Doing Business in China

June 1,2009 is a big day to the world's automakers.The automaker giant General Motors filed for bankruptcy in that day.It marks a historic reversal for an iconic American corporation and a cautionary tale for the US and the world.

A 101 years old automaker,which had been the world's largest automaker,why succumb to bankruptcy so easily?What lessons should the other automakers learn from the bankruptcy?

Many analysts thought that mismanagement,insensibility to market demand and customer needs,failure to innovate,and high production costs had already robbed GM of its ability to recover.

Bad management is largely responsible for GM's fate.GM have wasted too much money to invest heavily in technology and vehicles in 2008.Someone said legacy expenses such as the high cost of pesions and health care is the big reason to the bankruptcy.

Lack of innovation is another reason.GM does not have the economy vehicles that could help it win back the market nor does it possess the new energy technology needed to lead the car industry in the future.Since the oil-price shocks of the 1970s, US carmakers failed to take the lead in fuel efficiency – setting themselves up to lose market share when gasoline prices jumped again, as they did last year.

In a bid to preserve jobs and avoid a devastating collapse of the auto industry,the US Treasury agreed to pump an additional $30 billion into GM,on top of about $20 billion already committed.

What lessons should Chinese automakers learn from the GM bankruptcy?First of all,automakers should deal with the relations between becoming big and becoming refined and strong.

China's auto industry is doing its best to get bigger.Nearly all the auto companies plan to develop a complete series of products.A lot of enterprises have implemented multi-brand strategies and some have announced high profile goals of producing and selling one million and even two million units a year.

However,merely focusing on the size gives rise to some ailments commonly found in large companies,including low efficiency in resource coordination,rising costs and sluggish market response,as well as the difficulty in operating numerous brands.

Another lesson is that automakers should follow the market trend.GM placed its long-term development focus on the super profitable high-emissions SUVs and pckups.China's auto companies must establish a scientific outlook on development. They must turn their pursuit of "profit-driven" into "value-driven," and only judge their success by whether they can create value for their shareholders, customers, the industry chain and even the entire society.

GM will sale their Hummer brand,read the article:Chinese little-known Hummer buyer surprised the world