【正文】 nd Zhang therefore a city employee. (At the same time, it is listed on the Shanghai exchange and would like to be listed overseas: Chinese capitalism can be curious.) The pany’s anizational chart lists a category, “Party and Masses System,” not to be found outside China. There are subheads for the Propaganda Department, the Party Office, and the Armed Department. The city government is a constant factor. “We work in a mixed economy,” Zhang says. “You have to have three eyes: one on the market, one on the workers, and one on policy.” The larger point is that Haier’s success shows that even within these constraints, it is possible to resuscitate collective and stateowned enterprises. Unit Two China39。attack in the West.” When Zhang was in his 20s, schools were closed for several years because of the Cultural Revolution. He spent much of the period in solitary reading and slowly rising through the Qingdao municipal administration, then a Unit Two China39。s Haier Power — Antony Paul The early months were a manager’s nightmare. That first winter the factory had no money for heating coal: His workers burned wood stripped from the factory’s window frames. Nepotism was rife, production spasmodic, quality laughable. Staff members spent much of their time rubbernecking at funerals in a nearby crematorium. But by then China’s agricultural reforms had made it possible for farming cooperatives to accumulate cash reserves. With loans from farming friends on Qingdao’s outskirts, Zhang paid workers some of the back pay. His most popular move was the purchase of a bus. The workers lived some distance from the factory, and getting to and from work was a heavy burden. A bus was a luxury and a promise of Unit Two China39。s Haier Power — Antony Paul Other than a technology cooperation agreement, which is scheduled to conclude in 2022, the Liebherr connection ended in 1994. Haier had simply outgrown the relationship. It no longer needed to buy German equipment—in fact, it was selling its own manufacturing technology to foreign panies. Last year, for example, it sold appliance technology to Spain. But the group’s name is a reminder of the link :“Haier” is a Chinese phoic approximation of “Liebherr.” The Haier turnaround is a case study of the art—and is used as such at Harvard Business School. There were two major strategies: expansion and management. First, the Haier style. A visitor to the 120acre Haier Industrial Park in suburban Qingdao finds an assemblyline culture that Unit Two China39。 seiton (arrange tools in the order of use)。 seiketsu (keep yourself clean)。s Haier Power — Antony Paul mistake must stand on a painted spot on the workroom floor in full view of his work mates. Workers who fail to reform may be criticized in the pany newsletter or fined or, after several warnings, fired, a final step formerly all but unheard of in China. To those who plain that the system is too difficult, an executive sniffs, “The market has no tears.” A look at the ubiquitous wall poster