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GM bankruptcy not likely to hurt its China operations

By Li Fangfang (China Daily)
Updated: 2009-06-02 09:37

Related readings:  General Motors goes bankrupt  GM failed: Can 'Govt Motors' succeed?

Europe may be very anxious about General Motors' collapse, but for China, the worst news in the auto industry is not likely to hurt given that the nation is one of the booming marketplaces for the bankrupt auto behemoth.

The century-old automaker filed for Chapter 11 bankruptcy protection yesterday, and the US government said it would inject billions of dollars to support its survival and reorganization.

"The plan suggests that GM would use a court-supervised process to re-launch the company and lay out very well the challenges that we are currently facing in the US," said GM in an email statement.

But "no matter what the final actions are in the US, our operations in Asia Pacific will stay largely unaffected."

GM is expected to provide more information today.

"GM's entry into the bankruptcy protection process will definitely shake the US and European automobile market, but will almost certainly not impact its China business," said Zhong Shi, an auto analyst based in Beijing. "Its operations in China are healthy enough to make it go further independently."

"GM's two major manufacturing facilities in China, Shanghai GM and SAIC-GM-Wuling, are on a sustainable track now, be it in manufacturing, product line-up or sales," said Yale Zhang, director of Greater China Vehicle Forecasts for US consultancy CSM Worldwide Corp.

"The quite-profitable businesses here make it possible for GM to continue developing new projects in China, with its joint ventures' own capital."

As the Chinese government's series of stimulus packages have driven domestic demand, GM has benefited. Its China sales jumped 50 percent, to 151,084 units in April, even as it encountered a 50 percent slump in the first quarter in its home market.

Shanghai GM, which produced the Buick and Cadillac models, increased its local sales by 34.7 percent and sales of SAIC-GM-Wuling, GM's mini-commercial vehicle joint venture, which also manufactures Chevrolet cars, rocketed by 60.6 percent year-on-year in April.

In terms of product portfolio, "we also should not worry about GM's future in China, as its models produced locally, Buick, Cadillac and Chevrolet, are just three among four brands the company has promised to maintain in its restructure planning", said Zhong.

"GM's success in the China market has also proved that these three brands are strong even in the current economic situation."