Jack Perkowski, CEO of ASIMCO, Describes Building a Billion-Dollar Business in China
For 20 years, Jack Perkowski YC ’70 steadily moved up the ranks on Wall Street. He ran Paine Webber’s investment banking business before becoming a partner in a leveraged buyout firm with John Kluge, the telecommunications mogul. By just about any standard, his career had been a wild success. “But in August of 1990, I decided I wanted to do something different,” he told an audience at SOM on March 26. “I wanted to create a franchise — to identify a trend and put together an organization to get ahead of the trend. I was looking for something long-term, something I’d do the rest of my career.”
Perkowski, who spoke as part of the Leaders Forum lecture series, decided to take a look at Asia, which was not just populous, but young. With an average age in the 20s, the youth of Asia beckoned to Perkowski. “Older populations save money,” he said. “Younger populations spend money. I figured that qualified as a long-term trend.” That Perkowski would land in China seems obvious in 2008. But at the time, he said most people he knew were more interested in the Southeast Asia “tiger” economies, or in Japan. He went to Hong Kong at the end of 1991 and met with the acquaintances of a Chinese friend. “Most people who looked like me in Hong Kong were not looking at China,” he said. “It was too early. China lacked infrastructure. But talking to the friends of my Chinese friend I was struck by how they’d spend five minutes talking about Hong Kong, and then 25 minutes talking about mainland China. If the smart people were looking at China, it was an easy choice.”
Perkowski joked that he went to China unencumbered by any knowledge of the country. But he quickly launched an exhaustive tour of the Chinese countryside, hitting 140 factories in 30 cities, where he was treated to local hospitality on a daily basis. “I ate every part of every animal,” he said. With two employees and $150 million in capital, Perkowski launched ASIMCO Technologies in 1993, determined to take advantage of China’s nascent but expanding automotive market by becoming a major supplier of parts. He chronicled the rise of ASIMCO from start-up to industry leader in his new book, Managing the Dragon: How I'm Building a Billion-Dollar Business in China. It won’t be long, he said, before the Chinese auto industry surpasses the American auto sector. Since China joined the WTO in 2001, he said, the country has produced one million more vehicles each year. “And we’re only getting started,” he said. “The Chinese auto industry has a long way to go.”
ASIMCO, he said, is as close to a Chinese company as possible under the circumstances. It’s headquartered in Beijing, nearly all 12,000 employees are Chinese, and 85% of sales are in China. Perkowski, who grew up in Pittsburgh, said having a Chinese workforce is crucial to the company’s long-term success. By empowering local management teams to make decisions, ASIMCO is much better attuned to the subtleties of the Chinese culture and market, he said. As he looks toward the future, Perkowski is extremely bullish. Not only is the Chinese economy growing at impressive rates year after year, he said there’s still an enormous chunk of the population — up to 900 million people — still waiting to get a taste of prosperity. “As big as you think the Chinese market is,” he said, “it’s bigger.”
It’s among this population, Perkowski said, that the next great Chinese economic revolution will occur. At the moment, he said, they’re being served by companies making sub-par, but very cheap, versions of the vehicles, electronics, and textiles that garner so much attention from the West. He pointed to his own company, which dominates the market for high-quality piston rings, to illustrate what’s going on. Five years ago there were about 150 companies producing piston rings of varying quality. Today that number is around 400, with most selling cheaper versions to the bulk of the Chinese population. (Globally, he said, about five companies dominate the market.) It is here, in this massive, unseen market, that Perkowski believes the “final battleground for global leadership” will be fought. “The companies that are successful there, in the world’s largest market, will have a calling card for the rest of the world,” he said.
Listen to or watch Jack Perkowski’s talk.