This strategic marketing report prepared for the General Motors (GM) detailed a thorough analysis the motor vehicle market in China.
GM was a US automaker company, and entered the market of China by joint ventures. SAIC is GM’s major joint venture partner, and it had become the largest plant in China. GM was earning high profits from China by 2004. However, GM faced the challenges from both foreign and local competitors, overcapacity and intervention from Chinese Government. In 2004, the sales dropped sharply.
The first part will be analyzed by STEP theory of the motor vehicle market in China in 2004. Then we will use SWOT analysis to examine if China is still an attractive market for GM. Next, we will further concentrate on the pros and cons of both strengthening its position in China, and using China as an export base to the worldwide market. By analyzing all this data, conclusion and recommendation will be proposed to GM.
General Motors was a multinational automobile manufacturer. It was found in 1908 and headquartered in US. It manufactured its cars and sold them all over the world under the brand of Buick, Opel, Saab and Cadillac, etc.
By 2004, General Motor (GM) had been successful in China. It operated six joint ventures and two wholly owned foreign enterprise. SAIC is the major joint venture partner of GM. Through its joint venture, Shanghai GM was the second highest market share of automaker in China, and it had achieved an outstanding result and earned a huge profit from its China operation by this year.
However, the business environment of China was changing rapidly. Many foreign and domestic firms noticed the great potential in doing business in China, GM had faced the new challenge from these competitors. It had also experienced decrease of sales volume especially for some of the best selling model in 2004. GM had to rethink its marketing plan in China.
3.0 Overview Of China Vehicle Market Environment In 2004
In order to understand what action GM could take, the vehicle market environment of China in 2004 should be first looked into and it was analyzed by STEP theory.
Continuous Population growth;
Loss of consumer confidence;
Shifted to buy some less expensive models by customer;
Expectations of vehicle price further decreases because of car price war.
Glut of production facility;
Poor highway system design;
Modern technologies, innovation and managerial practices from foreign firms; Poor quality, lack of innovation and ongoing product development from domestic firms.
Increase in income of people;
Increase in demand of cars;
Rapid economic growth rate;
Increase in unemployment rate as enterprises strove to increase efficiency; Car price competition from both foreign and local car makers; Threat of oil and higher gasoline prices;
Free to distribute products of foreign firms;
Over-capacity and cause decreasing in car price;
Restriction on loans on purchase of motor vehicles;
Increase in taxes to restrain aggregate demand;
Increase in interest rates;
Maintaining an undervalued currency to enhance its exports and to restrain imports; Increase in levels of exports and substantial foreign investment; Rationing of power supplies;
Lack of Intellectual Property protection;
Domestic firms own 50% of each joint venture by regulation;
Decrease in tariff and phasing out import quotas after China joined WTO.
4.0 SWOT Analysis for GM
General Motors was a US based multinational automobile manufacturer and found in 1908. It sold its cars all over the world under the different brand such as Buick, Opel, Saab and Cadillac, etc. In 2004, GM had six joint ventures and two wholly owned foreign enterprises, it also maintained the second highest market share in China.