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GM’s transition away from its traditional reliance on the large U.S. automotive market, toward emerging markets like China, represents a monumentous shift for the carmaker, with up to 65 percent of GM’s revenues now coming from outside the United States. GM’s increasing globalization belies its success in China, with annual sales of 3.9 million vehicles in China in 2016, driven by GM’s successful joint venture with the Shanghai Automotive Industrial Corporation (SAIC) in 1997 and its successful integration into Chinese business networks and markets. To better understand whether GM’s future truly lies in China, this essay will analyse the importance and implications of non-U.S. sales for GM’s global and business strategy, with reference to the integration-responsiveness strategy, the reasons for GM’s success in China relative to its competitors, and the challenges and possible solutions for GM in China.
1. Importance and implications of non-U.S. sales for GM’s global and business strategy, with reference to the integration-responsiveness strategy.
GM’s non-U.S. sales have risen sharply, with annual sales of 3.9 million vehicles in China in 2016, driven by strong growth in Asia, Latin America and the Middle East, where GM has successfully pushed to reposition itself as a lean and low-cost manufacturer or small cars. This will create additional requirements for GM to effectively cater its products to the demand of local markets, XXX to localise research, design XXX sales XXXXXXXXX XX XXXXXXXXX XXXXX XXXXXXX XXXX effectively.
XXX integration-responsiveness XXXXXXXXX suggests XXXX firms need XX both XXXXXXXXX value chain activities on an XXXXXXXXXXXXX basis, XXX XXXX create XXXXXXXXX XXXXXXXX XXX XXXXXXX which are XXXXXX XXXXXXXXXX XX XXXXX XXXXXX XXXXXXXXXX. XXXXXX integration will allow companies to XXXXX costs XXXXXXX economies XX XXXXX, standardise XXXXXXXX XXXXXX and XXXXXXXXXXXXX XXXXXXXXX, ensure a XXXXXXX standard of service XXXXXXX, XXX access inputs XX scale. XXXXXXXXXX, XXXXX XXXXXXXXXXXXXX XXXXXX the XXXXXXX to XXXXXX XXXXX XXXXXXXXX to local XXXXXXXX XXXXXXXXXXX, XXXXXXX XXX interests, and XXXX XXXXX the company XX respond more effectively XX XXXXX XXXXXXXXXXX XXX regulatory XXXXXXXXXXXX, therefore ensuring XXX XXXXXXX. X company XXX take on XXXX XXXXXXXXX positions to XXXXXX XXX business strategy. Foremost, it can XXXXXX to XXXXXXXXX its home XXXXX if it has XXX cost XXXXXXXXX and XXX XXXXXXXXX to respond XX XXXXX conditions. XXXXXXXX, it can use a XXXXXXXXXXXX strategy if it XXXXX XXXX XXXXXXXXX XX XXXXXXX XX local XXXXXXXXXX, while XXXXXX XXX cost pressures. Thirdly, it can XXXXXXXXXXX its XXXXXXXX XXXXXXXX XX it XXXXX XXXX XXXX pressures XXX XXX local markets are XXXXXXX to accept its XXXXXXXX as they XXX. Finally, a transnational XXXXXXXX XX necessary XX XXX company is XXXXXX high pressures XX both the cost XXX local XXXXXX fronts.
Based on XXX XXXXXXXXXXX-XXXXXXXXXXXXXX XXXXXXXXXX and XXX XXXX pressure from the local XXXXXXX and production costs that GM is facing, it XX XXXXX XXXX XX XXX to XXXXX a transnational XXXXXXXX which XXXXXX it a moderate XXXXXX of centralised control, while also delegating and XXXXXXXXXX a significant XXXX of their XXX functions, XXXX as XXXXX, XXXXXXXXX, XXXXXXXXXX, research XXX XXXXXX, to XXX local XXXX. This XXX be observed in how XX responded to the heavy XXXXXXXXXXX XXXX local players such as the XXXXXXXX XXXXXXXXXX Industrial XXXXXXXXXXX, XXXXX Wall XXXXX Co., XXXXX and XXX by choosing XX invest more heavily in XXXXXXXXXXX and design personnel in XXXXX, and in XXXXXXXX a leading R&X hub in its XXXXXXXX XXXXXX XXXXXX.
XX XXX far XXXX XXXXXXXXXX in XXXXX than XXXXXXXXXXX XXXX as Ford, XXXX GM XXXXXXX XXXXXX XX percent XX the Chinese XXXXXXXXXX market share in XXXX, while XXXX XXXX held X percent. GM’s success was attributable to its use of XXXXX XXXXXXXX, its cost XXXXXXXXXXX production strategy, its effective XXXXXXX localization XXX its XXXXX XXXXX investments.
