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GM in China INTRODUCTION COM0027 In July 1994, when the Chinese authorities initiated the task

GM in China

INTRODUCTION

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In July 1994, when the Chinese authorities initiated the task of making China’s automotive sector as one of the country’s strongest industries, the market had opened up for the foreign companies. 1 However, the foreign car companies were required to qualify few pre-conditions:

they were required to first invest in the components industry and transfer the technology to the Chinese partner in a joint venture, where the share of the foreign partner would not exceed 50%. 2 General Motors (GM), in an effort to gain access to the Chinese automotive market, invested in technical assistance projects, which facilitated technology-transfer to the Chinese automotive sector. By 1996, GM had set up a number of joint ventures to manufacture auto components in China. Eventually, GM got the permission and so, set up a manufacturing unit investing between $1billion and $2 billion to manufacture mid-sized cars in China. 3

However, by 1996, the sales in the Chinese car market had been declining steadily, mainly due to the smuggling of cars into China, mostly from North Korea. 4 GM, however, continued with its expansion plans, as it felt that the Chinese market had a lot of potential. Between 1997 and March 2004, GM set up a number of joint ventures to manufacture different models (Exhibit I). The models manufactured by GM in China were the variants of Buick, Chevrolets and mini vehicles like Sunshine and LZW6360. GM China also brought in other models like Opel, Cadillac and Saab to China in the form of imports.

GM faced a number of problems in China; however, its optimism about China’s potential in the car market paid-off. The passenger car sector in China grew by 76% in 2003 over 2002. Industry sales totalled to 1.97 million units in 2003 compared with 1.12 million in 2002. 5 The country was fast developing into the fourth-largest automotive market in the world after the US, Japan, and Germany. 6 Global Insight Inc. had forecasted that Mainland China would become the world’s second largest automotive market by 2013. GM China’s sales increased by 46.4% in 2003, compared to the previous year. 7 The company was also able to maintain a steady stream of earnings over the years in China. In 2003, it tripled its earnings to $437 million as compared to $142 million in the previous year. 8 GM’s earnings for Asia-Pacific region, which totalled to $577 million in 2003, constituted majority of the company’s earnings.

1 Peters Tim, et al., “The Chinese Auto Industry General Motors and Ford Motors 1994 to 1999”, www.vwa.unisg.ch

2 Ibid.

3 Ibid.

4 Ibid.

5 Bailey John, “China’s auto industry prepares for more competition”, www.financeasia.com, March 25 th 2004

6 Ibid.

7 Blanchard Ben, “UPDATE 3 – Chasing VW, GM and China agree 4th plant”, www.forbes.com, February 26 th 2004

8 “China triples earnings to $437 mln in 2003”, http://www.gminsidenews.com/forums/showthread.php?t=4217, March 15 th 2004

This case study was written by Sandeep Chaurasia under the direction of T Phani Madhav, IBSCDC. It is

intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective

handling of a management situation.

The case was compiled from published sources.

© 2004, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

License to use for the Class of 2012, Semester I, IBS Hyderabad. Course: Marketing Management – I

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2 GM IN CHINA

THE CHINESE MARKET AND THE COMPETITION

2 GM IN CHINA THE CHINESE MARKET AND THE COMPETITION In the 1990s, the Chinese passenger

In the 1990s, the Chinese passenger car market was highly regulated due to the government control over production volumes, prices and the models that could be manufactured and sold. 9 The government wanted to reserve the mass market for the local players, and the foreign manufacturers were forced to manufacture vehicles that were too expensive for the average customer.

By the year 2000, the major problems being faced by foreign players in the Chinese automotive industry, apart from the fact that the government had the final say in all decisions that were made in the industry, were that the consumer understanding was very limited and there were dealers looking to make money by hook or crook. 10 Such problems led to a slowdown of the market, with prices that most Chinese customers were unable to afford.

prices that most Chinese customers were unable to afford. Mostly foreign players that have entered the

Mostly foreign players that have entered the market through joint ventures (Exhibit II), dominated the Chinese car market from 1995 onwards. These foreign players held a major portion of the market, while around 120 domestic manufacturers accounted for the rest of the market. Among the local manufacturers, First Automotive Works Group (FAW) and Shanghai Automotive Industry Corporation (SAIC), were the two largest companies and provided the main competition for the foreign players.

