Introduction to our Podcast, Managing The Dragon: Demystifying China
In this podcast, Jack talks about his book Managing The Dragon, describes ASIMCO Technologies, the Beijing-based automotive components company that he founded in 1994, and discusses why he decided to leave Wall Street for the Great Wall in the early nineties.
***
Excerpt: “When I made my first trip to the country in August 1992, I could barely spell the word ‘China.’ I went to Yale University and then the Harvard Business School, and in thinking back on it, I can’t think of a single course at either school that mentioned China.” Listen or continue reading to find out more.
***
EPISODE TRANSCRIPT:
Doug: Jack, for those listeners who haven’t read the book, tell us a little bit about it.
Jack: What I tried to do in the book is to answer three questions. If I’m on an airplane, and I sit next to someone I don’t know, who then turns to me and asks what I do, I have to think long and hard about what I answer. Because, if I say that I live in China, the next question will be, “How long have you been there?” When I say 25 years, all of a sudden, their curiosity is piqued.
The first question is: “How in the world did you get to China? Why did you go to China in the first place?” And then the second question they’ll ask is: “You’ve been there 25 years, what have you learned in that 25 years?” And then finally, everyone is curious as to where China is headed due to the importance that China has now assumed globally—economically, politically and militarily. Everybody wants to know how all of this will play out.
So what I tried to do—the book’s not organized that way, but the first, roughly, one-third of the book talks about how I got from Wall Street to the Great Wall. The second talks about some of the important lessons that I’ve learned—lessons like the lower cost perspective in China, the country’s two markets, decentralization and building a management team. And finally, in the last third of the book, I tried to make some predictions about what I think is going to happen going forward.
Doug: Why did you write the book in the first place?
Jack: My journey through China has been quite unique. I’m probably one of the only foreigners who has gone to China as an individual, not as a part of a company, and set up a major business. As I’ve spoken to various groups around the world and told them my story and how I got to China, many would say, “Jack, you should write a book.” I always thought they were just trying to be nice and to humor me, so I never took those suggestions too seriously. But, then I happened to meet Tom Friedman. He was writing his book, The World is Flat, and if you pick up your copy of the book, beginning on page 114, there is a chapter on China, and a good part is about me and ASIMCO, the company that I founded.
When Tom and I were going through his notes in preparation for the final draft of the book, we met at a conference we were both speaking at, and as we walked into a reception after going through his notes, Tom said, “Jack, you know, there is a book in you.” I said, “Really?” He said, “Yeah. Who else knows more about China? You should write a book.”
So, when Tom Friedman said that, I figured I should write a book. That was the initial impetus. Some of the other, deeper reasons why I wrote the book, is that my journey has been unique, and a lot of people have been helpful to me along the way. I thought the book was one way to help others who might be thinking about China. And, I enjoy writing. I enjoy relaying what I’ve learned.
Doug: For listeners who aren’t familiar with ASIMCO, can you tell us a little bit about it?
Jack: ASIMCO is a company that I founded in February, 1994 that is focused on the automotive components industry. At the time, China was trying to build its auto industry. In 1993, China passed an industrial policy which named autos as one of its seven pillar industries. Within autos, China knew that it couldn’t build good autos unless it had a good supply base, and the foreign companies at that time were slow in coming. China passed a policy which said that in automotive components, foreign investors or foreign companies could own majority. Of course, today, there are many industries where a foreign company, a foreign individual, can own majority, or even 100% of their operation in China, but in 1993, auto components was the only industry in China where this could be done.
The idea for ASIMCO was to do a roll up of the auto components industry. China said that I could have majority, and so the idea was to identify a dozen or so of the leading automotive components companies in China— companies that were number one or two in their product area—put them under one umbrella, and then put in common management and quality systems and build a global company out of what we could find in China.
That’s what we ultimately did.
In order to test whether this could actually be done, I recruited two individuals to work for me in January, 1993. One was a British accountant who spoke Chinese, and the other was a Chinese national. Together, the three of us visited over a hundred factories in 40 cities all over China in the first nine months of 1993. At the end of that trip, I concluded that we could, in fact, do what I was planning to do—a roll up of the industry.
