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GM forecasts 20+ percent growth in China, but Chinese competition lies ahead

General Motors is revising its sales forecast for China this year - upward. Thanks to a booming economy, GM China Group president Kevin Wale projects sales growth "significantly more" than GM's earlier forecast of 20 percent. GM is the market leader in China, with a 12 percent share.
Wales sees strong growth in the Chinese market through 2015. Despite the expanding market, profits are being held down by manufacturing overcapacity and intense competition - two factors which are predicted to drive Chinese manufacturers into overseas markets.

Years of manufacturing joint ventures with companies like GM, Ford and Volkswagen have given Chinese companies the skills and technologies to launch their own brands, targeted at a global market. A DaimlerChrysler executive told Reuters that he sees Chinese cars entering the U.S. market in three to five years, and appearing in global markets in five to eight years.

Time will tell whether established automakers have taken short-term gains at the expense of future competition in their home markets. Certainly some Chinese auto industry insiders think their industry faces an uphill struggle to develop their own exportable products - check out this BusinessWeek interview for some food for thought.

[Source: Reuters]

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