Of the foreign players, Volkswagen (Exhibit III), which entered the Chinese market in 1985, dominated the market. Toyota (Exhibit IV), with its 9% market share and with a plan to launch popular models like Crown, Corolla, Land Cruiser and Land Cruiser Prado, also posed a serious threat to GM. 11

By 2003, Mainland China had emerged as a key manufacturing region for the major global players and as the third largest producer of commercial vehicles behind the US and Japan with a production of 4.4 million units in 2003. 12 This production capacity of China was expected to grow over the years and most of the players in China intended to increase their existing production levels (Exhibit V).

to increase their existing production levels (Exhibit V). 9 10 11 Even though foreign players dominated
9 10 11
9
10
11

Even though foreign players dominated the Chinese auto industry, they had no competition from some domestic manufacturers like SAIC, FAW, and Dongfeng Motor Corp. (Dongfeng). SAIC, based at the Eastern region of Mainland China, had a total car production that exceeded 800,000 units in 2003. 13 FAW was based at Jilin province, Northeast Mainland China. The company manufactured trucks, buses, and passenger cars. It held a major joint venture with Volkswagen that had a yearly capacity upto 330,000 units. 14 Dongfeng, based

Thornton Emily and Roberts Dexter, “Beijing Gives Foreign Auto Makers The Green Light”, www.businessweek.com, July 19 th 1999

Webb Alyssa, “GM Retools in China”, www.businessweek.com, October 25 th 2000

“Toyota plans new models for China”, www.chinadaily.com.cn, August 21 st 2003

12 “China’s auto industry prepares for more competition”, op.cit.

13 Ibid.

14 Ibid.

21 s t 2003 1 2 “China’s auto industry prepares for more competition”, op.cit. 1 3

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at Hubei province, Central Mainland China, was the third largest auto manufacturer in China. The company produced about 470,300 autos in 2003. 15 Dongfeng had a major joint venture with Citroen, a French automotive manufacturer.

venture with Citroen, a French automotive manufacturer. Analysts opined that when China would eventually join the

Analysts opined that when China would eventually join the World Trade Organisation (WTO), prices would fall and then the cars would become affordable to the common man. Also the tariffs on imported cars were expected to fall from 70% to 80% of the list price to 43% to 50%, making such cars more affordable for the Chinese customers. 16 This relaxation of tariffs in the Chinese car market was expected to be extremely beneficial to the customers, as it was expected that the array of choices would increase and the prices would fall. However, it was expected to make life very difficult for the car manufacturers as this was expected to lead to heightened competition.

was expected to make life very difficult for the car manufacturers as this was expected to

GM’S JOINT VENTURES IN CHINA

Leveraging on its extensive global resources to deliver the best combination of technology, customer care and innovation, GM entered China to manufacture automobiles, auto components, set up R&D centre, extend financial services and provide after sales services. To penetrate the Chinese market, GM entered into a number of joint ventures with domestic manufacturers. The company felt that the knowledge of the domestic industry as well as the distribution channels of the domestic partners would come handy for GM’s operations. GM’s first major joint venture in China was with SAIC in June 1997; a 50-50 joint venture that formed the Shanghai General Motors (SGM) (Exhibit VI). Mass production at SGM started in 1999 with Buick sedan, based on the model produced in Oshawa, Canada. The Completely Knocked Down (CKD) kits were shipped from Tilsonburg, Canada, to SGM in large quantities. In 2003, the sales of Buick sedan increased by 81.6% over the previous year. 17

In April 1997, GM felt the need to focus on R&D and formed a $50 million 50-50 joint venture with SAIC to form the Pan Asia Technical Automotive Center (PATAC). 18 PATAC was the first joint venture for automotive engineering and design centre in the Asia Pacific region. 19 Among its achievements was the reengineering of the Buick Regal, Buick Excelle and other products for Shanghai GM.

Regal, Buick Excelle and other products for Shanghai GM. 15 16 In order to expand their
15 16
15
16

In order to expand their portfolio in China, GM entered into another joint venture with the Shanghai-based van manufacturer, Jinbei Automobile, to form the Jinbei GM Automotive Co., Ltd. in 1998. In the joint venture, GM had 50% stake ($ 230 million), while Jinbei Automobile had a 25% stake. The remaining 25% was jointly held by the Liaoning Development Group, Liaoning Energy General Co. and the Shenyang Automotive Industry Asset Management Co. 20 The objective of this venture was to start the production of the variants of the sports utility vehicle, Chevrolet Blazer.

