a. From the four strategies given (global, localization, transnational, international) what strategy is GM using in China, and why is it using this strategy?
Name strategy:
Why:
b. What entry method (exporting, turnkey contracts, licensing, franchising, joint ventures, or wholly owned subsidiaries) did GM use when entering China?
(1) Entry method:
(2.) Why do you think they selected this strategy?
General Motors on the Upswing By 2007, GM had expanded the range of its partnership with SAIC to The late 2000s were not kind to General Motors Corporation (GM), but the Wuling. The two companies had also established the Pan-Asian company is on a much-needed upswing. The Chinese market, in particular, Technical Automotive Center to design cars and components not just is becoming one of the most important foreign markets for GM. General for China but also for other Asian markets. At this point, it was already Motors, of course, is a U.S.-based multinational corporation headquartered clear that both the Chinese market and the joint venture were exceedin Detroit, Michigan. GM was founded in 1908 in Flint, Michigan, and Mary ing GM's initial expectations. Not only was the venture profitable, but it Barra is the company's CEO. In 2019, GM had revenues of $149 billion and was also selling more than 900,000 cars and light trucks in 2007 , an more than 180,000 employees, produced almost 10 million vehicles, and 18 percent increase over 2006, placing it second only to Volkswagen consisted of four core divisions (Buick, Chevrolet, Cadillac, and GMC). in the market among foreign nameplates. Equally impressive, some Hurt by a deep recession in the United States and plunging vehicle 8 million cars and light trucks were sold in China in 2007, making China sales, GM capped off the 2000s decade, where it had progressively the second-largest car market in the world, ahead of Japan and behind lost market share to foreign rivals such as Toyota, by entering Chapter 11 the United States. In 2015, GM sold about 3.16 million vehicles in bankruptcy. Between 1980, when it dominated the U.S. market, and China, up from some 2.4 million vehicles sold in 2010. 2009, when it entered bankruptcy protection, GM saw its U.S. market Much of the venture's success could be attributed to its strategy of share slip from 44 to just 19 percent. The troubled company emerged designing vehicles explicitly for the Chinese market. For example, tofrom bankruptcy a few months later a smaller enterprise with fewer gether with SAIC, GM produced a tiny minivan, the Wuling Sunshine. brands, and yet going forward, some believe that the new GM could be The van costs $3,700, has a 0.8 -liter engine, hits a top speed of a much more profitable enterprise. One major reason for this optimism 60mph, and weighs less than 1,000 kilograms-a far cry from the is the success of its joint ventures in China. heavy SUVS GM is known for in the United States. For China, the vehicle GM entered China in 1997 with a $1.6 billion investment to establish was perfect, making it the best seller in the light truck sector. a joint venture with the state-owned Shanghai Automotive Industry It is the future, however, that has people excited. From a market of Corporation (SAIC) to build Buick sedans. At the time, the Chinese about 9 million passenger and commercial vehicles sold in China in market was tiny (fewer than 400,000 cars were sold in 1996), but GM 2008 to 25 million in 2019, the Chinese vehicle market is booming was attracted by the enormous potential in a country of more than 1.4 compared with those in the United States and Europe. China has now billion people that was experiencing rapid economic growth. While the become GM's largest market in vehicles sold. GM also plans to expand company initially recognized that it had much to learn about the Chinese its Chinese dealer network to more than 5,000, and it plans to have 17 market and would probably lose money for a few years in the early assembly plants in China, more than the 12 it has in the United States. years, GM executives believed it was crucial to establish operations and Driving this expansion are forecasts from GM that demand in China will to team up with SAIC (one of the early leaders in China's emerging auto- reach 35 million vehicles a year by 2022, a huge increase from the mobile industry) before its global rivals did. The decision to enter a joint 25 million vehicles sold in 2019. Underlying these forecasts are the still venture was not a hard one. Not only did GM lack knowledge and relatively low vehicle penetration rates in China. China has about connections in China, but Chinese government regulations made it all 85 vehicles per 1,000 people compared to around 800 vehicles for but impossible for a foreign automaker to go it alone in the country. every 1,000 people in the United States. While GM was not alone in investing in China-many of the world's major automobile companies entered into some kind of Chinese joint Sources: S. Schifferes, "Cracking China's Car Market," BBC News, May 17, 2007; venture during this time period-it was among the largest investors. N. Madden, "Led by Buick, Carmaker Learning Fine Points of Regional China Tastes," Only Volkswagen, whose management shared GM's view, made a Automotive News, September 15, 2008, pp. 186-90; "GM Posts Record Sales in China," similar-sized investment. Other companies adopted a more cautious Toronto Star, January 5, 2010, p. B4; "GM's Sales in China Top US," Investor's Business approach, investing smaller amounts and setting more limited goals. U.S. Last Century," Bloomberg.com, April 29, 2013
