made no attempt to hide. The removal of Shi, a prominent local businessman
with friends in the Provincial Government, was a sensitive issue. He was a powerful People’s Deputy well connected in the provincial capital of Hefei. But on the other hand the joint venture
accounted for a good proportion of local tax revenues, so he couldn’t risk a fight with the foreigners. Wu was in a difficult position and he knew it.
Unusually tall for a Chinese, Secretary Wu had a presence about him that was only slightly diminished by hair that absolutely refused to sit flat and an enormously long fingernail – which
seemed to be reserved for ear-scraping – on the little finger of his left hand. He poured some tea and listened politely to Pat’s explanations. Deftly sidestepping the real issue, he
replied that the choice of the manager of any business was up to the Board so he couldn’t comment on the specifics. However, as the leader of the local Party Committee, he had a duty to
protect foreign investors. Therefore we could have our electricity back.
Back in Zhongxi Village, an agitated crowd of several hundred had gathered outside the gates of the factory, milling around among the potholes and craning their necks to read the notices
announcing Shi’s resignation. Reactions varied from angry disbelief to barely concealed glee but the underlying anxiety was palpable.
Shi had disappeared and throughout the day his brooding presence loomed in the background as we tore through the offices in search of the chops. Eventually we found them, and, by close of play,
we had at least secured the bank accounts, although we found out later that several million
renminbi
had been wired out within a few hours of the board meeting.
At dinner that evening, as we sat glumly over our chopsticks and mulled over the situation by the light of a few candles, the electricity suddenly came back on. This development was greeted with
a huge cheer and shouts for more beer. Maybe things weren’t quite so bleak. Later someone called to ask if a delegation from Shi could come to negotiate with us, but in a moment of bravado we
replied that there wasn’t anything to negotiate. We went to bed with our spirits lifted.
Early the next morning Shi himself called to ask for a meeting with Pat. Shi arrived at the factory looking tired. He mumbled that the change had come as a great shock and some of his people had
overreacted, but now he wanted to get back to business. By the time we left, the managers and workers were slowly drifting back. Round One had gone to us.
Over the coming weeks, an uneasy stand-off prevailed. Shi and Chang developed an immediate loathing for each other but Chang appeared to be in control despite the sullen stares
and disobedience of the locals as Shi lurked in the shadows, plotting revenge. On the surface all was normal, but underneath tempers were frayed.