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Leadership change is a practical choice for Dongfeng Motor and FAW

FAW is in need of a new leader to guide the company through a difficult time. SAIC as the top performer in automobile sales is not a centrally administered state-owned company. Chang’an Automobile Group is a relative young company in comparison. Neither of the two seems to be appropriate for selection of a top executive to run FAW.

Zhu Yanfeng, deputy secretary of Jilin Provincial Party Committee is an option because he was formerly president of FAW. But his FAW connection may complicate the ongoing anti-corruption campaign at the country’s oldest automotive manufacturing company.

A few years back, struggling Nissan needed an outsider Carlos Ghosn to start a painful but effective company reform, and that saved it from its imminent death. Similarly, an outsider seems to be a necessary choice for FAW at this special time of its history.

Currently, large state-owned automotive corporations face fierce competitions as much as any other OEMs. In addition, they have to fulfill quotes set by the State Assets Supervision and Administration Commission (SASAC). It will be too much of a task for a man to run FAW coming out of another industry. Therefore, transferring the head of the second largest state-owned Chinese OEM Dongfeng Motor Corp. to FAW seems a logical move.

Under China’s current administrative scheme, the central government is unlikely to transfer a leader from a local company to FAW which is directly administered by the State Council, especially considering the fact that FAW had been China’s top automaker for many years.

Moreover, Dongfeng started as China’s Second Automobile Works and was built by FAW. Deep down, the two companies share the same DNA in business culture. This swap of two top leaders at FAW and Dongfeng would make the leadership transition smoother.

However, for Xu Ping, the new FAW head, many challenges await. The current FAW corporate structure has proven to be beyond salvation. Xu has only limited time in trying to build a new company system, turn FAW around and create a sustainable developing platform for his successor.

On the other hand, Zhu Yanfeng’s new job at Dongfeng is relative easier. Over the years, Dongfeng has survived market competition and accumulated enough experience through cooperation with multiple numbers of international OEMs. More importantly, though working with multinational partners, it has trained and formed a solid management team.

Now Dongfeng sits comfortably at the second place in China’s auto market. The gap between Dongfeng and SAIC is just as big as the cushion between Dongfeng and the market No. 3. If Zhu can grow Dongfeng’s Chinese brands and elevate its international business, it will not only benefit Dongfeng, but also a dream comes true for Zhu himself.

(Rewrite by Kevin Wang based on author’s blog on

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