“China’s auto industry prepares for more competition”, op.cit.

Roberts Dexter and Webb Alysha, “Chinese Buyers: In the Driver’s Seat”, http://www.businessweek.com/bwdaily/dnflash/ feb2002/nf2002024_2258.htm?chan=search, February 4 th 2002

17 “Transportation”, www.shanghai.gc.com

18 “GM in China”, www.gmchina.com

19 “Transportation”, op.cit.

20 “GM, SAIC merge plans”, http://my.tdctrade.com, August 3 rd 2004

1 9 “Transportation”, op.cit. 2 0 “GM, SAIC merge plans”, http://my.tdctrade.com, August 3 r d 2004

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As part of its plan to increase the size of its distribution network in China, GM set up the GM Warehousing and Trading (Shanghai) Co. Ltd., in Shanghai’s Waigaoqiao Free Trade Zone in 1999. GM invested $3.2 million in the venture. GM also set up a wholly owned parts distribution center in August 1999. 21 It was established to ensure the quick delivery of genuine GM parts from AC Delco, GM’s US-based automotive parts subsidiary to customers in Mainland China.

GM was able to build up a strong distribution network in China, especially that of Shanghai GM (SGM). By January 2001, SGM had a distribution network of 76 sales outlets and 62 authorised after sales service centres across China. 22 SGM’s well-established network in China, provided customers with high quality products and after sales service. SGM also became the first Chinese automaker to adopt a distribution system in which the retailer sold cars to the customer and developed a relationship to handle the services and other needs of the customers.

In 2001, GM set its eyes on the mini-vehicle segment of China’s automotive industry. This interest was due to the fact that the size of this market segment was 110,000 mini vehicles in 2000 and the company forecasted the market sales to be at least 120,000 mini vehicles in 2001. 23 For this, GM established another joint venture in South China’s, Guangxi Zhuang Autonomous Region. The venture was formed by SAIC, GM and Liuzhou Wuling Automotive Co., Ltd. and was called the SAIC-GM-Wuling Automobile Corporation Ltd. (Wuling) joint venture. 24 This joint venture produced Sunshine, LZW6360 and the Chevrolet Spark, which was derived from GM Daewoo’s Matiz. By 2004, the joint venture evolved with an extensive network of over 400 retailers in 29 provinces and municipalities, and over 400 after sales service centres across China. 25

and over 400 after sales service centres across China. 2 5 After finding that car finance
and over 400 after sales service centres across China. 2 5 After finding that car finance

After finding that car finance was a largely untapped market in China, GM saw a sales driver in the car finance sector. This led to General Motors Acceptance Corporation (GMAC) planning its entry in China in 2001. Its purpose was to explore the opportunities to bring to China the latest automotive financing schemes. At that time only 12% of the private car sales were financed in China, as against 80% in the West. 26 However, GM felt that with China ready to enter the WTO, the situation would change due to the expected relaxation of government rules and policies, which would make the obtaining of licenses for financing companies easier.

the obtaining of licenses for financing companies easier. 21 22 23 In October 2003, GM became
21 22 23
21
22
23

In October 2003, GM became the first foreign automaker to apply for a license to handle vehicle financing in China. 27 The company’s financing subsidiary, GMAC, along with its

“GM in China”, op.cit.

“More Than 15,000 Chinese Place Deposits For Buick Sail”, http://www.autointell.com/News-2001/February-2001/ February-07-02-p5.htm, February 7 th 2001

Webb Alysha, “A Chinese Minivan Maker with a U.S Buddy”, http://www.businessweek.com/bwdaily/dnflash/apr2001/ nf2001049_328.htm?chan=search, April 9 th 2001

24 “Transportation”, op.cit.

25 “GM in China”, op.cit.

