【正文】 ions of legend. Something like, say, the day Henry Ford separated the manufacture of a valve into 21 steps or when Akio Morita made Sony’s first length of recording tape in a frying pan. By the early 1980s, the Qingdao General Refrigerator Factory had bee a typical example of a business in the last stages of socialist decay: heavy debt, grumpy workers, shoddy products, service from hell. One day in August an unhappy customer came to the work site to plain of having bought a dud refrigerator—no small plaint in those days, when only two or three of every 1000 urban Chinese households owned such a luxury. Unit Two China39。s Haier Power — Antony Paul Watched by CEO Zhang Ruimin, then 36, the customer rejected dozens of imperfect refrigerators. Finally he settled on one and left, declaring himself satisfied. Zhang wasn’t. He went through his warehouse, rechecking the refrigerators. “Of the 400 or so there, I found 76 that I didn’t want released to the market,”he recalls. He had the rejects placed in an open space. Then he called his staff of some 600 together, showed them the refrigerators, and passed around a sledgehammer. “Destroy them!”he ordered. The workers hesitated, but Zhang insisted. “If we pass these 76 for sale,” he told them, “we’ll be continuing a mistake that has all but bankrupted our pany.” Soon piles of shattered metal littered the warehouse floor. Unit Two China39。s Haier Power — Antony Paul The pany that Zhang brought back from the dead is a “collective enterprise,”one of some 25 million quasisocialist mercial entities owned in principle by the workers but supervised by local bureaucracies and Communist Party officials. Though the problems of such small or middling, often citybased firms are not exactly the same as those of China’s vast, gangrenous stateowned heavy enterprises, both have suffered from a lack of accountability and poor management. Unit Two China39。s Haier Power — Antony Paul Sovietstyle mand structure for local industry. With an eye on the future, he also absorbed, discreetly, Western and Japanese management texts. His chance to put his gleanings into practice came unexpectedly in 1984. As China opened to the West, foreign panies sought out Chinese factories to do business with. The Qingdao refrigerator factory, Haier’s own Website concedes, was then merely a “row of shabby buildings containing several lathes”with a production capacity of 84 units a month. And it was losing money: $179000 in 1984. LiebherrHaushaltsgerate, a leading German whitegoods manufacturer, offered to sell the factory modern refrigeratormaking technology. The city accepted. Pessimistic about the factory’s ability to absorb the technology, the managing director resigned. Zhang, by then vice manager of the municipality’s Household Appliances Division, was given the job. Unit Two China39。s Haier Power — Antony Paul appears to be a mix of foreign management practices and Chinese nationalism—with a whiff or two of Maoistera selfcriticism. Zha