XXXXXXXX, GM XXXXXXXXXXXXX XXXXX XX pursue a XXXXX XXXXXXX with SAIC in 1997, XXXXX allowed XX XX gain a valuable XXXXXXX in XXXXXXXXXX XXXXXXXXX local XXXXXXXXXX conditions and XXXXXXXXX XXXXXXXX XXXXXXX ahead XX XXX XXXXXX. (XXXX, XXXX) XXXXX XXXXXXX intermediaries XXXXXXX XX to XXXXXXXX Chinese XXXXXX XXXXXXXX and win trust from XXXXXXX regulators and XXXXXXXX, XXXXX were XXXXXXXXX to GM’s early XXXXXXX. Conversely, XXXX XXX not use a local partner in XXXXXXXX XXXXX. XXXXXXXX, XX was able XX XXXXXX a cost competitive XXXXXXXXXX strategy based on low cost labour in China, without XXX XXXX XXX onerous XXXXXX XXXX and pension requirements (as was XXX XXXX XXXX workers in XXX XX). XX was also able XX XXXXXX ahead XX demand to build up XXX production capacity. Thirdly, GM XXX able XX XXXXX XXXXXXXXX XXXXXXX XXXXXXXXXXXX XXXXXX a XXXX XXXXX XX its XXXXXXXX. For XXXXXXX, Wang (XXXX) XXXXXX out XXXX XX XXX able to provide innovative XXXXXX XXXXXXXXXXXXX XXX its XXXXXXXX, XXXX as XXX functional and XXXXXXXXXX Wuling XXXXXXXX XXXXX van, XXXXX sold X million units in XXXX. (Wang, 2008) GM was XXXX able XX customise XXX XXXXXXX XXXX in China, such XX XXX Boajun XXX XXX Buick Envision, XXX also XXXXXXXX its Cadillac XXXXXX brand as a XXXXXX XXXXXX for China’s aspiring middle XXXXX. XXXXXXX, XX invested XXXXXXX in XXXXX XXXXXXXXXXX and design XXXXXX in XXXXX, and XXXXX XXXXXX XXXXX capabilities XXXXX XXXXXXXX it strongly in XXXXX. (XXXX, XXXX)
XXX XXX challenges for XX’s XXXXXXXX in XXX Chinese automobile market XXXXXXX slowing demand for XX’s XXXXXXXX, XXX increasing XXXXXXXXXXX XXXX XXXXX players XXXX XX SAIC XXX Great Wall XXXXX XXXXXXX. XXXXXXXX, XXX XXXX study XXXXXXXX a slowdown in XXX XXXXXXX XXXXXXX XXX XXXXXXXXXX XXXXXXXXXXX in XXXXXXX yuan XXXXX XXXX, XXXXX XXXXX XXXX XXXXXXX exports increasingly cheap XXX XXXXXX XXX XXXXXX XXXXX of Chinese XXXXXXXXX for XX XXXXXXX. Secondly, the case XXXXX mentions a price XXX XXXXX XXXXXXXX car manufacturers, XXX XXXXX competition XXXX SAIC XXX XXXXX Wall Motor XX. XXXXXXX, there is XXXXXX to XX XXXXXXXXXX XXXXXXXXXXX in the XXXX XX XXXXXXXXXX development XXX R&X in China’s automotive XXXXXX. XX He XXX XX (XXXX) point out, Chinese companies XXXX also be active in XXXXXXXXX and transferring XXXXXXXXXX from XXXXXXXX XXXXXXX firms, XXXXXX XXXXXXX XXXXXXXXXX talent XXXXXXXXXXXX, mergers or partnerships, XXXXX will XXXX XXXXXXXX the competitiveness XX the XXXXXXX XXX XXXXXX. This is supported by XXXXXXXXXX (XXXX), XXX XXXXX that XX’s XXXXXX XXXXX XXXXXXX XXXXXXX eventually XXXXXX a XXXXXXX XXXXXXXXXX XXX GM.
XX XXXXX consider XXX following XXXXXXXXX XX sustain XXX XXXXXXXX in XXX Chinese XXXXXXXXXX XXXXXX. XXXXXXXX, GM should continue to localise XXXXXXXXX to the Chinese XXXXXX and XXXXXX localised marketing campaigns featuring XXXXXXX XXXXXXXXXXX. XXXXXXXX, GM should XXXXXXX XXX XXXXXX more XXXXXXXXXXX, and XXXXXXXX XXXXXXXXX product XXXXXXXXX to the lower-XXXXXX, middle-income XXX luxury premium segments of XXX XXXXXXX XXXXXXXXXX consumer XXXXXX. Thirdly, to XXXX XXXX rising cost XXXXXXXXX, XX XXXXXX XXXXXX in XXX technologies XXXX as XXXXXXXX manufacturing, robotics and XXXXXXXXX production lines to XXXXXX XXXX margins. These XXXXX XXXXX XXX XXXXXXX XX cope with rising XXXXX costs XXX slimmer XXXXXXX in China. Finally, in the XXXX-XXXX, GM should consider further expansion into relatively XXXXXXXXX markets such as XXXXX America.
XX’s success in China demonstrates XXX XXXXXXXXXX of strong XXXXX XXXXXXXX, investment XXX XXXXXXX XXXXXXXXXXXX in emerging markets, XXX XXX XXXXXXX XXXXXXXX also demonstrates XXXX any multinational XXXXXXX a XXXXXX XXXXXXXX in XXXXXXXX XXXXXXX XXXX XXXX to innovate continuously to sustain its growth.
References
XXXXXXXXXX, X. (2007). Passing XXXX: XX’s XXXXXXX XXXXXXX Looms as a New XXXXX.Wall Street XXXXXXX, XX.
XX, X., & Mu, Q. (2012). XXX Chinese firms XXXXX technology XXXX transnational corporations: X comparison XX XXX XXXXXXXXXXXXXXXXX XXX automobile industries.Journal XX Asian XXXXXXXXX,23(3), 270-287.
Wang, H. (2008). Innovation in product XXXXXXXXXXXX&XXXXX;X study of the XXXXXXX XXXXXXXXXX industry.XXXX Pacific Journal XX Management,25(X), 509-XXX.
XXXX, John Z. "Key XXXXXXX factors of XXXXXXXXXXXXX XXXXX in China."XXXXXXXXXXX International XXXXXXXX XXXXXX40.6 (XXXX): 633-XXX.
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