One of the things Li Chunrong did when assuming the role as CEO of Proton Holdings was to set up a Cross Function Team (CFT) to identify and address internal issues the company faced, and at the same time develop a new working culture for the new Malaysian-China team.
According to The Edge, before Geely came into the picture, Proton suffered from weak operational management, and the first thing the CFT recommended was to ask Proton vendors to reduce costs by 30% if they wished to continue supplying parts to the group.
This, naturally, was met with resistance. Vendors immediately complained about how difficult it would be to cut costs by 30% and still remain in business. Such defiance inadvertently caused rumours about Proton outsourcing parts from China to spread, but Li insisted that local vendors start cutting costs.
“When I came here, I asked our vendors to reduce costs by 30%. Then, of course, they complained. They asked me, how to reduce costs? I asked them back, in terms of operation management skill, who is better? You or Proton? They didn’t answer, because we [Proton’s management] were bad before.”
“I told them that your skill and my skill is the same, do you agree? They agreed. If I can reduce costs, you must be able to reduce costs,” he said, adding that if Proton could reduce its operational costs by 33%, the vendors should be able to do the same as well.
For Proton, cost-cutting measures involved closing down three regional parts centres and sold them for RM1 million each. It also shuttered a dozen warehouses across the country, maintaining just four now (Kuching, Kota Kinabalu, Shah Alam and Tanjung Malim).
The number of company cars were also trimmed – Li said Proton had a whopping 1,700 cars for its management, which he said was too many for a company producing less than 100,000 cars annually.
“When I was working in a company that was twice as big in China, we only had four company cars. That means Proton has so many company cars; so from my understanding, we can sell these cars,” Li noted. In the first six months, Proton had managed to sell more than 500 units of company cars. “This is one of the examples of how I reduce costs. If I can do it, definitely the vendors can do.”
Prior to the launch of the X70, Li urged Proton dealers to upgrade their dealerships to at least 3S or 4S standards, knowing that customers would be more receptive of the renewed brand image and quality. Li believes that the upgrading of showrooms was not only good in terms of brand image, but also service improvement.
Again, dealers opposed, claiming that the showroom upgrades would cost huge capital outlays. To mitigate this issue, Proton offered assistance to dealers, but this varied depending on the size of the showroom, location, and service bay capacity.
Currently, there are 124 3S and 4S centres spread throughout the country. Li explained: “Previously, more than 70% of our dealers were only doing sales (1S). Because of 1S, the store was small. The dealer could not store many spare parts. So that’s why Proton had to have many RPCs. But now, we have more 3S and 4S centres — 124 centres — so these RPCs are no longer necessary.”
“This is a business strategy. Why do I set up more 3S/4S? We want to upgrade our customer experience because we have high confidence in the X70. So we should put it in a high-quality environment, so that our customers can have a good experience,” he said.
Besides that, rumours swirled about an internal clash of cultures between Geely and Proton staffs, but Li said that wasn’t the case. In fact, they shared more similarities. “CFT was tasked to develop a new culture, combining Geely’s, Proton’s and DRB-Hicom’s values. We came up with TARI. It stands for teamwork, achievement, respect and integrity. This is why I said that we have the same culture,” he explained.
“We also focus on the business. There’s only one reason why we are here — to do business. Let Proton be successful. I don’t want Proton’s staff to be hooked on other things. Everyone here is making a living for themselves and for their family.”
“Everyone here is a worker. You are a local worker, I am a foreign worker. You are not a shareholder. But we have an overlap in targets, which is to let Proton be successful. Otherwise, we cannot understand each other. There is a common interest to let Proton be successful,” Li added.
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It was good that Dr Li had relied on the local management team to form his CFT which came out with these GC ideas. That tells us our local DRB guys have the knowledge on what must be done but they were afraid and restraint by their old man big boss advisor from doing anything. Now they have been unshackled by Geely they are GC everywhere. Well done our local DRB guys!
After 35years, still Well done our local DRB guys?
Excellent statement Li Chunrong! Proton is back on track again after 30 years of going downhill. Without you and GC Geely’s help, Proton is nothing but a disgrace.
Thank you so much Li Chunrong for guiding our GO Proton to have a better work culture and more streamlined operations. Your GC guidance have made Malaysians proud of Proton again. Also, today Proton are able to compete with GC Perodua again.
Nobody reply your comment so you replied your ownself and yet didn’t bother to read the article again? Typical you.
Proton sets a higher level in order to compete with TNH. Perodua itself is currently the only entry-level category.