I then went back to my colleagues on Wall Street and raised about $150 million in six weeks over the Christmas holidays. In February, 1994, I went back to China and founded ASIMCO. Over the next two years, from 1994 to roughly 1996, we put together a company by buying majority ownership interests in about a dozen or so leading suppliers in China. If you see a truck or a bus in China today, it’s running on a diesel engine. Chances are that 20% to 25% of the parts for that diesel engine could come from an ASIMCO factory. We did blocks and heads, piston rings, camshafts, fuel systems, starters and alternators, compressors—all the key components that go into that engine.
As we put the company together, we became a very important auto supplier in China. We pioneered the development of local management and were three times named one of the 10 Best Employers in China. In 2008, China Auto News named me one of the 30 outstanding entrepreneurs in China’s auto industry. Not just for the one year, but for the whole 30 years of economic reform. I was the only foreigner on the list—the rest were all Chinese entrepreneurs.
To answer your question, ASIMCO is an auto components company with a very unique background. The company was one of the first, if not the first, group companies in the industry that had a key market share in one of the leading segments of the auto industry— commercial vehicles, trucks and buses.
Doug: Was there anything in your background that led you to China?
Jack: When I made my first trip to China in August, 1992, I could barely spell “China.” After I graduated from business school, I went to work for Paine Webber, which is now part of UBS. My last job at Paine Webber was running the entire investment banking department. So, at roughly age 40 in 1990, I had what most people would consider a pretty good first career, but it wasn’t enough for me. I wanted to do something completely different for a second career. I wanted to do something where we could identify a trend and get out ahead of it. It could have been any industry, any part of the world—it didn’t really make any difference. The only qualification was it had to be a long term trend, because I told myself that whatever I do next, I’m going to do for the rest of my working career, which I hope to be a long time.
That got me to Asia. I stumbled upon a very fundamental demographic, which is that about one-half of the world’s population lives in Asia, and the average age is in the low twenties. Everyone knows that young people spend money. So, I thought that, as the younger populations of Asia started spending money—getting married, buying and furnishing apartments, having kids and buying cars—the economic development of Asia could be one of the big stories of the 21st century.
That seemed to me to qualify as the long term trend that I was looking for. I made my first trip to Asia in the fall of 1990; spent about six weeks, mostly in Hong Kong; and liked what I saw. I then made a whole series of trips to Asia; moved to Hong Kong at the end of 1991 and talked to the overseas Chinese businessmen, who would spend five minutes talking about their very big business in Hong Kong, and 25 talking about what they were trying to do in China.
I’m a pretty simple person. I figured that, if the smartest, most knowledgeable people in Asia were going to China, then my research was done. That’s how I narrowed down Asia to China. I made my first trip to China in August, 1992, and then started traveling around to figure out what I would do in China.
Doug: Where did you get your practical, common sense approach to doing business in China?
Jack: It is something that I learned. When I went into investment banking after business school, the one thing that I always criticized myself for was the fact that I had spent so much time looking at the trees that I didn’t really understand the forest as well as I should have.
When I decided to embark on my second career, part of the reason why I was looking for that trend was that I wanted to start from the forest and work down to the tree level. When you do that, you need to think through and look at everything logically. I started with Asia, got it down to China, and then in China, had to look at what was happening in the country.
I didn’t know anything about China when I first went there, and I learned very early that China changes very quickly. What happened in China ten years ago is very important, but that’s not nearly as important as what happened last year. And that’s not nearly as important as what’s happening today. I learned very early that the only thing that you can trust about China is what you experience firsthand. So, personal investigation became a very important part of what I was doing. I would say that the approach that I developed—-because I was starting from a very top level, very big picture, and then working down in a country that most people describe as being very mysterious and very hard to understand—worked.
I learned to think about what I was seeing and hearing and then draw my own conclusions, and not to just blindly accept the conclusions that others might have reached.
Doug: Okay. What are you trying to accomplish with these podcasts?
Jack: We can talk a little bit about my background, and I think it’s important for listeners to understand where I came from. I’ve encouraged people to read the book, because we do cover all of this in detail. But, the podcasts will focus on those second two questions. What have we learned? So, there will be a core set of podcasts that will cover some of the key lessons. But then, in answer to the question about where China is headed, we will cover topical issues. I try to do this in my blog—to be topical—but the podcast will provide another medium.