26 “GM Aims at Joint Venture in Chinese Car Financing”, http://www.china.org.cn/english/2001/Oct/20963.htm, October 2001

27 “GM to offer financing in China”, http://www.taipeitimes.com/News/biz/archives/2003/11/16/2003076090, November 16 th 2003

offer financing in China”, http://www.taipeitimes.com/News/biz/archives/2003/11/16/2003076090, November 16 t h 2003

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Chinese partner Shanghai Automotive Group Finance Co., applied to China Banking Regulatory Commission, to get a permission to become a financing authority for car finance in China. However, no timeframe for the application process was revealed.

no timeframe for the application process was revealed. By March 2004, GM had about 10,000 employees

By March 2004, GM had about 10,000 employees in China and had also set up a few other joint ventures. GM invested over $2 billion in China and had a combined manufacturing capacity of 530,000 vehicles – which were sold under the Buick, Chevrolet and Wuling brands. Thus, GM and its joint ventures offered one of the widest portfolios of products among the foreign manufacturers in China. 28

THE PROBLEMS

Even though GM had set a game plan of entering into a number of joint ventures in China to have a presence across all segments of the Chinese automotive industry, they still had to deal with a number of problems in China. One of the main problems was the poor performance of its joint venture with Jinbei. It was the sole unprofitable venture among all of the motors’ joint ventures in China. In the first half of 2003, Jinbei GM recorded a loss of 32.7 million Yuan, or $3.9 million. 29 It sold only 3,289 Blazers in 2003, which was about 10% of its capacity of 30,000 units a year. 30

was about 10% of its capacity of 30,000 units a year. 3 0 The main problems

The main problems being faced by the venture were its weak distribution network and the fact that the products it manufactured had a very limited appeal in the Chinese market. 31 In October 2003, SAIC was considering to take over Liaoning province’s share in Jinbei GM to address these problems. 32 However, in February 2004, it was GM that signed an agreement to sell half of its 50% stake in Jinbei to SAIC, its main Chinese partner. The other 50% of the venture held by four smaller shareholders would be taken over by Shanghai GM Co. GM said that the managers from Shanghai GM would oversee day-to-day operations of the venture. 33

Another problem faced by GM was that negotiators of the Chinese joint venture partners had a reputation for being tough. This was proved by the deals GM made in China and also by the large amounts that they spent in setting up and maintaining facilities, like the $800 million they spent on the Shanghai plant. 34 Though the Shanghai plant added a few pieces of automation in the welding areas, the amount of automation at the plant was still far below the automation standards of GM’s other plants in the US and Europe. The Jinbei GM plant, with only one robot, also had a low level of automation. This led to the two plants using twice as many workers as compared to similar Western facilities. This high level of staffing,

to similar Western facilities. This high level of staffing, 28 29 30 Ibid. 31 “GM in
28 29 30 Ibid. 31
28
29
30
Ibid.
31

“GM in China”, op.cit.

“Chinese partner raises stake in unprofitable Jinbei-GM venture”, www.iht.com

Blanchard Ben, “UPDATE 1 - GM’s sales surge in accelerating China car market”, www.forbes.com, October 16 th 2003

32 Ibid.

33 “GM’s Chinese Joint Venture Partner Buying Into Struggling SUV Venture in China”, http://www.theautochannel.com/ news/2004/02/26/182301.html, February 26 th 2004

34 Eisenstein Paul, “China: GM’s Next Big Thing?”, http://www.thecarconnection.com/index.asp?article=3869&n=156, 175&sid=175, July 7 th 2001

Big Thing?”, http://www.thecarconnection.com/index.asp?article=3869&n=156, 175&sid=175, July 7 t h 2001

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however, reflected the Chinese government’s interest in keeping as many citizens as possible employed at a time, when the rapid switch to capitalism was causing massive displacement across the country. The company’s officials admitted that they invested more than necessary amount in the facility, which could produce merely 100,000 minivans and sedans annually. 35 The problems at this plant also forced the company to give up the production of two new Sport Utility Vehicles – Ahoe and Trailblazer in China. 36

Utility Vehicles – Ahoe and Trailblazer in China. 3 6 GM had a total investment of

GM had a total investment of $1.52 billion in the Sino-US joint ventures. The investment in China paid off, as it created a win-win situation for both GM and the Chinese auto industry. 37 Shanghai GM set a record for the Chinese auto industry, when it produced its first Buick, just 23 months after the formation of the joint venture. Since 1999, GM launched at least one new model every year with its low-cost ‘Sail’ model catering specifically to the needs of the Chinese customers. 38

Shanghai GM was a major contributor to GM’s success in China as it was able to increase its sales, mainly due to the success of its Buick Regal and Buick Excelle models by 81.6% in 2003, compared to that of 2002. 39

models by 81.6% in 2003, compared to that of 2002. 3 9 Other partnerships also had

