Book Review: Managing the Dragon

Managing the Dragon provides very good insights into what was needed in the 90s to bring a successful fund into China to build a world-class Chinese automotive components company.

The author, Jack Perkowski, started out as a successful Wall Street investment banker. After twenty years, he took an interest in China and moved his family, where he focused on raising funds to build a Chinese automotive components manufacturer, ASIMCO.

When he went to China in the early 90s, the Chinese government was having trouble finding foreign investors for the auto parts industry, and was willing to give away foreign majority ownership. Seeing the potential of the industry, and Chinese government support, he decided to make his move, raising Wall Street capital while negotiating with Chinese partners to get started. Together with his team, he was able to make things happen, and now has a successful auto components company in China.

Aside from Perkowski being generally very smart, several things come through in the book:

• He was keenly aware that there were different ways to do things in China, and he did not try to force down only one vision “because that’s the way that it’s done in America”
• He did not try to negotiate from a superior position, but instead negotiated as an equal partner committed to China’s long-term growth
• He has a curious mind and is always willing to learn
• He and his family now live happily in China, which in the eyes of the Chinese government and many Chinese, shows his commitment to the country’s development

Perkowski shows that China is really not that mysterious, but it takes time to learn and understand how it works. If one is willing to make that investment, then one day, you will get a good return on your investment. Along with Jim Rogers, Jack Perkowski comes across as an investor in China who gets it.

To get a good view of what it was like doing the deals on the ground for Perkowski, you would be well-advised to read Mr. China: A Memoir.

If there is only one warning I would make, it is that many of the strategies and scenarios Perkowski outlines work well with highly capitalized manufacturing businesses. He had an advantage in dealing with Chinese officials because he had $150 million to invest. For smaller investors say, in the service sector, it would be quite different. Also, after joining the WTO in 2001, Chinese regulations have opened up considerably for non-Chinese investors. As for joint ventures, very few companies consider them anymore, so they are mostly off the table.