In this podcast, Jack talks about his book Managing The Dragon, describes ASIMCO Technologies, the Beijing-based automotive components company that he founded in 1994, and discusses why he decided to leave Wall Street for the Great Wall in the early nineties.
***
Excerpt: “When I made my first trip to the country in August 1992, I could barely spell the word ‘China.’ I went to Yale University and then the Harvard Business School, and in thinking back on it, I can’t think of a single course at either school that mentioned China.” Listen or continue reading to find out more.
***
EPISODE TRANSCRIPT:
Doug: Jack, for those listeners who haven’t read the book, tell us a little bit about it.
Jack: What I tried to do in the book is to answer three questions. If I’m on an airplane, and I sit next to someone I don’t know, who then turns to me and asks what I do, I have to think long and hard about what I answer. Because, if I say that I live in China, the next question will be, “How long have you been there?” When I say 25 years, all of a sudden, their curiosity is piqued.
The first question is: “How in the world did you get to China? Why did you go to China in the first place?” And then the second question they’ll ask is: “You’ve been there 25 years, what have you learned in that 25 years?” And then finally, everyone is curious as to where China is headed due to the importance that China has now assumed globally—economically, politically and militarily. Everybody wants to know how all of this will play out.
So what I tried to do—the book’s not organized that way, but the first, roughly, one-third of the book talks about how I got from Wall Street to the Great Wall. The second talks about some of the important lessons that I’ve learned—lessons like the lower cost perspective in China, the country’s two markets, decentralization and building a management team. And finally, in the last third of the book, I tried to make some predictions about what I think is going to happen going forward.
Doug: Why did you write the book in the first place?
Jack: My journey through China has been quite unique. I’m probably one of the only foreigners who has gone to China as an individual, not as a part of a company, and set up a major business. As I’ve spoken to various groups around the world and told them my story and how I got to China, many would say, “Jack, you should write a book.” I always thought they were just trying to be nice and to humor me, so I never took those suggestions too seriously. But, then I happened to meet Tom Friedman. He was writing his book, The World is Flat, and if you pick up your copy of the book, beginning on page 114, there is a chapter on China, and a good part is about me and ASIMCO, the company that I founded.
When Tom and I were going through his notes in preparation for the final draft of the book, we met at a conference we were both speaking at, and as we walked into a reception after going through his notes, Tom said, “Jack, you know, there is a book in you.” I said, “Really?” He said, “Yeah. Who else knows more about China? You should write a book.”
So, when Tom Friedman said that, I figured I should write a book. That was the initial impetus. Some of the other, deeper reasons why I wrote the book, is that my journey has been unique, and a lot of people have been helpful to me along the way. I thought the book was one way to help others who might be thinking about China. And, I enjoy writing. I enjoy relaying what I’ve learned.
Doug: For listeners who aren’t familiar with ASIMCO, can you tell us a little bit about it?
Jack: ASIMCO is a company that I founded in February, 1994 that is focused on the automotive components industry. At the time, China was trying to build its auto industry. In 1993, China passed an industrial policy which named autos as one of its seven pillar industries. Within autos, China knew that it couldn’t build good autos unless it had a good supply base, and the foreign companies at that time were slow in coming. China passed a policy which said that in automotive components, foreign investors or foreign companies could own majority. Of course, today, there are many industries where a foreign company, a foreign individual, can own majority, or even 100% of their operation in China, but in 1993, auto components was the only industry in China where this could be done.
The idea for ASIMCO was to do a roll up of the auto components industry. China said that I could have majority, and so the idea was to identify a dozen or so of the leading automotive components companies in China— companies that were number one or two in their product area—put them under one umbrella, and then put in common management and quality systems and build a global company out of what we could find in China.
That’s what we ultimately did.
In order to test whether this could actually be done, I recruited two individuals to work for me in January, 1993. One was a British accountant who spoke Chinese, and the other was a Chinese national. Together, the three of us visited over a hundred factories in 40 cities all over China in the first nine months of 1993. At the end of that trip, I concluded that we could, in fact, do what I was planning to do—a roll up of the industry.