Other partnerships also had an influential role to play in GM’s fortunes in China. SAIC-GM- Wuling recorded an increase in the sales by 22.8% in 2003, with the level of sales rising to 180,188 units for the mini-vehicle joint venture 40 with the Chevrolet Spark mini-vehicle, particularly enjoying a great amount of success. Pan Asia Automotive Centre (PATAC) also added to the success of GM in China by successfully re-engineering the Buick Excelle for Shanghai GM, which sold over 36,000 models in 2003. 41 It also introduced a concept vehicle in China in April 2003 called the Kunpeng CAV, which specifically catered to the typical Chinese mini-vehicle buyer, but was very different from the conventional mini- vehicle design in China. 42

from the conventional mini- vehicle design in China. 4 2 Even Jinbei GM, the unprofitable joint

Even Jinbei GM, the unprofitable joint venture of GM in China, was able to add the three-litre Chevrolet Blazer SUV to its Blazer line-up, inspite of its continued losses in the overall sales of Blazers in 2003 increasing by 2.9% over the previous year. 43

THE ROAD AHEAD FOR GM

35 36 37 38 Ibid. 39 40
35
36
37
38
Ibid.
39
40

For the first quarter of 2004, GM China recorded an increase in the earnings of about 24% over the first quarter earnings of 2003. This helped GM’s global automotive earnings to increase from $546 million to $611 million in the previous year, inspite of the lower production in North America and Europe, which had earlier been the major markets for GM. 44

“China: GM’s Next Big Thing?”, op.cit.

“General Motors Drops Plans to Build Two SUV Models in China”, www.automobilemag.com

“GM Investment in China Successful”, http://www.china-embassy.org/eng/zt/wto/t36936.htm, February 15 th 2002

“CHINA: Investment gains help big jump in Shanghai Automotive Q1 net profit”, www.just-auto.com, April 21 st 2004

“GM sales in China rises 46% in 2003”, http://www1.cei.gov.cn/ce/doc/cenk/200403171880.htm, January 8 th 2004

41 “GM Celebrates Another Record Year in China Sells 386,710 Vehicles”, http://www.gmchina.com/chinese/news/ ctl?action=press_body&press_id=281, January 5 th 2004

42 Ibid.

43 Ibid.

44 “GM – Earnings: Hist Earnings”, http://www.gm.com/company/investor_information/earnings/hist_earnings/04_q1/ index.html, April 20 th 2004

http://www.gm.com/company/investor_information/earnings/hist_earnings/04_q1/ index.html, April 20 t h 2004

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The growing market for imported cars in China provided a great opportunity for GM. The company announced in 2003 that it intended to export its cars to China’s vast market. The Chinese government had authorised the granting of trading and distribution rights in 2002, that were required by the WTO. In 2003, the sale of imported vehicles in China stood at 2,045 units, mainly due to the success of the imported Opel and Saab models. GM was also able to introduce Europe’s most popular mid-size sedan, Opel Vectra in March 2003 and also signed an agreement in November 2003 for the roll out of Cadillac luxury vehicles in China for 2004. 45 By 2005, GM was expected to export thousands of Cadillacs, Buicks and other GM vehicles valued at $1.3 billion. 46

GM China took up the initiative of bringing out a hydrogen fuel car and hoped that they would be able to enlist the Government of China in helping them to promote these cars. The alternative fuel cars were scheduled to be put to test on a racing circuit, on the outskirts of Beijing on November 18 th 2004, but would be commercially possible only by 2010. 47 Though people in Mainland China had just started buying regular cars, GM was banking on China jumping straight into alternative fuel cars, if special hydrogen filling stations were set up alongside new gas stations.

filling stations were set up alongside new gas stations. GM also had major expansion plans for
filling stations were set up alongside new gas stations. GM also had major expansion plans for

GM also had major expansion plans for its Shanghai GM and SAIC-GM-Wuling joint ventures. 48 This was expressed by the company’s Asia-Pacific president, Fredrick Henderson, who predicted that, by 2008, China would overtake Japan as the Asia’s largest automotive market. 49 Thus, GM’s focus on China would continue to grow over the years, as China moves towards becoming the dominant player in the Asian automotive industry.

the dominant player in the Asian automotive industry. 45 46 “GM Celebrates Another Record Year in
45 46
45
46

“GM Celebrates Another Record Year in China Sells 386,710 Vehicles”, op.cit.