Really? honda is still doing well? Honda have already lost more sales to proton last year. Even honda will be lose more sales to toyota, nissan. Even CRV sales will be going to lose more sales to Mazda CX-5 and Proton X70. People already asking honda malaysia to improve their services, efficiently and management but they are so greedy which always concentrating on their profit which they don’t care about customers lives and even honda malaysia also deleting on people’s feedback about issues.
Yes and why not? Without them, Dr Li won’t know what was the problem and how to fix it. Without accurate information he would have failed just like the other CEOs before him.
Half or more of the Proton management is still from the old blood. There’s only so much this Dr Li can do when DRB still holding majority stake. Please go to their Centre Of Excellence service centre and see the work culture there. Nothing has changed. There’s less than 10 customers at the lounge but they had to employ 2 customer service reps, 2 receptionists, 2 cashiers and 6 service reps and I’m not even sure how many more they employ behind there. You can pretty much guess what they cashiers, receptionists and ‘cusromer service’ staff are doing with their phones. With that many manpower they still can’t finish a vehicle under 3 hours.
If the HQ is still like before, what more is to say about their dealers?
Proton ma biasa ler. Kini & selamanye, sabar..
You go during weekday right after MCO of course there are nobody therelah! I went there on a whim during a typical weekend back in 2018 and there are many customers by noon.
he made a similar comment before Covid19 lah. meaning his experience was before the pandemic.
He’s been making a lot of claims which are unverifiable.
Kudos to P1. Kipidap!
P1, Geely, Lotus, Volvo, Mesidis > all
thank you dr li for providing the guidance much required by proton. as with many malaysian organisations, proton has great people with high levels of skills and knowledge, we knew all along the problem was with the management unable to provide a clear guidance to the company.
Dr.Li is doing a great job. Rakyat confident on his new heading of Proton. Good bye 3rd National car!!!
Keep it up to all drb proton, even umw and tc. As they will be improving soon by doing in goods for their management. Now everyone are slowly attracting these kind of their game changer ideas
Two points I can observed to the successful turnaround of Proton>
1. Unshackling of Proton mgmt from the our politicians who always want to interfere in areas they have no expertise or jurisdictions. This allow the professional managers in Proton to flourish and be measured on their performance and key objectives.
2. The market segments that has not been acceptin/buying Proton cars with remarks “made of milo tin”, inferior quality, bad products in general has been buying the products in drove.I guess we still suffer the “Made in Malaysia” products are not good enough for Malaysians. Though Toyota and Honda made/assembled by our Northern neighbours while similar in quality, sell fairly well.
Lastly, these are anecdotal/observations and no scientifif data to support my claims are available. Maybe someone in the marketing/ sales academia may find it wothwhile to do a scientific study?
Yes there is. I will be submitting a paper on Proton’s brand equity as perceived by consumers.
Lucky Geely tong san came to the rescue. Otherwise proton now will be extinct as a collectable in museum, long gone and forgotten.
The reason why Toyota was a successful brand from.the 80s throughout the 90s and into the new millennium.
Proton achieved high rate of success in terms of sales (around 240k units sold in 2003 involving saga lmst and lmss, wira SE, waja and perdana v6.
Reason for new plant in tg malim because tengku mahaleel was expecting proton to be able to sell 300k cars in 2007-2008) because of the govt protection against foreign makes but Toyota sales were strong because of good product reliability, after sales service and also positive work culture.
In 2008 UMWT for the first time hit 100k mark by having variety of car models (vios, corolla, Avanza, rush, hiace, hilux, Camry) when Honda sales was about 40k only (,,jazz, city, Civic, accord, CRV). Honda introduced Freed but like the stream wasn’t successful.
Well that’s the story of Toyota success, similar to what Proton CEO wants.
However Toyota lost to Honda because of issues like 2 airbags versus 4/6 and also the zinc roof noise when raining in the 3rd gen vios. And Honda learnt the same thing what Toyota did – adding more models. So in with HRV, BRV, CRZ, insight and special.models like jazz hybrid, city hybrid, Civic hybrid and Civic type R.
As someone who has been working in the industry for 25 years.. For Kia, Jaguar, BMW, VW, Kia, Toyota and Proton.. I know how and what was the work.culture in each company.
Why Kia was very successful in 2005-06 but hardly sells a car today.
Why was VW so great in 2010-12 but same story with Kia today.
Well, the management didn’t know what’s happening on the ground, didn’t want to learn and just didn’t bother.
