Why General Motors in China Performs More Successfully Than It in America?Abstract: One of the worlds biggest automakers, General Motors faced its bankruptcy in US on June 10, 2009. However, its subsidiary company in China achieved its best feats on the other side of the earth. How come the same company performed so differently in two different domains? These are specials for General Motors. What makes Chinese GM so successful? Beyond its managerial structure and its smart work ethics, the Chinese macroeconomic environment, the cross-functional knowledge management, Chinese monetary evaluation and the social stature all play an important role. Whats the main contributor for US GMs failure? Its cumbersome structure and insular culture affect greatly.
Key Words: General Motors, Cross-functional knowledge management, Chinese Monetary Evaluations, Organizational structure and cultureIntroduction1.1 General Motors in ChinaThe auto industry is no exception. General Motors has had a presence in China since the 1920s, exporting American-made cars, chiefly of the Buick line, to China. In 1997 GM partnered with Shanghai Automotive Industry Corporation, a Chinese government owned corporation, to establish Shanghai GM. Shanghai GM specializes in producing automobiles for the Chinese market, though it also exports autos to other countries.
1.2 Performance of GM in ChinaThere is no question whether GM-China has outperformed GM-United States in the last decade. During prime recession in 2008, US faced record high unemployment rate and a distressed financial system, GM-China was virtually unaffected by what was occurring around the world and continued to excel in sales and revenue outperforming last years numbers. While GM-US collected bailout funds from tax-payer dollar to reorganize and rethink a new company vision and strategies to become major competitor in the auto industry, GM-China became the leading auto-mobile manufacturer in China exceeding the closest competition by sales of more than 200,000 cars and annual growth of 10.3 percent from last year.
It is the very least to say that GM-China under SAIC (Shanghai Automotive International Corporation) has pulled off a great feat by performing so effectively in these uncertain economic times, it is nothing short of a miracle that they have managed to sell more cars and generate higher revenues in the last few years when many other companies were simply trying to break even or resist filing bankruptcy. Due to the startling facts mentioned above, we need to look deeper into other factors that go beyond Organizational structure and culture that has helped GM-China to perform so aggressively and effectively. There are several other factors that contribute to the success of Shanghai Automotive International Corporation aside from the core factors mentioned
China and the Global Market:
The country’s rapid growth makes it attractive to foreign auto companies and in turn, in turn, makes it important for local car manufacturers in places like the Philippines, Thailand, and Russia and even in China to be part of larger global companies like GM-China
To be clear, we do not believe that China has the ability and willingness to implement such a great deal of innovation in its rapidly developing and highly skilled automobile sector, nor do we believe that any new technology will produce a global marketplace with all its new technological and infrastructure requirements.
As it stands today, we expect General Motors International (GM) to continue its growing presence in Asia on its own, with some of these new opportunities as well. With the recent move of the Shanghai Group from China the growth of GM, which we believe continues to be very sustainable, is expected to be a very strong positive for GM as China and global trade continues to move in tandem.
China and the Global Market: To be sure, China is also very competitive with the US and European markets, especially given the relative success of the auto industry of the world, but it’s clear that there are other reasons that GM operates outside of their regional markets of competition, especially in China.
We think that while GM and a number of its large car industry subsidiaries are focused on China, it’s important to remember what this is all supposed to mean, and to realize that the fact is they really do try to do a great deal of the business. It also means that they’re not as bad as other companies in Asia. On top of that, in the short term this is not supposed to have a negative impact on China. Although we would guess that this would be more of a positive if it meant this way than not. With this in mind, we would feel comfortable pointing out the need to evaluate both of these factors on a broader front in terms of the need for these changes.
So, while any change at all is welcome, what should be addressed by GM under any circumstance remains to be seen. This post will be my own attempt to explain what the point of GM in China and Japan on a technical or economic level and what they have to do with it over time.
For our next post below, you’ll now get to see and hear about the top three factors of the GM Group’s decision-making, including why you should stay or move over the next year based on these factors.