BEIJING -- The head of r&d at Chery Automobile Co. has quit along with three other executives, potentially slowing the Chinese automaker's entry into the U.S. market.
Xu Min, who was educated in the United States and worked at Delphi Corp. and Visteon Corp., left Chery on Thursday, July 27, industry sources say. The other departing executives also have overseas degrees and experience. All four were involved in designing cars for the domestic market and for export.
Xu could not be reached for comment.
Chery suppliers say the departures were caused by a clash with locally trained engineers. Chinese automakers need engineers trained overseas to develop cars for export to the United States and Europe. But they can disrupt the companies that hire them.
"Overseas people like to manage Chery with foreign experience and style," says one supplier source. "Before the overseas Chinese came back, the local people had the real power. They don't like to lose it."
Returning Chinese tend to earn higher salaries than their local colleagues.
The departures are a setback for product development, the source says. Contracts that were negotiated by Xu but not finalized are now in limbo. The local executives are unlikely to use the same companies, the source says. New suppliers will now have to be found.
"Our company will be hurt by this change," adds the supplier source.
Two other automakers eyeing the U.S. market, Geely Automobile Holdings Group and Great Wall Motor Co., have hired returnees, as they are known.
The U.S. auto industry has many Chinese engineers who earn Ph.D.s in the United States. They are lured back to China more by the opportunity to help China's automotive industry than by the high salaries.
Still, their starting salaries are invariably much higher than a typical local salary. A high-end salary for a Chinese engineer with a Ph.D. from a local university and no international experience is about 20,000 yuan a month, or $2,500 at the current exchange rate. A returnee with a Ph.D. from a foreign university and overseas work experience can start at $6,300 a month.
Malcolm Bricklin's Visionary Vehicles LLC is working with Chery to develop cars to export to the United States. The original target for the start of exports was 2007, but developing cars that meet the stringent emissions and safety requirements for the United States market has proved tricky.
Chery engineers have said a more likely date is 2009. The recent departures may push that date out even farther.
You may e-mail Alysha Webb at [email protected]