Sadly we need someone from a foreign company to tell Proton how to this. How to do that. It’s well described in this article.
Not really. Did you even read the article and try to understand what was said?
He formed the CFT (which comprised of Proton management) that told him the true story of what ails them. He only help enabled them to do what needed free from meddling by a certain someone. In the past, stepping on vendors and dealers toes are like stepping on that person’s toes, and nobody dares to cross him so nobody dares to cross THEM. It not so much on the product or the staffs but management upstream and downstream no longer obstacled with personal interests.
If proton can source it parts freely that will save lots of costs
Proton’s biggest problem was they were not able to do just that but now they can, and quite quickly we can see them grow unhindered.
Is he already succeeded? I dont quite think so.
Proton needs to show ar least 3 years of continuous profit, or export >50% of their output, or overtake Perodua locally.
The time to market also took too long.
Ckd x70 took like 18 months.
X50 teased for 1 year already but still not in market.
The Mpv, planned launch date is still at least 2 years away.
Why it takes this long if truly the culture has changed?
No clear long term plan revealed either, but keeps emphasize the long-in-the-tooth 3 models revision last year.
Whats next for Saga? Whats next for Persona? Whats next for Preve? What platform or engine is in the pipeline? Nobody knows.
Only Exora replacement is clearer, hopefully.
It is at least moving in right direction though, but is far from a success story yet. Journey still long.
Keep up the good work.
Depends on what is your definition of ‘success’. Did he achieve his target milestones? Yes, so that is a measurable success for him. Has he completed his job? Not yet so that final success is still some way out but he is getting there.
The debuts of these new models took time because they needed to be redeveloped. Keep in mind they weren’t designed with RHD conversion so that needs to be redeveloped from scratch. It is not like making roti canai.
What is next is really their best kept secret, as seen Perodua had constantly tried to steal Proton’s thunder of late with Bezza tried to spanner new Saga, Aruz tried to spanner X70, now D55 trying to spanner X50 so by not revealing what is Proton’s next model it will keep Perodua from trying to spanner it. In business world it is what’s called a business strategy and that usually is a trade secret.
Perodua has always been released the car on market one segment lower than Proton to mislead consumers. D55L (3995 x 1695 x 1620) is 12.5% smaller than X50 (4330 x 1800 x 1609). HR-V (4334 x 1772 x 1605) just 1.7% smaller than X50.
Wow didnt know that Proton managed to cut the vendor / supplier cost by 30% and also the cost cutting in overall Proton too and yet the savings are not passed to customers like us.
Also its quite interesting to know the inefficiency and management in the company which resulted in all the losses for example the company car LOL so now we know where all their executives test their cars everytime up the hill and back.
What do you mean the savings were not passed on to consumers? Did you know that ever since SST 2.0 replaced GST, Proton had absorbed the sales tax imposed on each of their cars sold? Is that not passing the savings to their customers?
Proton absorbed SST and give improved specs
for all facelifts without increasing prices. That all are not ’savings passed down to customers’?
There was once a mat salleh said he wanted to change the working culture in a “prominent” GLC. In the end, he found it easier to change his job. Hopefully this apek is able to overcome the tremendous challenges in Proton dan tak kena hantar balik ke cHiNa awal.
That mat saleh had to face a workers union that was hostile and didnt see the need to change. This apek managed to convince his side workers union that change was better for their future and they accepted him. See the difference what can make one a failure and the other heading for success?
In the end, that company now is nyawa-nyawa ikan.., soon to be bankrupt. Good riddance, although painful, since there will be no more national airline pride. But enough is enough with this stupid MASEU.. hopefully proton will stay strong and not follow this rotten route by this national carrier.
Ya know, and the right people and those can walk without tongkat?
In the pictures above, all are quite young and none of them are seen using tongkat.
“Every one here is a worker” This, is a boss who gets it. He knows, he too is a worker. Unlike some of our (employee) bosses who have bigger ego than their title.
With this understanding, everyone understands that this is not their “bapak punya company” & doesn’t act like it. Every one strive to the common goal.
Kudos. Keep it up, Dr Li.
Customer experience with proton is awful
All the hype by Proton is actually on ground amounts to zero.As an owner of a proton cars since 1985 i find the customer service centre is awful and does not address issues.It passes the unsolved around and sometimes does not attend to customer problems.Proton Preve cvt transmission is like driving in hell.Lots of quality issues with proton especially the cvt transmission.I hope the CEO addresses these issues before being too ambitious.