General Motors, once a dominant force in China, is now facing a significant downturn in its business within the country. For a quarter-century, the company enjoyed substantial profits, competing head-to-head with Germany’s Volkswagen as a leading car seller. However, this era of prosperity has come to an end.
G.M.’s sales in China have plummeted, experiencing a 42.5 percent decrease in the first eleven months of this year. Ranking sixteenth in sales, the company’s once-thriving presence has collapsed, leading to a roughly $5 billion charge against profits this month. This is a stark contrast to the company’s initial entry into the market in 1996, when it launched operations with a $350 million investment, constructing a network of factories and generating billions in profits for its Detroit headquarters.
During its initial years in China, G.M. executives demonstrated a keen understanding of the market’s distinct attributes. They designed sturdy minivans with ample chrome that appealed to leaders of state-owned companies, which were major customers. They successfully marketed Buicks, a brand that was losing popularity in the United States but still held prestige in China. Moreover, for rural farmers, G.M. offered vans and pickup trucks – with basic features like flimsy seats and no air-conditioning, but priced affordably at $5,000.
In many ways, G.M.’s experience in China mirrors the wider situation of foreign automakers in what has become the world’s largest car market. The Chinese government granted foreign carmakers such as G.M. access to the market as part of a long-term strategy to obtain technology and develop its own internationally competitive automotive industry. Moreover, early on, government leaders aimed to move away from gasoline-powered cars, which China largely imports, and toward electric vehicles utilizing domestically sourced energy like coal, solar, and wind.
