#2: Selling Cars Where No One Drives

You can find every episode of China Life on our website or by subscribing on Apple Podcasts, Google Podcasts, or Spotify.

Transcript

Craig: Back in 1992, China only produced one million cars. That sounds like a lot until you consider that Americans purchased over thirteen million cars in that same year. So it’s curious that Michael Dunne, who was majoring in French at the University of Michigan at the time, would suddenly decide to move to China to start an automotive advisory firm. But his gamble paid off, China’s auto industry is now the largest in the world, and produced 25 million cars this year – twice as many as were produced in the United States. Michael ended up spending over two decades living and working in China and South East Asia, and is now the CEO Zozo Go, a consulting firm focused on the electric car industry based out of San Diego, California. 

From the USC US-China Institute, this is China Life. The podcast sharing the stories of people living and working in China. I’m your host, Craig Stubing. 

[Music]

Craig: Growing up in Michigan, sort of you know the center of the car universe, were you immediately just fascinated with cars as a kid?

Michael: Yes, in particular because my father, Jim Dunn, was the inventor of an art called Cars by Photography. So as a kid, I would accompany him on these hunts around the Detroit area where he would look for if you've seen on the roads camouflaged cars and take photos of it and these are cars that were going to be introduced two three four years out but he made a name for himself by capturing these cars on film starting way back in the 60s and 70s and as a young kid and even as a teenager I eventually became his wing man, the driver and as he shot the photos I drove the getaway car and so there's a couple things going on there. One was I got to know cars really well first hand we test drove so many different kinds of cars but more importantly I got the feeling of what it's like to be on the front lines doing reconnaissance - being in the hunt looking for something new something different the frontier, and that was really really made an impression on me like there's a big world out there there's lots to discover and uncover and I'm right in the middle of the action with my dad doing this in the car industry.

Craig: Despite that, when you went to the University of Michigan you majored in French was that’s kind of off the beaten path right.

Michael: Well it definitely sounds like it now as we look in retrospect but at the time my parents were interested in us traveling - we took seven kids, they take coast-to-coast in motor homes as a kid and then as teenagers we all went to Europe, and the culture of the family was go and explore see firsthand learn for yourself and so part of that was we all were encouraged to study a second language and well French was it when I was going to school. You learned French or Spanish and I flipped a coin it landed on French in my junior year I was in Aix-en-Provence and my professor there said, “Hey you sound like a guy who likes to focus on the future with all of France but France is not the future the future is in Asia and it's probably China.” So I said well that's what I'm gonna do I'm gonna go back to my senior year I'm gonna learn Chinese. Why not? And from almost the first day in class I said my goodness this is what I've been looking for I really love this language and I love the history associated with it and it just took me by storm. So I made a major pivot about to graduate and shifted to studying Chinese through the my senior year I stayed the summer after my senior year to take intensive Chinese - stayed the following year to take third and fourth year Chinese before in 1986 going to China for the first time.

Craig: Did you know anything about China at the time? 

Michael: Less than zero. But there were headlines in the paper about you know in the late seventies was this thing called normalization and the University of Michigan happen to have a pretty prestigious highly respected China Center, but it wasn't long before I thought wow I've stumbled upon something phenomenal here. This country's about to open up, it’s the frontier of our lifetimes, no one I know has been there. I can be a trail-- I can be out there, the intrepid, and discover something that no one else knows about. That was really the appeal the draw.

Craig: So I guess you learning about China in your like masters program, did you feel like you knew different you knew better and you were going do things the Michael Dunn way and it was going be different.

Michael: That's exactly the sentiment. And how inspiring, oh I know how to speak the language we're in modern times, China wants to and this is important China seems to want to embrace the West. Now in retrospect I think China wanted to catch up but on its own terms and there's a massive difference between the two. So I like those before me I bought into the whole image of, hey no one's really conquered been able to affect change in China, I could be the first. I could be one of the first to really really have an impact on this massive country with this long history.

Craig: How do your impressions of China changed - like what did you know about the country now that you know you hadn't just a few years before.

Michael: It was not until I got into China proper that I began to understand the realities of and the complexity of China so for those of us who have studied Chinese history, Chinese language, there is a tendency in the United States I'd say to paint a beautiful picture of China at its very best. You know almost Tang/Song Dynasty eras of culture and temples and poetry and music and just a really really attractive social picture of society. Then when I arrived in China for the first time, still a graduate student, I went directly to Chongqing which was a heavy industry, the air was filled with pollution, crowded noisy tough place where everyone was sort of surviving. I said this couldn't be further away from my expectations. Where? How do reconcile this? Wait, hang on this is not the China that I was, read about and taught about in the great textbooks. This is a different China so it was a real wake-up call for me. It was like okay which one is the real China. 

Craig: At what point did you realize you weren't going be able to change the whole country yourself.

