GM finds surprising success in China

Phil LeBeau with Wally Griffith • Profile

SHANGHAI, China - The old symbols are still there: the monuments, the uniforms, even the red flag.

But on the streets of today’s China there are a growing number of new icons that Mao Zedong never dreamed of, with prestigious names like Rolex, Louis Vuitton — and Buick.  

That’s right, Buick. Look anywhere in China and there they are: Buick sedans, Buick station wagons, even Buick police cars.

What would Chairman Mao think? Six decades after the communist revolution, China has become the hottest capitalist engine on earth. And ironically, some of the most revered symbols of success in today’s China are Cadillac, Buick and Chevrolet.

General Motors may be struggling at home, but it is thriving in China. In 2007, GM sold nearly twice as many Buicks in China as it did in the United States — more than 330,000. In this part of the world, your grandfather’s stodgy old car is actually hip.  

“Growing so fast is not easy,” said GM CEO Rick Wagoner. ”But it’s better than shrinking, I promise you.”

We joined Wagoner on a recent trip to China, and found him awestruck by the country’s economic vitality.  

"In a way it is — I don’t know what it is — 30, 40, 50 years of progress in 12 years,” he said. “It’s like things run here in triple time."

In 1997, Wagoner and his then-boss Jack Smith made a gamble, betting $1.5 billion that GM could build and sell cars in China.

Partnering with a once-hostile Communist government in a country moving mostly on bicycles, GM was taking a big risk. 

But Wagoner believed the Chinese were ready to trade two wheels for four, and he wanted GM to go along for the ride.

“Back in 1997, the Chinese market was about 1.5 million units,” he said. “We sold about 60,000. So I don’t think, to be fair, anyone could see the extent of the potential.” 

Wagoner’s hunch was that 1.4 billion Chinese — long denied access to Western goods — would be starving for legendary brands like Buick, Cadillac and Chevrolet.

In the end, Wagoner was right. Just ask Zhoucheng Ye, a 36-year-old businessman from Shanghai province.

He and his brother traveled three hours to a Chevrolet dealership here in Shanghai to buy his very first car, a brand new Chevy Aveo.

“I saw Chevrolet is very heavily used, I saw a lot of them on the streets,” Zhoucheng told us through a translator. “Chevrolet has very good quality and quality is very important for Chinese.”

Zhoucheng may be new to car buying, but he works the deal like a pro. Zhoucheng and the dealer settle on a price of 76,000 Chinese Yuan — roughly $11,000 — which Zhoucheng pays in full using a bank debit card. Like a new-car buyer anywhere, Zhoucheng is delighted with his purchase. 

So why buy American instead of a car made by a Chinese manufacturer?

“American producers have a longer history of producing cars and they have better techniques,” said Zhoucheng.

There’s just one problem: Zhoucheng doesn’t have a driver’s license, so his brother will have to drive the new car home. Still, Zhoucheng is thrilled, and so is GM.

The automaker has captured 12 percent of the growing Chinese automobile market, the largest share of any car maker here. It’s a story playing out in other countries, too. 

GM is investing heavily in places like India, Brazil and Russia. Eastern Europe, where the Chevrolet brand is on fire, is one of GM’s hottest markets. Apparently, ex-communists love Chevy.

GM’s global strategy has silenced critics who argued its capital belonged at home, rather than abroad. 

We saw an example of that first hand at Daewoo Motors in South Korea.

In 2002, Daewoo was bankrupt, broken, and looking for a buyer. GM was looking for opportunities overseas, and so in 2002 a deal was made between the two automakers.  

Today, under GM ownership, Daewoo’s factory floors are humming and its bottom line is booming. 

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