Before 2002, the names of Brilliance China, its chairman Yang Rong and the Zhonghua sedan were growing increasingly popular, as the company grew explosively through a series of dazzling business deals and investment masterminded by Yang and the introduction of
But in 2002, Brilliance China¡¯s road to great success suddenly changed course as the assets of the company were taken over by the
Today, Brilliance China is overshadowed by latecomers Chery and Geely, which are proudly holding the banner as pioneers of
The era of Yang Rong
The founder of the Brilliance China Automobile Group, Yang Rong teamed up with Shenyang Jinbei in 1991 to set up Brilliance Jinbei. Since then, he followed an innovative management strategy that combined automobile manufacturing, business ventures and infrastructure investment.
Yang¡¯s automobile projects included the Jinbei passenger van, Jinbei-GM SUV, Zhongxing pick-up, Sanjiang-Renault Kangoo and Zhonghua sedan.
Of all of these products, the Zhonghua sedan was Yang¡¯s favorite, being the first independently designed car in
The first Zhonghua sedan rolled off the assembly line in December 2000 with a Mitsubishi engine produced at a local joint venture. Not happy with the engine, Yang turned to BMW for help and was referred to MG Rover.
Brilliance and Rover reached an agreement to establish a joint venture in Ningbo of Zhejiang Province to produce the Zhonghua brand cars using Rover technology. The solution was ideal for Yang, because it would significantly upgrade the quality of his brainchild, the Zhonghua, without stamping it with a foreign brand.
But not everyone shared his enthusiasm. To the Liaoning Provincial government and the city of
With support from the central government, the Liaoning Provincial authorities started to look into Yang Rong¡¯s assets and declared that those assets belonged to the government.
Yang Rong fled to the
Su Qiang and the “four guardians”
The four guardians, handpicked by Yang during his tenure at Brilliance China, Wu Xiao¡¯an, Su Qiang, Hong Xing and He Tao, continued to hold key positions in the company after Yang¡¯s departure. It was obvious that the Liaoning Provincial government did not want to jeopardize the company¡¯s operations by making a complete management change. The four guardians stayed on, believing that they would be fulfilling their duties as ¡°professional managers.¡±
¡°Brilliance will become a significant automobile group in
In sharp contrast to Su¡¯s grandiose plan, the profit of Brilliance China decreased drastically from ¥900 million in 2001 to ¥48.6 million in 2004.
In taking over control of Brilliance China, the Brilliance Group Holding Co., Ltd. was established by order of the provincial government and Yang Baoshan, assistant to the governor, was appointed chairman. Thereafter, the assets formerly controlled by Yang Rong, which totaled 39.446 percent of the shares of Brilliance China, were transferred to the
To keep the ¡°four guardians¡± in their management positions at Brilliance China, Brilliance Jinbei and BMW-Brilliance, Yang Baoshan promised them 80 to 90 million shares each in the new company, worth between 100 and 200 million
In the meantime, investment projects made by Yang Rong were shut down one by one. Joint venture plans with MG Rover were aborted and the Sanjiang-Renault project in
Seeing that they were unable to control the destiny of Brilliance China, the four guardians sold their shares in Brilliance in 2003 and 2004 and three of them, including Su Qiang, resigned in late 2004.
Not long afterwards, the Liaoning Provincial government announced Yang Baoshan¡¯s resignation, Brilliance¡¯s sales continued to decline and the Zhonghua sedan operated at a loss.
The three paths for Lin Xiaogang
Only days after Su Qiang¡¯s resignation, Lin Xiaogang, former vice president of the Shenyang Aircraft Corp., took over the role of president and chairman of the Brilliance Group. Earlier this year, Brilliance Jinbei¡¯s vice president and long-term executive, Liu Zhigang, was appointed president of the company.
The question remains as to whether this new management team headed by Lin Xiaogang will be able to make a turn-around for Brilliance and its car assembly businesses. And there are probably three scenarios facing the Shenyang-based company.
The first is to rejuvenate under the new management. ¡°My first goal is to stop the decline in sales,¡± said Lin Xiaogang to the public after his new appointment. However, sales in the first half of 2005 of the Zhonghua sedan and the Jinbei Haice minivan continued to decline, down by 45 and 11 percent respectively over the same period in 2004.
The second scenario would be a merger into a large automobile group in
The third scenario is the return of Yang Rong. ¡°If I had the opportunity to return to Brilliance,¡± Yang Rong said in a telephone interview, ¡°I think that would be a win-win situation.¡±
Rewritten by Alfred Tian based on the author¡¯s article published in Zhongguo Qiyejia (