Inside The Deal To Sell GM to China’s SAIC (2024)

FAQs

Why did GM enter through a joint venture with SAIC? ›

One of the reasons Wuling started the joint venture with SAIC and GM is the ambition to manufacture and sell passenger cars as well. In 2003, that dream partly came true.

As was pointed out, GM's ability to become the number-one player in the world's fastest growing car market is due to many reasons: non-union workers, low labor costs, and strong brand equity being among them.

And now GM is leading the way on Chinese outsourcing, announcing it will become the first U.S. firm to import a vehicle made in China to the U.S. It's about time taxpayers ask what their $50 billion rescue really bought them.

In 2021, the joint venture between China's Shanghai Automotive Industry Corporation (SAIC) and General Motors (GM) reported revenue of 182 billion yuan, an increase of 2.8 percent compared to the previous year.

SAIC General Motors Sales Co., Ltd. is a joint venture between GM China and SAIC Motor that was established on November 25, 2011. GM China has a 49 percent stake and SAIC Motor a 51 percent stake.

How many US companies are owned by Chinese? There were 261 Chinese companies listed in the US with a combined market value of $1.3 trillion as of March 2022 according to the U.S-China Economic and Security Review Commission.

Like any public company with a stock offering, General Motors is owned by shareholders. In the past, the U.S. government was a majority shareholder in the company (after the 2008 bailouts). However, in 2010 GM broke free from the government's yoke and was reborn in its current incarnation.

GM is big in China already. But market share has been slipping in recent years. The company, with its joint venture partners, sold about 2.9 million vehicles in China during 2021, capturing about 11.2% of the market.

Why do American companies choose China over everyone else? ›

Working with a manufacturing facility in China means you can reduce the production cost, without reducing volume output. This is by far the primary reason why U.S firms and entrepreneurs put up with the disadvantages of manufacturing on the other side of the world.

China's robust business ecosystem, low taxes, and competitive currency practices are some of the reasons why the Chinese market is unmatched.

Both were top Obama-administration officials involved in the auto-bailout decision — Goolsbee had been a member of the Council of Economic Advisors and Krueger was chief economist at the Treasury Department. GM lost $40 billion in 2007 and another $31 billion in 2008, they pointed out.

"Ford's manufacturing plants are located elsewhere in China, and they remain in operation.” GM's facilities in Shanghai produce Buick, Chevrolet and Cadillac vehicles.

But, the hype is not the reality. In fact, GM did not repay the loans with money it earned from selling cars. Instead, GM repaid the TARP loans with money it withdrew from another TARP fund at the Treasury Department.

Which Cars Are Made in China and Sold in the U.S.? ... 2019 Buick Envision. ... 2018 Cadillac CT6 Plug-in Hybrid. ... 2018 Volvo S60 Inscription. ... 2018 Volvo S90. ...

Since 2015, Volvo (owned by Geely Car Company) has sold Chinese assembled XC60's in the U.S. Similarly, Buick has sold the Buick Envision here, which has been assembled in China since 2014. But so far, no 'homegrown' Chinese car company has entered the U.S. market to sell their own engineered vehicles here.

U.S.: best-selling car brands 2022

In 2022, Ford overtook Toyota as the leading car brand in the United States based on vehicle sales, delivering about 1.8 million units to U.S. customers. The United States is the largest market for Ford: wholesales to U.S. dealerships reached 1.7 million vehicles in 2021.

China is already the second- or third-largest market for many American companies, including Apple, Starbucks, and Amway. Texas Instruments and Qualcomm each derived more revenues from China in 2020 than from any other country.

Altogether, Chinese sales of U.S.-made vehicles totaled about 266,657, representing less than 1% of the world's largest automotive market. Here were the top 20 most exported models from U.S. plants to China in 2017: BMW X5: 52,407. Mercedes-Benz GLE: 40,304.

Is Ford owned by China? ›

No, Walmart is not owned by China, nor has it been sold to a Chinese investment group. According to USA TODAY fact check, a claim that Walmart had been sold to a Chinese firm was proven false. On Jan. 2 2021, a Facebook post claimed a Chinese business group bought out America's largest retailer.

The $11.2 billion loss includes a write-off in March of the government's remaining $826 million investment in "old" GM, the quarterly report by a Treasury watchdog said.

General Motors net current debt for the twelve months ending December 31, 2022 was $3.318B, a 66.9% decline year-over-year. General Motors annual net current debt for 2022 was $0.373B, a 87.19% decline from 2021. General Motors annual net current debt for 2021 was $2.912B, a 951.26% increase from 2020.

GM earns the majority of its revenue and profit from vehicle sales but also from its financing arm called GM Financial.

Shanghai OnStar, a joint venture of GM and SAIC Motor, is the leader in automotive telematics in China.

How many cars GM sold in China? ›

GM China sales decreased 20 percent to 2,303,100 units during the complete 2022 calendar year. Sales were down at all five GM brands in the Asian country, including Buick, Chevrolet, Cadillac, Baojun and Wuling.

SAIC General Motors Co., Ltd. (SAIC-GM) is a joint venture between General Motors and SAIC that was established on June 12, 1997. SAIC-GM has four major manufacturing bases – Jinqiao in Shanghai, Dong Yue in Yantai, Norsom in Shenyang and Wuhan – with eight vehicle plants and four powertrain plants.

U.S. trade with China has grown enormously in recent decades and is crucial for both countries. Today, the United States imports more from China than from any other country, and China is one of the largest export markets for U.S. goods and services.

