The Chinese hand that bailed out GM

Updated: 2011-12-09 08:38

By Li Fangfang (China Daily)

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The Chinese hand that bailed out GM

Kevin Wale says GM focuses on growing its business in China in all areas, from brands and products to local development. [Photo / China Daily]

Not too many people would have heard of Liuzhou, a third-tier remote city in the Guangxi Zhuang autonomous region. And it is hard to imagine that SAIC-GM-Wuling, the three-way auto joint venture in the city was partly responsible for bailing out General Motors Co (GM) from bankruptcy protection in 2009.

The venture, established in 2002, a year after China joined the World Trade Organization (WTO), contributed more than half of GM's total China sales in 2009, the year the US conglomerate restructured its operations as sales slumped in Western markets.

SAIC-GM-Wuling sold 1.06 million units in 2009, up 66.68 percent from a year earlier, and in the process became the first automaker in China to have annual sales of more than 1 million units. The trend was also helped by the Chinese government's stimulus and subsidies for vehicle purchase and trade-ins.

The company also retained its edge in China's minivan sector for the fourth consecutive year with its Wuling minivans, and boosted its market share to 47 percent from 11 percent earlier. The success and huge benefit from Wuling made the restructured new GM decide to revive itself through further expansion in emerging markets.

In August 2009, GM began exporting locally produced Wuling-brand mini-commercial vehicles under its international Chevrolet brand name through GM's worldwide distribution networks, to markets in South America, the Middle East and North Africa.

GM also signed an agreement with its Chinese partner SAIC Group to leverage their resources to support expansion in other Asian markets like India, with SAIC-GM-Wuling venture a core part of the strategy.

GM and SAIC will utilize GM's two vehicle manufacturing facilities and a powertrain facility in India and GM's nationwide distribution network for setting up a new joint venture.

Mini-commercial vehicles from the SAIC-GM-Wuling stable will be produced and sold in India and the products will be part of GM's global vehicle fleet.

Analysts said that GM has found a way to copy its SAIC-GM-Wuling business model in more emerging markets, in a bid to grab more market share in the global automobile market.

Furthermore, in August, SAIC-GM-Wuling launched its first passenger car Baojun 630, making the self-developed Baojun brand join GM's other three brands in China, Buick, Chevrolet and Cadillac. Initially targeted at consumers in China's second- and third-tier cities, GM is also considering making Baojun cars locally in India.

"Over the last 15 years, GM has focused on growing all its areas of business in China - from brands to product lineup to new business opportunities - both on its own and with partners," said Kevin Wale, president and managing director of General Motors China.

"GM's success in China is the result of our strategic approach to doing business in this country. China will continue to be a top priority for the company in the future also," said Dan Akerson, the US automaker's global chairman.