Presidential Change Blurs Ford China’s Outlook

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“Farewell.” On the afternoon of October 26, Shen Yingquan, president of Changan ford Mazda Corporation (Changan Ford for short), sent such a message to the reporter. Due to the reporter’s insistence, Shen Yingquan stated frankly that he is going to depart from the post as president of Changan Ford.

Leaving aside the possible reasons, Shen’s departure has marked one important end of the developing process of Ford business in china. Shen is the last senior administrator from Taiwan in the business system of Ford in China, after Cheng Meiwei, the former president of Ford (China) and Xu Guozhen, the former vice president. His departure means that Ford business in mainland China will officially drop its Taiwan characteristics completely.

Subsequently, the reporter learned from Changan Ford that the successor of Shen is Marin Burela, director of global business in charge of compact developing in Ford automobiles. What kind of changes will the arrival of the new president bring to Changan Ford, now faced with serious challenges in China?

Track of Shen Yingquan

“President Shen’s departure is just a normal retirement!” On Oct. 26, Zeng Jianming, Public Relations Manager of Changan Ford, told the reporter that, Shen Yingquan will work until December 31. “In the following months, President Shen will continue his management in Changan Ford on the normal working process.”

Shen Yingquan was born in Tainan, Taiwan, 1950. He is right 60 years old in 2010.

While working in the Ford system, Shen experienced various alternations among different roles such as engineering, technical, marketing and other positions. In January 2007, he was transferred from president in office in Ford Lio Ho Motor Company in Taiwan to take over the position as president in Changan Ford. He has gained the respect and recognition from partners and working staff within the Changan Ford Company, with his humble working style. Zou Wenchao, former vice executive president of Changan Ford and present vice president of China Changan Automobile Group, worked with Shen for three years, during which the two cooperated harmoniously and make Ford go through the financial crisis successfully in China.

Just one year as president of Changan Ford, Shen encountered the financial crisis while the auto market in China was also faced with risks. However, Shen, who worked in Ford Lio Ho Motor Company in Taiwan and handled Asian financial crisis, considered this crisis as a chance for Changan Ford to realize bigger achievement in China.

In 2008, Shen applied the system of quality control procedures, which had achieved remarkable results in North America market, to Changan Ford and enhanced the aftermarket service. In addition, he also made drastic reforms in marketing strategy in Changan Ford, for example, he categorically decided to slow down the construction of dealers’ network in several large cities including Shanghai, Beijing, Guangzhou, etc., with the aim to prevent the losses of dealers due to the overdevelopment of the network. When the sales of Mondeo slowed down, Shen made the marketing strategy as focusing on service car market for Mondeo. Based on the series of strategic adjustments by Shen, in 2009, Changan Ford achieved 48% growth of sales and in the three quarters of 2010, Changan Ford Mazda still keeps a double-digit growth of sales.

“We are grateful for Shen’s great contributions to Ford during these years.” Joe Hinrichs, president of Ford in Asia Pacific and Africa area, praises Shen Yingquan.

Rotation in Ford

For Changan Ford, Shen’s departure might just be a normal management change; but for Ford, it marks an end for a 12-year history for Taiwanese executives to take important positions in Ford Company in mainland China.

Since Cheng Meiwei took the position as president and CEO of Ford (China) in January 1998, Xu Guozhen and Shen Yingquan have come to the mainland from Taiwan in turn. By 2007, Cheng was chairman and CEO of Ford (China), and Xu was vice president of Ford (China), and Shen was president of Changan Ford. Thus these three men are called Taiwan Trio from Ford in mainland China

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The formation of the Taiwan Trio pattern is closely related with the rapid development of Ford Lio Ho in Taiwan. Ford Lio Ho, founded in 1972, is a joint venture company by Ford Motor Company and Taiwan Lioho Group. After the establishment, Ford Lio Ho rapidly developed into the largest car maker in Taiwan, with an annual sale accounting for a fifth share of Taiwan auto market. Xu Guozhen once told reporters that Ford Lio Ho in Taiwan has actually become the global talents tank for Ford Company, “Ford often sent people here to different places all over the world, especially for the newly opened mainland market in China, it is shown even more clearly.”

