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Shanghai General Motors Essay

823 words - 4 pages

Shanghai General Motors

The Asian market has been an attractive one for global corporations for many years and of late China has been the region’s crowned jewel of multi-national companies looking to drive revenue and earnings. Therefore, it is no surprise that General Motors saw significant importance in the Chinese market in the 1990s and as such made a concerted effort to penetrate the local automobile industry. But there are several specific reasons why GM found China attractive and as such aggressively pursued. The first, obvious reason is the high population of the country that is currently underserved from an automobile perspective. The country makes up 20% of the worlds’ ...view middle of the document...

And at the signing ceremony, both the Chinese Prime Minister as well as VP Al Gore were present to show the government alignment. This makes these types of agreements go a long way. The second reason why it was successful was because there were some clear expectations and goals set at the beginning of the partnership. GM had clear “gives” which were requested by SAIC and acknowledged by GM from the very start such as significant technological enhancements/improvements in the Chinese automobile industry and global coordination and training for Chinese workers in this area. GM had clear initial “gets” which were acknowledged by SAIC as well. These “get goals” were assistance in becoming a significant player in the Chinese auto market, controls over marketing and distribution, rapid sales growth, China as a central point in the Asian market, and the opportunity to leverage a government owned company in policy making activities to help drive success. The last reason why the joint venture was successful was because there was rapid sales and earnings growth. It is amazing how well partnerships work when both sides are making money! This was the case for several years and as such helped buoy the activities to the next level.
General Motors did a very good job driving innovation in the automobile industry in the Chinese market which helped create success and these activities were found in several key components of the automobile industry. The first area was sourcing. GM leveraged leading global practices the drive the...

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