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The visionary in China

The visionary in China

Carl Hahn, former CEO of the Volkswagen Group, brought the Volkswagen brand to China in the 1980s. By creating the automotive industry China, he worked with Volkswagen to fuel the country’s economic and social development. For his dedication to the country, China Newsweek has named Carl Hahn “Person of the Year.”

When Professor Carl Horst Hahn (92) walks onto the stage of the Diaoyutai State Guesthouse in Beijing on Saturday, he will add another honor to the long list of tributes that he has received in his life. During a career that spans nearly 70 years, his résumé includes many different career stops, awards and memberships. The photos, prizes and inscriptions in his Wolfsburg office impressively document his life’s work: Images of international personalities like Pope John Paul II, tennis legend Steffi Graf, Soviet reformer Mikhail Gorbachev and Chinese leaders cover the walls. Family photos of his wife, Marisa, and their four children fill the gaps in-between.

Professor Carl Hahn is “Person of the Year” in China

The former CEO Professor Carl Hahn is being honored as “Person of the Year” for his work in China

In the 1980s, Hahn laid the foundation for the success of the company in China while he served as CEO of the Volkswagen Group – and for the long-term success of the entire Group as well. As a partner who helped establish the automotive industry in China, Volkswagen shaped the economic and social development of the country in the decades that followed like no other car manufacturer. China’s transformation into an economic powerhouse was made possible by the country’s policies of reform and opening that were introduced 40 years ago. To mark this 40th anniversary in 2018, the Chinese magazine China Newsweek is honoring 40 personalities for the services they provided during China’s period of reform. Four of them will be honored as “Person of the Year” this weekend in Beijing as representatives of the entire group – Carl Hahn will be one of the four. For the 92-year-old Hahn, the award in China is one of many. But there is still something very special about it. “This honor is the biggest gift you can receive in life,” Hahn said. “I have had such a rich life, and I am grateful for it every day. I could not have done it all on my own. I had many associates and supporters. I would like to thank each of them, including my former Board of Management colleague Dr. Martin Posth. I will accept the award on behalf of them and the Volkswagen team in China and throughout the world.”

Carl Hahn came in contact with the automotive industry during his childhood

Born in 1926 in the eastern German city of Chemnitz, Hahn was the son of an industrialist. His relationship with the automotive industry began during his childhood. Before World War II his father served as a high-level executive at the automaker DKW in Zschopau, a city near Zwickau, and later at the newly established company Auto Union in Chemnitz. His family started over again in Ingolstadt after 1945. Following the war, Hahn’s father and Richard Bruhn reestablished Auto Union in Ingolstadt with the help of the Bavarian State Bank. In the process, they laid the cornerstone for the Group brand that is known today as Audi. After majoring in business administration in Paris, Hahn earned his doctorate at the University of Bern. He initially worked at the OECD (Organization for Economic Co-operation and Development) in Paris.

From assistant to CEO of the Volkswagen Group

He began his career at Volkswagen in 1954 as an assistant to Heinrich Nordhoff at the former Volkswagenwerk GmbH. One year later, he was named head of export promotion. Four years later, he became CEO of Volkswagen of America, where he conquered the U.S. market with the help of the VW Beetle. Back in Wolfsburg, the 38-year-old Hahn was named to the Board of Management and handed responsibility for Group sales. After differences of opinion emerged over the strategic direction of the Group – Hahn did not just make friends with his divisionalization policy because he wanted even back then to position the Group brands into various segments – he left Volkswagen in 1972. He then served as head of the former company Continental Gummi-Werke AG in Hannover for nine years.

“If I had a talent, it was my talent for strategy.”

Once he returned to Volkswagen as CEO in 1982, he added the issue of China to the company’s agenda. The decision was well thought out. As a far-sighted strategist, Hahn carried out a global expansion campaign at Volkswagen, an effort that he began by entering markets in Brazil and Mexico. “If I had a talent, it was my talent for strategy,” Hahn says. With the acquisitions of SEAT and ŠKODA, Volkswagen became the European market leader under Hahn’s direction. Volkswagen’s vision for China also had its detractors. Some critics described it as simply “nonsense” that would “waste millions of dollars on the Communists,” Hahn says. The arguments against doing business in China were obvious: A communist-run state economy and anemic purchasing power – one car per 1,000 residents.

Visionary Carl Hahn argued for Volkswagen’s market entry in China

Together with a group of other advocates, Hahn continued to call for Volkswagen to enter the market in China and pushed for the creation of a Chinese automotive industry. After diplomatic relations between West Germany and China were initiated and a Chinese delegation visited West Germany in 1978, negotiations began a few weeks later on plans to build Volkswagen models locally in China. The year of 1984 marked a milestone: Volkswagen became the first foreign automaker to sign a joint-venture agreement. The signing marked the establishment of the Shanghai-Volkswagen Automotive Company. The Santana rolled off the assembly line in China a year later. Hahn systematically expanded the production location in the years that followed. In 1991, a second joint venture was set up: FAW-Volkswagen in Changchun. In 1992, Hahn left the Board of Management at Volkswagen and joined the company’s Supervisory Board, where he served until 1997.

Long-term partnerships and transfer of know-how

In creating the Chinese automotive industry, Hahn focused on establishing long-term business partnerships. “We brought the largest automotive suppliers to China and initially had to set up a supply network,” Hahn says. “We also created fundamental structures like collective bargaining agreements in the process.” With the help of the VW Foundation, Hahn also made a major contribution to China’s social and cultural development. Volkswagen’s global foundation has carried out more than 100 projects in China since then – from erecting sanitary facilities to universities. “We wanted to do something that would move the country forward and generate new momentum,” the 92-year-old Hahn says. Hahn began to promote knowledge transfers at an early stage. This commitment was illustrated by the construction of a training workshop staffed by German master craftsmen in China and the introduction of a training program to instruct employees in Germany and China. “We had to exchange know-how and qualify our own people,” Hahn says.

At home in China: Carl Hahn still continues to support a range of projects in China today.

To this day, Carl Hahn feels right at home in China. He visits the country regularly and assists with a range of projects being done locally, including ones that involve foundations and research into such areas as genetic engineering. You feel his admiration of and excitement about the country and its people. “Today, you simply cannot overlook China’s significance, particularly in the area of digitalization,” he says. “The Chinese are unbelievably fast learners and have real business acumen. They act in a very disciplined and logical manner. They are also entrepreneurial and inventive.”

Even at 92, Carl Hahn goes to the office almost every day. You really feel his spirit for ideas and projects. “We once brought Volkswagen know-how to China. Today, the Chinese have surpassed us in electromobility,” Hahn says. “China is on the right track. Our partnership with China cannot be too close.” The country has been the largest and most important individual market for the Volkswagen Group for many years now: The early total of a few thousand cars a year has grown into a figure of nearly 4 million sold vehicles in 2017. He laid the cornerstone for this success 40 years ago – the visionary and strategist Carl Hahn.