International Law

GM?s China Expansion Plans

By Stan

Call me crazy, but I don’t think this is going to play well in Michigan (or Ohio, or Indiana, etc.):

General Motors Corp., shuttering U.S. plants in a bid to avoid bankruptcy, is ?likely? to build a new factory in China on surging demand.

?Operations in China are profitable and in the future China can finance its own growth,? Nick Reilly, the company?s Asia-Pacific president, said at the Shanghai auto show today. He didn?t give a time frame for the new plant.

GM, the biggest overseas automaker in China, boosted sales in the country 38 percent last month as government stimulus measures spurred demand for its minivans. By contrast, the company?s U.S. sales slumped 45 percent on the recession, as it battles to convince the U.S. government that it?s still viable.

The automaker has also delayed expansion of an Indian plant for as long as two years as sales growth there has slowed, Reilly said. The company will seek to turn around sales in Australia and South Korea, he added.

GM is basing its business planning in Asia on the assumption that it will have to finance projects locally, insulating it from possible problems in the U.S., Reilly said.

?We won?t get money out of the U.S. into China,? Reilly said. Still, ?we don?t need to because we have a very good balance sheet.?(Bloomberg)

Doesn’t really matter if the U.S. and PRC business units are separate and whether local demand (or lack thereof) is driving these corporate moves. It still looks bad and will certainly not help GM’s image in the U.S.

I wonder what will happen the next time they hold committee hearings on the auto bailout(s) in Congress and all those union-backed congressmen/senators get a chance to pontificate about why the U.S. government is giving money to struggling auto companies, who are closing U.S. factories and opening new ones in China?

Should be fun to watch.

© Stan for China Hearsay, 2009. | Permalink | One comment | Add to del.icio.us

Full post as published by China Hearsay on April 20, 2009 (boomark / email).