“GM to Export Autos to China”, http://www.bizasia.com/trade_/ctm94/gm_export_autos_china.htm, November 12 th 2003

47 “GM wants China to help promote new car”, http://english.people.com.cn/200311/19/eng20031119_128573.shtml, November 19 th 2003

48 “GM Celebrates Another Record Year in China Sells 386,710 Vehicles”, op.cit.

49 “Automaker predicts Japan will be outpaced in global sales”, http://msnbc.msn.com, October 19 th 2003

4 9 “Automaker predicts Japan will be outpaced in global sales”, http://msnbc.msn.com, October 19 t h

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Exhibit I GM’s Manufacturing and Design JVs in China Joint Venture Year of Partner(s) Purpose
Exhibit I
GM’s Manufacturing and Design JVs in China
Joint Venture
Year of
Partner(s)
Purpose
Name
Formation
Shanghai GM
1997
(SGM)
Shanghai Automotive Industry
Corporation (SAIC)
Manufacturing the entire
range of Buick products
Pan Asia Technical
Automotive Center
(PATAC)
1997
Shanghai Automotive Industry
Corporation (SAIC)
For automotive engineering
and design of GM’s various
models in China
Jinbei GM
1998
Jinbei Automobile, Liaoning
Development Group, Liaoning
Energy General Co and the
Shenyang Automotive Industry
Asset Management Co
Manufacturing the variants
of the Chevrolet Blazer SUV
SAIC-GM-Wuling
2001
Automobile
SAIC, GM and Liuzhou Wuling
Automotive Co.
Corporation Ltd.
To increase GM’s focus on
the mini-vehicle market of
China.
(Wuling)
SGM Dong Yue
Motors Co.
2003
SGM, SAIC and GM China
Production of the Buick
models in addition to those
of SGM.
Shanghai GM Dong
Yue Automotive
Powertrain Co. Ltd
2004
SGM, SAIC and GM China
Making engines for vehicles
manufactured in China by
GM
Source: www.gmchina.com
Exhibit II
Sino-Foreign Joint Ventures
Audi
VW
GM
VW
First
Shanghai
Automotive
Automotive
Works Group
Industry Corp.
Toyota
Mazda
(FAW)
(SAIC)
Daihatsu
Daewoo
Chrysler
Mercedes
Beijing
Chongqing
Suzuki
Chang’an
Ford
Automobile
Co. Ltd.
Automotive
Industry
Holding Co.
Hyundai (BAIC) MMC
GM
Peugeot
Nissan
MMC
Toyota
Brilliance
Kia
Dongfeng
Citroen
Motor Co.
Renault
China
Automotive
Holdings Ltd. BMW
MMC
Hyundai
MG
Honda
Rover
Source: www.financeasia.com

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ExhibitIII Volkswagen in China The Volkswagen Group entered China through two production joint ventures, Shanghai
ExhibitIII
Volkswagen in China
The Volkswagen Group entered China through two production joint ventures, Shanghai Volkswagen
and FAW Volkswagen. In addition, it was a majority shareholder in a gearbox joint venture in
Shanghai called Volkswagen Transmission (Shanghai) Co. Ltd. (VWTS). Volkswagen had over
16,000 employees in China, and sold over 2.7 million vehicles from 1985 to 2002 in this country.
The major models that it sold in China were Santana, Passat, Gol and Polo through Shanghai
Volkswagen and Jetta, Bora, Audi and Golf through FAW Volkswagen. Volkswagen was also
considering starting the production of its Skoda model at the Shanghai Volkswagen Joint Venture.
Compiled by the author from www.autointell-news.com and www.autoindex.org
Exhibit IV
Major Toyota Ventures in China
Name Of Venture
Incorporated
Capital
Shareholders
Purpose
Tianjin Toyota
Motor Co., Ltd.
(TTMC)
June 12, 2000
Approx. US$
100 million
Toyota: 50%, Tianjin
Automotive Xiali Co.,
Ltd.: 50%
Production of
Toyota’s new
compact cars
Tianjin Toyota
Motor Engine Co.,
Ltd. (TTME)
May 16, 1996
US$ 248
million
Toyota: 50%, Tianjin
Automotive Industrial
(Group) Co., Ltd.: 50%
1.3l/1.5l engines,
engine casting
components
Tianjin Fengjin
Auto Parts Co., Ltd.
(TFAP)
Dec. 25, 1995
Approx. 230
Machining and
million Yuan
Toyota: 90%, Tianjin
Automotive Industrial
(Group) Co., Ltd.:
assembly of
constant velocity
5.3%, Other local
company: 4.7%
universal joints
Tianjin Toyota
Forging Co., Ltd.
(TTFC)
Feb. 27, 1997
Approx. 240
Toyota: 100%
million Yuan
Constant
velocity
universal joint
castings; 400,000
sets/year for
Charade and for
export
Contd

