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GM lessons for Chinese autos
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11:02, June 03, 2009

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By Li Hong, People's Daily Online

It is heartening to see Shanghai GM, a joint venture between Shanghai Automotive Company and the American GM, which just filed for Chapter 11 seeking insolvency protection, issuing a statement yesterday declaring its terrific balance sheet, and increasing sales on the Oriental market. The nuanced implications are that business in China will remain buoyant and lucrative, despite the quagmire two American auto icons have stepped into.

The 19-month economic recession and financial meltdown on the other side of the Pacific has brought about two more casualties in the Main Street, after wrecking outrageous havoc in the Wall Street earlier. General Motors and Chrysler, two family brand-names worldwide, have gone to the court. Luckily, they are seeking court protection while not liquidation. To all car lovers including me, we are assured a little bit that the two icons were bailed out by President Obama, sent to reorganization and refueling, and hopefully, for an eventual glorious comeback.

From where the two mega autos lapsed, China's auto companies -- regulators in Beijing too -- have lots to learn.

The first and most apparent lesson is recognition and unconditional embrace of market rule. For a business to succeed in the market place, edge of its competitiveness is the bedrock. Competitive vehicles, competitive prices, and competitive customer services will define how long and how far a car maker can walk. The prevailing Japanese and German cars in the United States, in Europe, and now in China, speaks of only one hallmark: Their vehicles are of solid quality, fuel efficient, nice-looking, and accompanied with superb after-sale services.

China's car manufacturers are all late arrivals as compared with Volkswagon, Toyota, Honda, G.M. and Ford, hence, the distance in design, engine innovation, mileage gas cost, technology research and development calls for our long and persistent efforts to shorten. A few home car manufacturers in Zhejiang, Anhui and Guangdong beating chests to catch up with and even surpass overseas giants in a few years is nothing but boastful.

Time and again, I have seen pictures on newspapers in which angry consumers employ horse or cattle pulling dysfunctional cars to the doors of various dealers, as a way to shame poor quality. Of course, the laggards here include cars imported, or coming out of the assembly lines of the Sino-foreign joint ventures.

For the regulators, their major task is to ensure a level playing ground for all car makers, and prevent market manipulation. I would consider no less than 10 manufacturers as viable and healthy in a market as big as the United States or China. Over concentration of market share in the hands of one or two player in any industrial line could be perilous. Grievances about services provided by China Mobile and China Unicom are a legion, as the two dominate China's telecom market. GM used to control 50 per cent of the American market, employing half a million workers and tossing out products of more than 20 namess. President Obama, 60 percent owner of the new GM, has decided to shrink its lineup and spin off production lines of Opel, Pontiac, Saturn, Hummer to others.

And, American consumers' easy access to bountiful and inexpensive oil supplies, for too long a time before 2008, which is partly enabled by US government's unparalleled political and military power in the world, have led to their liking of muscle engines and gas guzzlers. It is righteous for Obama to demand new GM to produce smaller and more fuel efficient cars, taking into environmental concerns and needs of energy conservation. The idea that a Chinese private car maker in Sichuan is going to buy Hummer is ridiculous.

Pundits have recommended the new GM board of directors fix the company's corporate and workplace culture, including the attitudes, mind-sets and relationship patterns, which were too inertial to lure potential American car buyers. For China, GM's predominantly towering unions are attractive to our workers, but definitely counter-productive to the enterprise. The practice that a GM worker had access to full pay and benefits without attending jobs is somewhat insane. The Chinese government ought to find a balance between the two.

The article represents the author's view only. It does not represent opinions of People's Daily or People's Daily Online.



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