I then went back to my colleagues on Wall Street and raised about $150 million in six weeks over the Christmas holidays. In February, 1994, I went back to China and founded ASIMCO. Over the next two years, from 1994 to roughly 1996, we put together a company by buying majority ownership interests in about a dozen or so leading suppliers in China. If you see a truck or a bus in China today, it’s running on a diesel engine. Chances are that 20% to 25% of the parts for that diesel engine could come from an ASIMCO factory. We did blocks and heads, piston rings, camshafts, fuel systems, starters and alternators, compressors—all the key components that go into that engine.
As we put the company together, we became a very important auto supplier in China. We pioneered the development of local management and were three times named one of the 10 Best Employers in China. In 2008, China Auto News named me one of the 30 outstanding entrepreneurs in China’s auto industry. Not just for the one year, but for the whole 30 years of economic reform. I was the only foreigner on the list—the rest were all Chinese entrepreneurs.
To answer your question, ASIMCO is an auto components company with a very unique background. The company was one of the first, if not the first, group companies in the industry that had a key market share in one of the leading segments of the auto industry— commercial vehicles, trucks and buses.
Doug: Was there anything in your background that led you to China?
Jack: When I made my first trip to China in August, 1992, I could barely spell “China.” After I graduated from business school, I went to work for Paine Webber, which is now part of UBS. My last job at Paine Webber was running the entire investment banking department. So, at roughly age 40 in 1990, I had what most people would consider a pretty good first career, but it wasn’t enough for me. I wanted to do something completely different for a second career. I wanted to do something where we could identify a trend and get out ahead of it. It could have been any industry, any part of the world—it didn’t really make any difference. The only qualification was it had to be a long term trend, because I told myself that whatever I do next, I’m going to do for the rest of my working career, which I hope to be a long time.
That got me to Asia. I stumbled upon a very fundamental demographic, which is that about one-half of the world’s population lives in Asia, and the average age is in the low twenties. Everyone knows that young people spend money. So, I thought that, as the younger populations of Asia started spending money—getting married, buying and furnishing apartments, having kids and buying cars—the economic development of Asia could be one of the big stories of the 21st century.
That seemed to me to qualify as the long term trend that I was looking for. I made my first trip to Asia in the fall of 1990; spent about six weeks, mostly in Hong Kong; and liked what I saw. I then made a whole series of trips to Asia; moved to Hong Kong at the end of 1991 and talked to the overseas Chinese businessmen, who would spend five minutes talking about their very big business in Hong Kong, and 25 talking about what they were trying to do in China.
I’m a pretty simple person. I figured that, if the smartest, most knowledgeable people in Asia were going to China, then my research was done. That’s how I narrowed down Asia to China. I made my first trip to China in August, 1992, and then started traveling around to figure out what I would do in China.
Doug: Where did you get your practical, common sense approach to doing business in China?
Jack: It is something that I learned. When I went into investment banking after business school, the one thing that I always criticized myself for was the fact that I had spent so much time looking at the trees that I didn’t really understand the forest as well as I should have.
When I decided to embark on my second career, part of the reason why I was looking for that trend was that I wanted to start from the forest and work down to the tree level. When you do that, you need to think through and look at everything logically. I started with Asia, got it down to China, and then in China, had to look at what was happening in the country.
I didn’t know anything about China when I first went there, and I learned very early that China changes very quickly. What happened in China ten years ago is very important, but that’s not nearly as important as what happened last year. And that’s not nearly as important as what’s happening today. I learned very early that the only thing that you can trust about China is what you experience firsthand. So, personal investigation became a very important part of what I was doing. I would say that the approach that I developed—-because I was starting from a very top level, very big picture, and then working down in a country that most people describe as being very mysterious and very hard to understand—worked.
I learned to think about what I was seeing and hearing and then draw my own conclusions, and not to just blindly accept the conclusions that others might have reached.
Doug: Okay. What are you trying to accomplish with these podcasts?
Jack: We can talk a little bit about my background, and I think it’s important for listeners to understand where I came from. I’ve encouraged people to read the book, because we do cover all of this in detail. But, the podcasts will focus on those second two questions. What have we learned? So, there will be a core set of podcasts that will cover some of the key lessons. But then, in answer to the question about where China is headed, we will cover topical issues. I try to do this in my blog—to be topical—but the podcast will provide another medium.