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Cummins, a U.S.-owned company, has completely crossed the barriers of language, geography and culture in China, and has grown into a localized company with cultural roots.
Recently, the engine technology center established by Cummins in cooperation with Dongfeng Company was completed in Wuhan.
People in the industry have noticed that Cummins is a relatively special company in investing in foreign companies in China. This is particularly manifested in many aspects: the management of the company has an authentic Chinese name; all the foreign employees of the Chinese company speak Chinese fluently; and an independent diesel engine company in the Car company joint venture; in the engine industry, the first cooperation with China to establish a technology center......
One person commented on the “Financial Times†reporter’s report that this company from the United States in China “has completely crossed the barriers of language, region and culture and has grown into a culturally-rooted local company.â€
Difficult choice
At the beginning of August, Tim Solso, chairman and chief executive officer of Cummins Inc., stepped aside from other tasks and made a special trip to attend the inauguration ceremony of the joint venture technology center.
People saw Su Zhiqiang's satisfied smile. Few people know that when deciding to set up a technology center with Dongfeng, the Cummins board, headed by him, has experienced too many difficult psychological decisions.
They can't be unconcerned. People in the industry all know that a joint venture to build a technology center means that both partners must participate in research and development and share technological achievements. This means that Cummins will have to introduce its own core technology, and Chinese partners will have the opportunity to learn and digest these technologies, and ultimately master the core technology.
This is a taboo for the vast majority of multinational corporations. When many foreign companies have joint ventures with China, they do not want Chinese partners to truly master their core technologies. In order to completely monopolize technology and maximize profits, many companies have invested heavily in controlling their own joint ventures in China and even completely independent.
Although with the deepening of the Chinese market, some multinational companies have already broken this boundary and established joint venture R&D centers in China. However, many R&D centers are still only nominal cooperation, either with limited R&D or foreign personnel. As the main body, it is difficult for Chinese employees to have access to core technologies.
However, after careful consideration, Cummins board members eventually broke through the psychological barriers. They are fully aware that the current and unprecedented competition in the Chinese market requires them to have more in-depth actions. Cooperation with Chinese partners in depth is of great significance to the development of Cummins in China in the future.
What Su Zhiqiang did not think of was that this cooperation even led Dongfeng Cummins to set up four firsts in China's engine industry: the first Sino-foreign joint venture's professional R&D center; the first joint venture developed a company with independent intellectual property rights; The first engine developed by the joint venture and put into operation globally; for the first time, the Chinese assumes R&D work in the Chinese and foreign engine joint ventures.
This technology center, known as the East Asia R&D Center, has become Cummins’ second largest R&D institution in the world.
Cultural localization
More than one boss of a Sino-foreign equity joint venture has sent such sentiments: The biggest risk of a joint venture is cultural non-convergence.
Sino-foreign joint ventures are a blend of two or more cultures. Once they fail to integrate, they will be transferred to the north and south, losing their dominant voice, and ultimately leading to business decisions or operations. At the same time, if the foreign corporate culture cannot be rooted in the soil of local culture, it will be hard to read and copy, or the results will be disobedient.
In this respect, Dongfeng Company, which has a deep accumulation of state-owned traditions, has had some lessons. There have also been many stories with its partners. Among them, the representative one is Dongfeng, a joint venture with Nissan. Nissan was a Japanese company with a typical Oriental culture of furniture. After cooperating with Dongfeng Company, it took three years to run. The two parties completed the complete docking of cultural concepts and management concepts.
Zhu Fushou believes that Dongfeng and Cummins have not experienced major twists and turns in their culture. Since this American company came to China, it quickly integrated into Chinese culture and deeply rooted its cultural philosophy in China.
In October 2005, Cummins moved its global board of directors to China. This is the first time the company has held a board of directors outside the United States for 15 years. While in China, members of the Cummins Board of Directors dressed in Tang suits, ate Chinese food, issued Chinese business cards, and even held a ceremony in which banners were stamped with Chinese seals. So that someone on the spot evaluation, if you only look at the table with the Chinese name written, no one can think of this is a U.S. multinational company in the ceremony.
A researcher analyzes that when a successful company manager runs a joint venture company, he must be aware of the soft and humanistic environment such as the quality of the managers, values, and ethnic habits. The success of Cummins in China stems largely from its practical integration with China and its integration with Chinese culture.
Mutually supportive cooperation
Cummins has made great strides in China in the past two years. Its turnover in China exceeded US$1 billion for two consecutive years. China has also become Cummins’ largest and fastest growing overseas market.
However, the rhythm of rapid development is also mixed with questions about Cummins’ China strategy. In particular, after the joint venture between Cummins and Shaanxi Auto, they also reached an agreement with Futian. Some people questioned the prospects of Cummins' cooperation with Dongfeng.
At the inauguration ceremony of the joint venture technology center, there were reporters throwing this question at Cummins executives. Maybe I did not expect to encounter such a difficult problem, Cummins (China) Investment Co., Ltd. chairman and CEO Hua Jinsheng momentarily, actually did not know how to answer.
Zhu Fushou, general manager of Dongfeng Motor Co., Ltd. solved for him. He openly admitted to the media: "Dongfeng Company understands Cummins's new investment projects in China very well. It also understands its cooperation with Beiqi Foton, and this cooperation may not be of any benefit to the east wind." Hearing such an answer, The Cummins executives here are relieved because they do not want Dongfeng to have any misunderstandings. Like Zhu Fushou’s idea, even if there are several joint ventures in China, Cummins still hopes Dongfeng can provide the largest market support for it, just as Dongfeng hopes to have a major engine factory such as Dongfeng Cummins support it.
Dongfeng Cummins is not Cummins' first joint venture in China, but it is its largest automotive engine user. Since the joint venture in 1996, Dongfeng Cummins has become the core competitiveness of Dongfeng Commercial Vehicles with its well-known brands and advanced technologies. Some users even use the Dongfeng Commercial Vehicles as “Cumminsâ€.
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