First Branch Factory

Biodata

Feature	Details
Name	First Branch Factory (一分厂)
Alias(es)	First Branch
Affiliation	Light Vehicle Company; initially subordinate to the Headquarters Factory while operating under independent accounting and self-financing 802 991
Occupation/Role	Automotive manufacturer and reform pilot focused on production, sales, technical development, and industrial integration 802 1208
Status	Active 1715
First Appearance	Chapter 802

Background / History

The First Branch Factory was created as a management-reform experiment within the Light Vehicle Company. It was intended to operate with independent accounting and self-financing; Ma Zhaoxian became its vice manager during the establishment discussions. 802

It officially opened with only two strings of firecrackers, few guests, and widespread skepticism. Its reported circulating capital was just 200,000 yuan, leading many Headquarters Factory workers to predict an immediate failure. 803 During its preparation, Ma Zhaoxian secured loans, rented workshops and equipment, and took responsibility for establishing the new unit. 813

The factory initially produced the mature 130 model to train its workforce rather than undertake production of the newer 136 model. It faced shortages of essential components, pressure from the Headquarters Factory, and disputes over interns and skilled workers. 804 814 Li Ye attracted interns by offering remuneration equivalent to workers in comparable positions and the possibility of long-term employment in the Capital City. 805

Lu Zhizhang was appointed the First Branch Factory's director, while Li Ye became acting head of supply and sales before being formally promoted to deputy factory director responsible for both areas. 813 826 The factory’s early momentum was rapid: within less than three months, it had produced more than 2,500 complete vehicles. 836

Its growing profitability and independent sales operations repeatedly brought it into conflict with the Headquarters Factory, which sought to reclaim sales rights, profits, production lines, and even use the First Branch Factory as collateral for loans. 838 921 991 Li Ye, Lu Zhizhang, and Ma Zhaoxian consistently resisted measures that could burden the branch with the Headquarters Factory’s debts and inefficient management practices. 990 991 1129

The factory later merged with Zhuancheng Motor Vehicle Factory. The merged operation retained Wang Jinyu as factory director, while finances remained controlled by personnel from the Capital City. 1206 1215 It also reached a preliminary merger agreement with the Eighth Machinery Factory to produce automotive chassis components. 1344

Documented Development

Milestone	Chapter	Notes
Establishment approved	802	Created under independent accounting and self-financing; Ma Zhaoxian appointed vice manager.
Official opening	803	Opened with little ceremony and reportedly only 200,000 yuan in circulating capital.
Early production ramp-up	814	Produced the mature 130 model while training its workforce.
Management team formalized	826	Lu Zhizhang became director; Li Ye was appointed deputy factory director for supply and sales.
Output exceeds 2,500 vehicles	836	Achieved in less than three months of operation.
Japanese production lines installed	966	Two imported lines arrived alongside German engineer Ludwig.
1041 production quota assigned	988	Received a quota of 3,000 vehicles annually amid plans to transition away from the J3 130.
Zhuancheng merger approved in principle	1206 1208	The city vehicle factory entered merger talks and began adopting First Branch Factory rules and systems.
Heavy-truck technical breakthroughs	1645	Its technicians overcame numerous heavy-truck technical problems within a year.

Operations and Management

Production and Quality Control

The First Branch Factory’s production and quality-control methods differed sharply from those of the Headquarters Factory. Its leaders considered a six-month qualitative leap in 1041 output possible only through major commitments of personnel, funding, and effort. 949

• Early production centered on the 130 model, whose units became bestsellers while Headquarters Factory’s comparable J2 130 accumulated inventory. 814 837
• It later gained access to 1041 production rights after taking on technical research tasks that the Headquarters Factory could not complete. 1208
• The factory developed a new business coach and rolled off a mini-truck production line. 1041
• Its management coordinated a broad automotive supply chain, from major components such as engines and gearboxes to small parts such as lights and screws. 1662

Sales and After-Sales Network

The First Branch Factory protected its independent sales rights as a core source of autonomy and revenue. 838

• It partnered with Changbei Machinery Company to establish nationwide three-guarantee after-sales service points. 1111
• Its sales network covered every provincial capital and most first-tier cities, an unusually advanced arrangement for domestic vehicle manufacturers of the period. 1111
• Headquarters Factory’s 1041 vehicles were eventually incorporated into the First Branch Factory’s sales system. 1208
• The Headquarters Factory later adopted the First Branch Factory’s sales standards after using its sales system. 1491

