General Motors‘ chairman and CEO Dan Akerson met Chinese media for the first time on Tuesday and said the automaker would continue investing aggressively to ensure long-term success.
He said: “GM’s success in China is the result of our strategic approach to doing business in this country. The foundation is great product, a consistent focus on understanding and meeting the needs of local consumers, fantastic partnerships, and a dedication to bringing the latest industry technology to China.”
This approach, said Akerson, has enabled GM to remain the sales leader among global automakers in China for the past six years – its joint ventures sold a record 2.35m vehicles locally.
“GM will continue to make China one of our priorities,” said Akerson. “We plan to introduce more than 20 new and upgraded models over the next two years, strengthen our local product development capability, expand our cooperation and sharing of technology with local partners, and lead in the introduction of new energy vehicles including the Chevrolet Volt extended-range electric vehicle. All of this is part of GM’s long-term commitment to the sustainable development of China’s automotive industry.”
Akerson reinforced the importance of GM’s local relationships. “We regard our 11 domestic joint ventures as 11 keys to our success in China,” he said. “To remain a global industry leader, GM must remain an industry leader in China.”
“China is central to GM’s global strategy,” Akerson told a news conference in Beijing on Tuesday. The GM chief said the company has 11 joint ventures in China with two of its primary local partners, SAIC Motor Corp. (600104.SH) and FAW Group Corp. “We regard our 11 joint ventures as 11 keys to success, not just in China but globally.”
The rising yuan has prompted a hard look at costs in China though export opportunities are being eyed nonetheless. GM has already agreed a deal with India and the Wall Street Journal quoted Tim Lee, president of GM’s international operations, telling the news conference that GM “will look at every export potential” out of China, such as shipping vehicles to South America or Southeast Asia, even though an appreciating yuan makes the endeavor “marginally more difficult”
To compensate for the effect of a rising yuan, Kevin Wale, head of GM’s China operations, said the company would focus on slashing costs in China, such as those for design and manufacturing. By driving out cost, GM aims to be “competitive in both” selling within China and exporting out of the country cars it produces there, Wale said.
Lee said GM aims to exploit an export opportunity if the company and its joint-venture partners could determine a given China-produced car could become a “[market] segment-leading product” in a market outside China, the WSJ reported.
He said GM’s joint venture in China with SAIC last year began exporting to Chile and Peru Chevy Sail compacts designed and made in China.
GM already exports Wuling microvans out of China and uses its own dealer networks to sell those vans in markets such as Columbia, Ecuador, Peru, and Egypt. GM exported 5,670 GM-branded cars and 7,048 Wuling vans in 2010, a GM spokeswoman told the paper.
GM spokesman Johan Willems told the WSJ GM expects its China sales to expand 10%-15% in 2011, in line with most industry forecasts for China’s overall vehicle market.
“China is clearly a crown jewel in the GM universe,” Akerson was quoted as saying. “China is a unique market sitting in what I think is the highest growth area in the world for the next 10, 20, 30 years.”