General Motors Company in China
Southern New Hampshire University
This paper aims to explore the cultural barriers that GM encounters while doing business in China especially in terms of language and Asian mind difference. As a matter of fact, we cannot examine all the cultural barriers due to the scope of the paper. On the other hand, some differences emerging from different thinking behavior between US and China are exemplified in the second part of the paper. In the first part, the company information and the SWOT analysis of GM are given before going further with the Asian operations of the company.
A- Company Information:
First of all, General Motors Corporation changed name with the government bailout in 2009. After the government involvement, the company became the new GM as a legal successor of General Motors Corporation. General Motors Company founded by United States Department of Treasury in 2009 which changed into Delaware Corporation and then undertook all the assets and liabilities of General Motors Corporation by the 363 sale (GM quarterly report, 2010 May 17). The old GM was incorporated in 1908 an operated until 2009. The Detroit, MI based automotive company manufactures cars and trucks under the following brand names:
i) GM brands (GM Fact Sheet, GM website)
ii) GM divisions: (10 K annual report, 2010 April 7, GM website) The old GM had four divisions whereas new GM has only three operational divisions. GM Latin America/Africa/Mid-East, GM Asia Pacific are organized under the GM international operations.
1- GM North America (GMNA):
This division has still the largest market for GM. The Company continues to lose its market percentage as its U.S market share declined to 19.6% in 2009 where the pursuer competitor Toyota increased its share to 16.7 % according to the 10 K annual report of General Motors dated 2010, April 17. The total market share of GMNA declined to 19 % in 2009 which is lower than the 25 % 2005 mentioned in the case. The global crisis, the decline of income and the potential bankruptcy of old GM are the reasons for the decline which are mentioned in the annual report.
GM Europe is also the unchanged division in the new GM. The market share of GM Europe has also declined like GMNA. According to the Exhibit-5 the net margin of GME is yielding consistent losses for the company by 2005. In the first quarter of 2010, GM Europe is still losing money ($500m), yet it is better than the last quarter of 2009. McVeigh (2010, May 17) argues that after selling of Saab, GM Europe operations (Opel and Vauxhall) reduced its losses in Europe thanks to the sales of Opel Astra. Selling of Saab also contributed to the decline of loss in the region. The company is expecting €1.8 billion state aid from the European governments to make the operations of Europe profitable by 2012. The company promises new jobs as well in the plan to get the loan from the governments.
3- GM International Operations:
GM Latin America/Africa/Mid-East, GM Asia Pacific are turned into GM international segment in the new GM formation. This segment experienced declines in the market percentage in 2009 as well. However, the dominance in Chinese Market contributed the company to hold the first spot in the global automotive industry. Hence, the Chinese and Indian market and other emerging markets are very important for GM and the other competitors to increase their sales and market share thanks to the increasing demand in those markets.
China has a strategic importance for General Motors. GM China with the local partner SAIC Motor tries to increase its foothold in Chinese market. According to Gao (2010, June 1) in 2010 GM targets to sell 2 million cars in...
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