Analysis of General Motors Performance on the Chinese Market

GM sales of cars outside the US are significant because seventy percent of the revenues for the company come from foreign countries. The US has a saturated market for vehicles. Economical emerging Countries like China can put up substantial car sales in the future. Secondly, GM can manufacture cars in other countries at less price than in the US.

In the existing scenario, GM has a promising future in countries such as China, which has a demand for luxury cars and SUVs. The company must think of offering passenger cars suitable to each country’s needs. As per the integration-awareness framework for determining the global strategy, the comprehensive standardization strategy would suit the GM’s plan. Because there is always a pressure to reduce the price of the cars made by GM in China, in response to the domestic vehicle manufacturers, there, global standardization approach is ideal. The scenario that the pressure to reduce cost is high, and the strength to respond to the local needs is low makes the GM go for standardization of its product offering.

Based on the above global strategy, GM can formulate its business strategy as cost leadership. The company may standardize its product across the world, manufacture the cars at the least cost from countries like China, and offer the vehicle at a lesser price in the US. Though global strategy, the company can leverage its business strategy.

General Motors uses international businesses to obtain and retain consumers. General Motors place themselves in a global market to reach the highest number of consumers through international trade. By doing this, they can offer more products in exchange for consumers all over the world. In 2014, GM obtained almost 15 percent market share in China, while Ford gained only 3 percent (Rothaermel, 2017).

GM was fruitful in China. Some of its rivals, as well as Ford, struggle to increase a stronger position in the world's largest automobile market because GM made a joint venture with Chinese auto manufacturing companies & Some 70 percent of GM’s revenue are now from outside the United States (Rothaermel, 2017). It is relatively a high level of globalization for a company that once focused on the local market only. GM traded more than 3.6 million vehicles in China, 37 percent of the total GM cars sold (Rothaermel, 2017). The Chinese market becomes more and more significant to GM’s performance, accounting already done for almost 30 percent of the total GM revenues of $155 billion (in 2014) (Rothaermel, 2017).

Though GM has the edge over other automobile manufactures, it must address the challenges posed by the market. General Motors was one of the first organizations to discover and start marketing in the China markets. The company, in return, created a positive perception from the customers about the company. The key challenges are:

• There is an economic slowdown in China.
• Materials that need to import for manufacturing in China are costlier due to the devaluation of the Yuan. Buying local products over international products in the Chinese market lowers sales from General Motors. Promoting local products can be done by using unfavorable business laws that suit local manufacturers over the global business market.
• Government controlled auto companies are placing fierce competition on the GM. Rivalry on the domestic automobile manufactures lead to decreased sales for the organization.
• The US is showing signs of recovery, and the auto sale expected to grow there, especially in the SUV sector. GM will have resource constraints if the company decides sharply to compete in both the market.