Both Yahoo and LinkedIn announced their withdrawals in 2021, while being pretty clear about why they made the decision. Yahoo cited its commitment to a “free and open” internet, while LinkedIn says its decision was due to a “considerably more difficult operating environment and higher regulatory requirements.” ...

China is an important source of revenue for many multinational apparel companies like Nike (NKE), Gucci, and Abercrombie & Fitch as well. Other notable consumer goods companies with sales in China include Avon, Colgate-Palmolive, Tyson, Nabisco, Kellogg's, Danone, Conagra, and Tupperware.

Lower Costs. Chinese low operating costs are derived from having raw materials. China makes its raw materials and because of high demand, they cost less.

It supports US jobs.

American companies exported $192 billion in goods and services to China in 2021, constituting 7.5 percent of US exports. While expanding foreign trade can disrupt US employment, trade with China also creates and supports a significant number of American jobs.

Total U.S. Trade in Goods with China

In 2021, U.S. exports to China were $151.1 billion, a 21.4% ($26.6 billion) increase from 2020; the U.S. imports from China were $506.4 billion, a 16.5% ($71.6 billion) increase; and the trade deficit with China was $355.3 billion, a 14.5% ($45.0 billion) increase.

Ford did not ask for a government bailout, but received other financial assistance. Ford supported the GM and Chrysler bailouts to protect its supply chain and dealer network. To run the auto bailout part of TARP, the new Obama administration created the White House Council on Automotive Communities and Workers.

Apologists for the bailout assert that were it not for the federal government's emergency intervention, America would have lost one of its premier industries, along with a critical mass of skilled labor, physical plants, technology, and suppliers.

Is GM still owned by the government? ›

The new GM company, after the purchase of most of the assets of "old GM" is not a participant in the continuing bankruptcy proceedings of Motors Liquidation Company (Old GM). The "new GM" is mostly owned by the United States Government.

Ford sold approximately 624,000 vehicles in China and Taiwan last year, up from 602,627 sales in 2020. GM, meanwhile, sold about 2.9 million vehicles in China, the same as it did in 2020.

With GM headed towards bankruptcy, its US government rescuers unwilling to pay for overseas problems, credit markets largely frozen by the financial crisis and the Korean Development Bank refusing to extend loans beyond the $2 billion already owed to it by GMDAT, GM's only option was to turn to its Chinese partner for ...

This is despite the fact that GM and Chinese automaker SAIC motor have a 50-50 stake in several Chinese factories. These plants manufacture Buick, Cadillac, and Chevrolet vehicles, among other GM brands. Therefore, some Chevy trucks are actually made in China.

The U.S. government spent about $50 billion to bail out GM. As a result of the company's 2009 bankruptcy, the government's investment was converted to a 61 percent equity stake in the Detroit-based automaker, plus preferred shares and a loan.

General Motors filed for bankruptcy early Monday, marking the end of an era for GM, as the troubled automaker now represents the largest bankruptcy in history. Once the world's largest automaker, now the ailing giant will be forced to close more than 10 plants and cut more than 20,000 jobs.

U.S. employees who are approved for the buyout will be granted one-month pay for every year they worked up to 12 months, as well as COBRA health coverage. They also will receive prorated team performance bonuses and outplacement services.

GM saw the joint venture as a way to get access to quality small cars and an opportunity to learn about the Toyota Production System and The Toyota Way, a series of lean manufacturing and management philosophies that had made the company a leader in the automotive manufacturing and production industry.

In 1992, General Motors wasn't producing any cars in China yet. The Shanghai-GM joint venture, known today as SAIC-GM, was only launched in 1997. For GM, a car-making deal with Shenyang Jinbei presented a golden opportunity to get a foothold in the promising car market.

Because the Chinese economy was growing rapidly and it had huge economic potential in coming years. GM wanted to reach China and reap the benefits of this opportunity before its rivals. This was the strategic rationale behind its joint venture in China.

When did General Motors enter the Chinese market? ›

GM's first China venture dates back to 1997, with the formation of the Shanghai General Motors Company Ltd or Shanghai GM to manufacture and sell its Chevrolet, Buick, Cadillac, and Opel brands in the domestic market.

Company pensions and legacy health care costs were fixed as well. So when sales went down, many costs stayed fairly constant. And that led to losses. As the losses mounted and the economy struggled, these losses became so significant that GM could not survive as a viable business.

NUMMI wasn't successful, it wasn't famous – it was just a dream. GM had several very clear business objectives. They had an idle plant (the Fremont plant had made several products over the years, Chevy Camaro, Olds Ciera, GMC trucks. But, no matter the product, quality was consistently GM's worst.

The main lesson of NUMMI is clear: Massive automation without corresponding changes in management and work force organization is not enough. Because GM's executives were too concerned with labor cost, they failed to recognize that other costs are also significant.

American companies benefit from outsourcing manufacturing to China. The most common reason for outsource manufacturing is the reduction of cost. American companies outsource manufacturing to China to have their goods assembled, or completely built overseas, at incredibly low costs.

The Bottom Line

However, the availability of cheap labor is just one of many factors that have kept the "Made in China" label on so many products purchased by consumers around the world. It will take more than low labor costs for emerging economies to set up a business ecosystem that can compete with China's.

Today, the United States imports more from China than from any other country, and China is one of the largest export markets for U.S. goods and services. This trade has helped the United States in the form of lower prices for consumers and higher profits for corporations, but it has also come with costs.

In China, GM and its joint ventures sell passenger cars and commercial vehicles under the Cadillac, Buick, Chevrolet, Wuling and Baojun brands.