Successful of Gm Joint Ventures in China

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Submitted By ickkyi
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Case Overview (Successful of GM joint ventures in China)
In 1997, General Motors establish a joint venture with the state-owned Shanghai Automotive Industry Corp (SAIC). GM investment value was at $1.6 billion. At the time, the Chinese market was very small; fewer than 400,000 cars sold per year. However, GM expects an expansion in Chinese automotive industry. Not only lack of local knowledge and connection in China, but the Chinese regulation forced GM to establish a joint venture with SAIC (SGM). There were only GM and Volkswagen in the Chinese market. See table 1
10 years later in 2007, GM and SAIC is able to sell more than 900,000 cars and light trucks per year, exceed GM expectation 18 percent increase over 2006. In addition, Chinese market grew to be about 8 millions cars per year, second largest car market in the world. The major hit is the mini-van cost $3,700, has .8 Liter engine, top speed of 60 mph, and weight less than 2,200 lbs. 460,000 mini-van sold in 2007.
After the US economic crisis in 2008, GM sold a 1 percent stake in SGM to SAIC due the need to raise capital. In 2009, about 13.8 million cars sold in China, China become the largest automobile market in the world. SGM sold 1.8 million vehicles in 2009. In 2010, GM sold 2.35 million cars from total car sold in China grows to 18 million cars. China becomes the largest market for GM; surpass the US sales of 2.2 million cars. See table 2, 3 and 4.

Case Discussion Questions 1. GM entered the Chinese market at a time when demand was very limited. Why? What was strategic rational
GM attracted by the expectation of an increase in demand from Chinese economic expansion. In 1996, China has a total population of more than 1 billion people. In addition, GM expects to sell more than 3 million cars by late 2000s.
Not only China huge market demand, but GM sees China as a gateway to Asia sales and…...

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