In General, Companies Invest In Foreign Markets To Increase

1385 WordsJan 22, 20176 Pages
In general, companies invest in foreign markets to increase profit and sales, or they desire to protect their profit and sales from competitors. General Motors is no different, and has heavily invested in foreign markets. No manufacturer can ignore the Chinese market. Sales can be increased by entering, creating, or targeting fast growing markets, and profit can be increased by lowering the cost of goods, and/or increasing revenue. And by entering foreign markets a company can follow its customers abroad, attack in a competitors home market, use foreign production to lower cost and protect that market, bypass certain political issues, acquire technology and know-how, and geographically diversify their market to increase profits,…show more content…
n.d.). GM has a long relationship with China spanning nearly a century. They opened their first dealer in Shanghai during the 1920’s. Buick soon became the choice for businessmen and political leaders. Even the last emperor of China owned a pair of Buicks; a four door sedan, and four door limousine. By the 1930’s, one out of every six cars in China was a Buick (Chen as cited by Nelson 2011). GM was forced out of China in 1949 when the communists took power. GM would not return for nearly a century. And return to China they did. In 1994 GM rented two rooms of a Shanghai Holiday Inn and began negotiations with the Chinese government to form SAIC (Shanghai Automotive Industry Group). By 1999, the Chinese were once again buying a modern Buick. That two room beginning eventually grew to encompass 40,000 employees across nine cities. In 2004, GM sold 253,000 cars, in 2008 that number almost doubled to 446,000, and by 2010, GM became the first automaker to sell 2 million vehicles, in China, in a single year. And that’s just the beginning. Today, GM’s attention is squarely focused on China, and for good reason. While GM’s US truck division currently generates the most revenue, it may not last long. Forbes states “China is undoubtedly the most important region for General Motors … we believe that China holds the maximum growth potential and will be key driving factor for
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