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Tianjin Jinfeng Auto Parts Co., Ltd. (TJAC) July 29, 1997 140 million Yuan Toyota: 30%,
Tianjin Jinfeng Auto
Parts Co., Ltd.
(TJAC)
July 29, 1997
140 million
Yuan
Toyota: 30%, Tianjin
Automotive Industrial
(Group) Co., Ltd.:
Steering
components for
240,000
25.8%, Other local
vehicles/year
company:44.2%
including Charade
Propeller shaft
for 110,000
vehicles/year
including Hijet
Sichuan Toyota
Nov. 10, 1998
US$ 67
Co., Ltd.
million
(SCTM)
Toyota: 45%, Toyota
Tsusho Corp.: 5%,
Sichuan Luxing
Chechang: 50%
Small Bus Motor
“Coaster”
specially
developed for
China
Toyota Motor
Technical Center
(China) Co., Ltd.
(TTCC)
Feb. 1998
1.1 billion
Toyota: 100%
yen
Technical
consulting service
for research,
development, and
local production
of vehicles and
automobile
components
Toyota Motor
(China) Investment
Co., Ltd. (TMCI)
July 2001
US$ 30
Toyota: 100%
million
Providing
marketing
assistance for
advertising, sales,
and public
relations, training
of sales and
service
employees, etc.
Toyota Motor
Dec. 5, 2001
US$ 2.5
TMCI: 100%
Warehousing &
million
Trading (Shanghai)
Co., Ltd.
Procurement and
sales of imported
replacement
parts for Toyota
vehicles
Source: www.toyota.co.jp

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Exhibit V Production Capacities of Car Manufacturers in Mainland China for 2003 Production Capabilities of
Exhibit V
Production Capacities of Car Manufacturers in Mainland China for 2003
Production Capabilities of Car Manufacturers in Mainland China
Planned capacity
Existing capacity
1800
1600
1400
1200
1000
800
600
400
200
0
Source: www.financeasia.com
Volkswagen AG
General Motors Corp.
Peugeot S.A.
Honda Motor Co. Ltd.
Toyota Motor Corp./Daihatsu
Suzuki Motor Corp.
Nissan Motor Corp. Ltd.
Hyundai Motor Co./Kia
Mitsubishi Motors Corp.
Ford Motor Co./Mazda
DaimlerChrysler AG
BMW AG
Fiat SpA
Ssangyong Motors
Domestic manufacturers
Exhibit VI A Brief Overview of the Product Portfolio of Shanghai GM • In April
Exhibit VI
A Brief Overview of the Product Portfolio of Shanghai GM
• In April 1999, Shanghai GM began regular production of three models of midsize luxury sedans: the Buick Xin
Shi Ji (New Century), Buick GLX and Buick GL.
• In May 2000, Shanghai GM launched the driver-oriented Buick GS sedan and the first executive wagon made
in China, the Buick GL8.
• In August 2000, a sedan with a smaller engine, the Buick G, was added to the portfolio.
• In December 2000, Shanghai GM’s first small car, the Buick Sail, came off the production line.
• In October 2001, Shanghai GM began exporting the GL8-based Chevrolet Venture to the Philippines.
• In November 2001, Shanghai GM introduced the Buick S-RV recreational vehicle.
• In November 2002, Shanghai GM announced that it had secured a contract with GM’s CAMI joint venture in
Canada to export engines beginning in 2003.
• On December 26, 2002, the newest product from Shanghai GM, the Buick Regal midsize sedan, was
introduced.
• On April 19, 2003, Shanghai GM unveiled the Buick Excelle, its first lower-medium sedan, at Auto Shanghai 2003.
Source: www.gmchina.com