Abstract

"China's First Foreign Factory Director: A German Manager and the Reform of State-Owned Enterprises in 1980s China"

Juanjuan Peng, Georgia Southern University (jpeng@georgiasouthern.edu)

Werner Gerich, a retired German engineer, became a national sensation in 1984 as the People’s Republic of China’s first foreign factory director, overseeing the Wuhan Diesel Engine Factory. The official narrative, widely disseminated by state media, hailed his two-year tenure as a triumph of early reform, citing improved quality control and pioneering salary incentives that revitalized a struggling State-Owned Enterprise (SOE). Interviews with former factory employees, however, reveal a very different story. According to them, the plant was already a top performer before Mr. Gerich was hired, and his foreign policies were unpopular and ultimately ineffective, leading to his compelled departure. This divergence raises a compelling historical puzzle: which version of the story more accurately reflects the chaotic reality of 1980s SOE management under reform transformation, and what political, social, and cultural factors drove the creation and maintenance of these conflicting memories?
To resolve this puzzle, this research develops a new methodological framework for post-reform Chinese business history that integrates the historical study of collective memories with economic analysis of the reform process. By focusing on this pivotal, transnational case, the paper addresses three key issues: it first compares the official and workers’ narratives to determine whose account of factory performance under the contract responsibility system aligns with economic data; second, it explores the dynamic interplay between central and local governments in shaping the factory's destiny and the state-recognized memory after Gerich’s departure; and finally, it examines manager-employee relations and shop-floor dynamics to understand how managerial decisions shaped workers’ experiences during Gerich’s tenure, thus influencing their version of the story. In short, this historical study of collective memory will use a cultural and social history approach to deepen our understanding of the early stage of China’s SOE reform and assess its performance.