General Motors in China

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General Motors in China

GM’s Penetration into China

China holds a 12% market share in the General Motors Company. In Asia, General Motors manufactures a large percentage of its vehicles in Shangai, China. This particular plant was opened in 1998. General Motors has a joint venture with SIAC Motor, which is a Chinese vehicle assembling company. This venture has seen the successful launch of various vehicles into the market like the Wuling marque. GM managed to gain shares in the Chinese market through the sales of Buick and Buick Excelle brands. In 2004, General Motors managed to introduce the Cadillac into China successfully. The company’s penetration into the Chinese market was heightened with the introduction of the Chevrolet in 2005. By the year 2010, sales of vehicles from General Motors had risen to 28.8% in China. The rise in sales caused the company to set up a corporate campus and a research station in Shangai. This was a mark of major penetration into the country’s market.

The corporate station was used to develop alternative fuels, hybrid vehicles, engines and electric vehicles. This move was the company’s expression of its goal of doubling sales in China by the year 2015. The joint venture experienced competition from Geely, Build Your Dreams and Chery. Theses local competitors challenged SAIC-GM to come up a lost cost brand that would have a competitive edge. The brand created was a low cost version of Baojun. The wide auto market received the model well because sales of the vehicles gave a cumulative figure of approximately $10,000. The year 2010 saw the joint venture sale vehicles worth $ 1.23 Million.

Obstacles Encountered

Some of the challenges that General Motors has faced during its penetration in the Chinese market is a result of neglecting good business opportunities. Such challenges are encountered when the company allows internal affairs to weigh down the processes of creation and deliverance of value in the market. Such mismanagement reduced the shares of the company in the Chinese market. A restoration of shares would require the company to launch new products and apply different operational and marketing strategies.

During its endeavors to penetrate the Chinese market, General Motors faced the challenge of the US Government bailing out. The government’s move was an act towards stabilizing the country’s economy. General Motors’ decline in sales was detrimental to the economy of America. The implication of this fall would be uncertainty of the stock market and subsequent reduction in stock prices. The government bailed out the company in order to salvage the political, social and economic structures of America.

General Motors suffered from dearth of innovation, which led to a decline in the quality of their vehicles. The effect of this reduction in quality led to the rejection of vehicle brands in China. This became economically strenuous because the company’s sales reduced tremendously. Automobile companies like Toyota became unreachable competitors.

The global financial crisis in 2008 affected the operations of General Motors. In China, the citizens were unable to purchase fuel comfortably because of the increase in world oil prices. Subsequently, they were not able to get loans to purchase vehicles due to the country’s financial crisis. A decline in the purchasing power of the citizens led to a decline in the company market share value.

Another challenge that the company faced while penetrating the Chinese market was a change in the taste of the consumers. This change in taste and behavior was aggravated by the company’s inability to adapt to these changing tastes. Brands like Sport Utility Vehicles lost their popularity among consumers because of their large fuel consumption. The increase in world fuel prices and the competition faced from smaller vehicle manufacturing companies discouraged consumers from purchasing the GM vehicles. General Motors adamancy to remain in its comfort zone cost its penetration in the Chinese market.

One of the challenges that the company faced was the entrance of new automobile manufactures. The company faced aggressive competition from companies like Build Your Dreams. This intensified industrial competition. Build Your Dreams’ competitive edge was their affordable prices. This aspect pushed the boundaries of General Motors. Affordability drove consumers to purchase vehicles from local automobile manufactures like Build Your Dreams. BYD’s launch of the vehicle brand e6 BYD has been well received in the market. They have not only sold the cars in China but have also penetrated the markets in America. This increases their competitive edge as global automobile manufactures.

General Motor’s penetration into the Chinese market has been met with great success and challenges. Joint ventures have propelled the company to achieve higher sales. At the same time, the company’s complacency has cost its market dominance.