Michael: One of the first impressions that anybody stepping into China is the sheer, the sheer humanity I mean you arrive at the airport and there are layers and layers of people holding signs and noise and chaos and bodies everywhere and it's overwhelming. If you say oh my goodness there's an ocean of people before me and I'm just one little minnow in this ocean - and so that first impression really hit oh whoa okay maybe this won't be oh so simple after all. That was that was the first thing. 

Craig: Did you ever think like I've made a huge mistake? 

Michael: No question. There were days of doubt and what am I doing here - my family would visit and they sort of would look at me and say are you sure you know what you're doing? Keep in mind incomes at that time 1986 no one had any money. 

Craig: So when you landed in China for the first time what was your plan? How are you going make money? How are you going to survive? 

Michael: [Laughs] It's so tempting in retrospect to say I had this splendid plan all mapped out. The truth was I knew that I really enjoyed learning the language and I liked being in an environment with a lot of uncertainty and things up in the air and possibility. And that those two were enough to take me to China and then I said okay I've got to make some a living how do I make some income any wait a second I know something about cars grew up around them and as incomes rise in this country I got to believe that people are going start buying cars. And when they do, automakers from all over the world will converge here and when they step inside they'll be completely baffled by this place. Different language, different culture, different values different priorities. How will they be able to adjust and with that in mind I set up my first company 1990 called Automotive Resources Asia working with global automakers and their suppliers to step into China and avoid the landmines. Try to get into business without making too many mistakes. 

Craig: What did the streets look like in 1990s?

Michael: Very few cars, you had bicycles. When I remember my very first day in China I landed at the airport in Chengdu. You know you always remember your first impression of a new country and stepping off the plane and into the airport what I remembered was it was quiet. Now you would never believe that if you went to China today but things were moving very slowly. It was quiet. There were bicycles on the street. Very few motorized vehicles, the occasional truck, some buses, but by and large the streets belong to pedestrians and the bicycles. That was it. 

Craig: I guess how long were you trying to figure out this auto industry that hadn't really developed yet before you know you got your first lead? 

Michael: That took a while. I was there for a full six months and I remember it was at Christmas Eve that I decided to call home and I explained the situation to my dad and he goes I know you'll work it out and he hung up the phone. As life happens, totally unexpected and out of the blue I got a call just a few weeks later from the head of Chrysler China and they had a very special situation. Beijing Jeep joint venture between Chrysler and the city of Beijing had as part of their joint venture agreement that Chrysler would export a certain number of Jeeps somewhere outside of China to earn foreign exchange foreign currency which is extremely important at that time. Trouble was the jeeps being made in Beijing were welcome nowhere no country in the world wanted these sketchily put together iffy jeeps made in Beijing by the state enterprise where people taking naps every other hour. So long story short United Nations Cambodia needed transportation. I helped to broker that deal and after that I became a mini hero in the eyes of Chrysler. Oh we were really in a jam this guy's resourceful he can help us out and then we started to build a business with Chrysler and then Chrysler talked to people at Ford and said there's this guy in Asia have you heard about him he's got a company called and that's how things got started. 

Craig: I imagine that the the business you were learning in the University of Michigan it's very different than how things operate in China. 

Michael: Totally different and I remember one of the first weeks after forming the company and setting up the office in Beijing my number one staffer Sophia said, okay it's Monday our first our plan for this week the first thing we need to do is visit the government agencies that are responsible for the auto industry we should also visit the people at the tax Bureau and probably a good idea to pay a visit to the fire station down the block to the fire department. okay okay what planet am I on Sophia these have nothing to do with business we need to find our clients and deliver services I don't have time to see the government. And she said no no, you don't Understand, the government is our market. Once we stall that market then we can go and take care of our customers. So this was complete lunacy to be like a different language. What? And so I went along half-heartedly just to say alright I understand. When in Rome do as the Romans but didn't really buy into it. Over time I came to understand and this is important learning for anybody doing business in China there are two markets. You've got to establish relationships with the officials who are in your industry. It's a relationship wherein you want them to know that you're there and who you are so that later anything comes up they go yeah yeah I've met that company I know about them they’re okay. That's really sounds probably for Western ears a little bit unusual or strange but it's part and parcel of winning in China. 

Craig: Do you remember what that first meeting was like? 

Michael: I do. The very first meeting was with the tax department and the meeting didn't take place at the tax office no no we don't meet them at the tax office we meet them at the restaurant. And okay we meet them at the restaurant. Well the tax officials said her favorite restaurant was a seafood restaurant just up the block here not too far away so ok seafood restaurant and do we have an agenda for the meeting? no no no no agenda for the meeting. We're going to eat together and she's probably going eat a lot and probably going take away a lot for her family and her friends. Okay but when do we talk business like what do we need to get done with the tax department. And my colleague said just eat. So I'm looking for some deliverables all right we're going to eat and then do we get a document, do we sign up for something are we in good standing and they patiently looked at me and said we're going to eat with her. That's all, trust it it's going to be fine. So that's my first lesson in how you start to build, go eat, go eat. The entire lunch not a single word was spoken about our company, about tax policy about business at all, it was just enjoying a good meal together, done. 

