Stuck in the Slow Lane

That's good news for Zhonghua Automobile Industry Co. Last year, Beijing city authorities decreed that Zhonghua's Bullet Head car would be a recommended replacement for the bread box. (It seemed no coincidence that when Asiaweek visited the firm's offices, an official from the Taxi Management Office was hanging around.)

Zhonghua, one of the smallest of 120 car-makers in China, wants to market 30,000 Bullet Heads a year. Trouble is, the car is widely detested, especially by taxi drivers, and only 4,000 or so have sold since production started in 1994. Indeed, Zhonghua is a good example of where China's ambitions for a world-class auto industry are today: stuck in the slow lane with the signals somewhat crossed.

In a truly competitive market, Zhonghua would not even be a player. But this is China, where the pedigree of the company boss is more important than value for money. Consider Zhonghua president Tang Jinsheng, the 45-year-old son of high-ranking People's Liberation Army officers and a former tank division specialist. Now a businessman, he runs eight other companies. Tang is especially fond of Zhonghua -- after all, nothing revs up national pride like a national car program. Tang says: "My aim -- to develop the Chinese car industry -- is vital to economic development. Chinese are very smart people; we can do the same thing as the Americans or the Japanese."

One visit to the Bullet Head factory puts those words in perspective. The 1,200 workers are teenagers; most of them came straight from the fields to the factory floor with no training. Not that they need to be rocket scientists. The cars are lifted by hand -- or shoved and kicked -- from one step of the production process to the next and sit on stacks of bricks until they are fitted with wheels.

Then there is the quality factor. Thanks to the fiberglass construction, if the car is damaged it can mean replacing the entire body. One taxi driver who bought a Bullet Head visited the firm five days running, each time with a new problem. Already, repair shops are springing up nearby that specialize in Bullet Head headaches.

The hatchback is almost entirely made in China. By the end of the year, Tang vows to make it 100% domestic. Right now, the 1,000-cc engine is supplied by Nissan or Tianjin Automobile Industry Group Co., which uses Daihatsu technology. Tang hopes to build 1,300-cc and 1,600-cc motors on his own production line. This would bring the sticker price below $7,300, the level of other "family cars."

About 10 Bullet Heads are made each day -- 13 on a good one. "If you invest too much, then you have to make more cars," says Tang by way of explaining the low-tech methods. He talks dreamily about installing a mechanical assembly line complete with robotic technology in a few months. In the meantime, to keep his young charges productive, he runs the place like a boot camp -- reveille for exercises is at six a.m.

"If Princess Diana was in our car," says Han Wei, company sales manager, "she would have survived." As if to prove his point, a tour to the Bullet Head factory customarily ends with about two-dozen muscular young men trotting out in military style to the parking lot. With much gusto, they attack and beat a sample vehicle with iron bars. For a grand finale, all of them jump on the roof. The demonstration shows that the Bullet Head is a tough car. But the real test, both for the company and the industry, will come on the roads of reality.