However, from the end of 2008, Ford has gradually started its adjustment for the Taiwan Trio. At the end of 2008, Xu was transferred to Ford headquarters; in April 2009, Ford announced that Cheng’s position as chairman and CEO of Ford (China) was replaced by Robert Graziano. In the back of the series of appointments, it lies the collision of different management strategies between Ford headquarters and Taiwanese executives.

It is known that, as Ford’s market share in China has not improved too much over the years and the gap with its competitors even gets increased, all these have resulted in dissatisfaction from top administrators in Ford towards their business in China. However, Taiwanese executives blame the relatively slow development of business in China to the rigid conservative strategy of Ford. Actually since 2006, Cheng has begun to urge the Ford headquarters to increase investment in China and build new factories earlier. But this proposal has not been approved by the headquarters until the second half of 2009. Up to now, Ford’s conservative strategy has not changed too much, which makes the existence of Taiwanese executives seem to be somewhat out of tune with that strategy. Therefore, it is inevitable for Ford to choose more trustworthy American executives to regain its control in China.

New Challenges

From January 1, 2011, Marin Burela will formally serve as president of Changan Ford. Before being appointed as president of Changan Ford, he served as director of Ford global compact product line and led the team to research and develop Ford global compact portfolio, including the Ford Fiesta. In response to this point, someone from Ford (China) said that, Ford now especially stress the compact strategy. “During the term, Marin Burela is likely to strengthen the Ford’s competitive advantages and further expand its share in compact market in China.”

But so far, due to the weak desire for compact cars by the Chinese consumers, successful case rarely meets the launch of compact cars into Chinese market by foreign brands. Except for Volkswagen’s Golf, the specific sales of the Toyota Yaris, Hyundai’s Accent, GM’s Excelle and Nissan’s March, have not bring any surprise to the auto industry.

In addition, due to the rapid development of SUV market in mainland China, Shen has expressed his hope that Ford SUV product should achieve production in mainland as soon as possible for numerous times. But in the occasion of his imminent departure, Ford SUV, the production program for Ford SUV in China is still remote. “SUV’s absence will make Ford more disadvantageous to keep its competition position in the auto market of China.” Jia Xinguang, a well-known auto industry analyst believed. This problem will soon be transferred to Marin Burela to search any solution.

Another tough issue encounters Marin Burela is how to solve the increasingly complex joint venture relationship.

In the end of 2008, Ford implemented the “ONE FORD” strategy. Since then, it has been reducing its own Mazda stock. Recently, Ford announced that it is ready to continue to sell its currently held Mazda shares. At present, Ford holds 11% of stock in Mazda and this time Ford prepares to sell half of the stock it holds now in order to thoroughly abandon its position as Mazda’s largest shareholder. Meanwhile, Mazda and Changan companies have begun to actively plan a new joint venture company.

It is known that, in the strategy of Mazda and Changan, the newly formed company will firstly use the production capacity of Changan Ford in the initial phase. How to consult with Mazda and Changan companies on the allocation of production capacity in Nanjing plant of Changan Ford and other issues, will be closely related with the follow-up market performance of Ford Fiesta and other models produced in Nanjing plant.

In addition, after the establishment of China Changan Automotive Group in November 2009, Changan’s has got more voices in the matter of joint venture. Currently, Changan Ford has made a lot of demands in the output of R & D technology. At the same time, due to Ford’s reluctance to launch a joint venture company’s own brand, Changan Ford Automotive Group has begun to put more pressure on Ford. With the strong joint venture partner, it will be easier for Ford to expand its business in the Chinese market. But it is also obvious that more challenges are in front of Marin Burela for his ability to adapt to the new joint venture partnership.