Craig: Do you feel like what you learned about business in your master's program prepared you for China or do you think you just kind of had to learn as you go. 

Michael: [Laughs] There was a two parts to the program so there's the business side and then of course in there’s a masters in Chinese history. The master in Chinese history definitely helped prepare me for Chinese culture and getting especially in the language once here you have a window into how people are thinking once you know the language so that was enormously helpful. And the business side there's some business wisdom that is universal so I wouldn't recall things that I learned from the business class but keep in mind you know Michigan MBA in 1990 that's all about getting people ready to work for GM Ford and Chrysler, end of story. 

Craig: So it's just kind of funny that it was really learning Chinese history and Chinese language that prepared you more for being able to do business than actual business school. 

Michael: Exactly, and the argument could still be made today I would say it's still true if you ask me do you want to have a one year education in Chinese, Chinese history, Chinese language or do you want one year in business your job is going be to go to start a company in China. I’d take the Chinese training for sure and learn the business as I go. 

Craig: So when you came back to the U.S. three years ago did you kind of have to readjust how to do business now doing it in the US. 

Michael: Definitely, definitely, that's arguably a tougher adjustment because I didn't expect to need to adjust but I was in Asia for so long that I got accustomed to Asian ways and specifically in the U.S. things move very fast and there you know for lack of a better word I think it's a transaction oriented society and business is definitely transaction first. Get the job get the business done and then oh by the way how's your family and everything else. So I had grown accustom of the Asian way where you get to know someone first, connect on a personal level and then ease into business they couldn't be more different.

Craig: Are there things you learn doing business in China that helps you now back in the U.S.? 

Michael: I think that's always tough to measure but I got to believe I have to believe that I learned things from the Chinese for sure. One is that they say that personal relationship still matters a lot. I find that a big part of my work here is establishing those good solid trusting relationships and without that time in Asia I don't know that I would have arrived there. 

Craig: But do you think that there's anything specific how you changed being in China and coming back. Did you come back to the U.S. three years ago different than the way you went there because of China? 

Michael: mmm my time in Asia most of my adult life was spent there definitely shaped me. How has is it shaped me? Probably patience. I'm a hard-charging MBA from Michigan ready to get things done, let's go. Patience is such a what in American culture is kind of a flimsy, not a strength. It's like oh you have to be patient? Bullshit. I don't want to be patient, I want to get things done. So it's almost the antithesis of our culture and when you say, hey when you step into Asia it's really important to be patient someone could easily interpret that as, ah this guy's gone native, he lost his roots, he doesn't know what's going on. What do you mean be patient. Why? What for? Let's move. 

Craig: America's a very young country. We do things very quick and you know we don't have that kind of cultural history to kind of like give us a longer perspective on things. 

Michael: Right right that's really gets to the heart of the matter I'm reminded as you speak about a meeting just a couple months ago with one of our clients, American company and a Chinese company, tech company, and not long into the meeting the American side was disenchanted. Just said, I don't think this meeting’s going to go the way we want it to go and they kind of hinted okay let's you know we're gonna wrap this up. Kind of turned to me and go let's just wrap this up and I said I kind of gave him a look like we don't want to wrap this up right now I know it's not good but don't don't don't do something abrupt. It's not going to pay well later. It’s not going to payoff later. Be patient, see it through and you never know this actually what happened the meeting pivoted and it got a lot better I didn't know that would happen but my younger self would have said yeah I agree let's just get out of here. But somehow in Asia you want to hang around be respectful and it pays off later. 

Craig: If you were to go back in time and give one piece of advice to yourself in 1986 what would that be. 

Michael: Get ready for a marathon not a sprint. Take your time to build relationships with people. It's like planting seeds and those relationships will grow and blossom and later on they'll bear a lot of fruit don't be in a hurry to make an impact right away it won't work. Be methodical, be patient, be persevering and things will come your way. That's the Asian rhythm that's the Asian rhythm that's how things work. 

[Music]

Craig: China life is a production of the USC US-China Institute. If you haven't yet, subscribe to China Life wherever you listen a podcast to get all of our shows downloaded onto your listening device automatically. While you're there leave us a review, it really helps other people find out about the show. To learn more about the USC US-China Institute and browse our vast collection of resources such as historical and contemporary documents, China based events around the U.S., author interviews, seminars for Educators, and much more visit our website at china.usc.edu. I'm Craig Stubing and this is China-Life.

[Music]