Financial Management

The factory maintained a reputation for detailed and transparent financial records. Its financial statements listed revenue, profits, procurement expenses, loan interest, labor costs, and distributions to other entities. 990

• Technology investment reached 3.8% of total revenue, exceeding 8.6 million yuan in one documented year. 988
• It distributed profits to the Headquarters Factory, Hong Kong partners, and COFCO while retaining funds for development. 990
• It rejected efforts to make it collateral for Headquarters Factory loans, arguing that doing so would repeat the old factory’s debt-heavy path. 991
• The factory’s profits later accounted for seventy percent of the Light Vehicle Company’s profits. 1422

Technology and Research

“Technology First”

Li Ye deliberately shaped the First Branch Factory’s culture around the principle of “technology first.” 810 The factory treated technical capability as the basis for advancement and invested heavily in independent research rather than relying solely on imported technology. 1205

• Recruitment for technical talent set a college-level standard and excluded night-school and correspondence degrees. 957
• Technical personnel received benefits such as opportunities for Hong Kong inspection visits based on their skills and performance. 1127
• The factory replicated an Isuzu engine, but Li Ye treated Mitsubishi’s subsequent price reductions as proof that independent R&D remained necessary. 1205
• Its researchers used Li Ye’s technical journals to address specific engine-improvement problems. 1205
• The factory refused unrestricted foreign access to its R&D workshop, fearing that easy external solutions would undermine its self-developed research mechanism. 1043

Research and Development Department

The R&D department was regarded as the factory’s true “blade’s edge,” while management personnel were described as serving that core. 1206

• Visitors passed two security checkpoints before entering the R&D area. 1206
• The department contained extensive domestic and imported experimental equipment. 1206
• Researchers followed fixed daily plans and continued working during official visits rather than staging welcome ceremonies. 1206
• The technical team grew from roughly two hundred personnel during its earlier engine-development period to more than one thousand technical personnel by the Kamaz project period. 1043 1570
• Its culture of concentrated research was described as unusual even compared with major domestic automobile enterprises. 1499

Computerization

The First Branch Factory used computers and FoxBASE database software for personnel registration, distribution records, and information retrieval. 809 938

• New employees were assigned to workshops through computer-managed registration records. 809
• Work permits could be linked to meals, transportation, and salary administration. 809
• During New Year distributions, its separate computer records reflected distrust of Headquarters Factory record-keeping. 938
• The factory provided Headquarters Factory personnel data on disks but declined to lend out its expensive computers. 939

Work Culture

The First Branch Factory’s workforce was predominantly young, and its management model was gradually built over seven years through eliminating unsuitable managers and promoting adaptable workers. 1575

• More than eighty percent of its employees were young at one stage of development. 1575
• Employees were expected to be proactive, efficient, and accountable; transferred cadres from Headquarters Factory often required time to adapt. 1129
• Promotions and recognition emphasized ability and concrete work performance rather than seniority alone. 1198 1457
• Factory-wide vote counting was conducted openly, allowing employees to verify results themselves. 1457
• Employees developed strong collective pride and were known to defend the factory’s reputation and interests voluntarily. 1211

Relationships

• Li Ye — Key organizer and later factory director; established its technology-first culture, defended its independence, and led technical and sales expansion. 810 1043
• Lu Zhizhang — Factory director during its formative period; defended its products, management model, and autonomy in disputes with Headquarters Factory. 813 837
• Ma Zhaoxian — Vice manager at establishment and a major political protector; secured early financing and opposed using the factory to absorb Headquarters Factory’s financial burdens. 802 813 991
• Headquarters Factory — Parent unit and recurring rival over sales rights, profit distribution, staffing, production rights, and management control. 838 921 1233
• Changbei Machinery Company — Partner in nationwide after-sales service and an important source of technical and market cooperation. 1111
• Zhuancheng Motor Vehicle Factory — Merged with the First Branch Factory after adopting its rules, work processes, and management methods. 1206 1208 1215
• Eighth Machinery Factory — Reached a preliminary merger agreement with the First Branch Factory to focus on automotive chassis components. 1344
• Southwest Heavy Truck Company — Proposed for integration into the First Branch Factory’s production and sales system if it met the latter’s standards. 1575