Upgraded, GM China Gears up under New Boss.doc

1、Upgraded, GM China Gears up under New BossThe increasingly intensive competition in the Chinese auto market finally wore out the calm and patient nerves of General Motors （GM）. On August 2， GM announced a significant change to the General Motors International Operations （GMIO）. It spun the Chinese b

2、usiness off this department and upgraded GM China as the organization in charge of GMs business in China. From then on， GM China directly reported to the headquarters of GM in the United States. Meanwhile， GM also appointed new executives in some of the key positions of GM China. Timothy E. Lee， for

3、mer board chairman of GMIO， was appointed board chairman of GM China. The appointment officially took effect as of August 5. Actually， this was the re-definition of the organizational structure and the management functions of GM China made by GM headquarters after 2005. It is widely believed that th

4、e independence of the Chinese business shows the importance GM headquarters attaches to the Chinese market. It also signals the coming grand actions of GM in China. However， when Volkswagen and other automakers are sparing no efforts in narrowing the gap between them and GM， whether the U.S. automak

5、er can consolidate its position in China remains unknown. The Upgrade According to the announcement， GM Chinas new board chairman Timothy Lee is going to work as the executive vice president of GM Global Manufacturing. His place was taken by Stefan Jacoby， former CEO of Volvo. He was appointed execu

6、tive vice president of GMIO， taking charge of GMs business in Africa， Asian-Pacific Area， Europe and Middle East covering 100 countries and regions. Bob Socia， the current president of GM （China） Corporation and the CEO of GM Operations in China， India and ASEAN， will directly report to Timothy Lee.

7、 “GM is going to keep its leading place in China and the United States， the two largest auto markets in China. In the future Timothy Lee is going to lend his force to the development of GM in China， ” said Daniel Akerson， CEO and board chairman of GM. Through this structural adjustment， GMs business

8、 in China will go independent in the future. To GM China， the new structural frame can apparently improve its competitiveness and help it grasp the opportunities of development in the international market. it is known that GMIO was preceded by the GM Headquarters in Asian-Pacific Region. Around 2008

9、， the GM Headquarters in Asian-Pacific Region， which had a growing management range， turned into GMIO. “Presently， China is the largest auto market for GM in the world. In the future， Jacoby and Lee will directly report to Akerson. This means that GM China will be in the same level with GMIO at leas

10、t in the management function. This also shows the importance GM attaches to the Chinese market， ” says an insider from GM China. An official announcement from GM China says that Timothy Lee is going to put more focus on the automobile manufacturing department of GM and will give his priority to the

11、Chinese market. “This April， GM just announced the investment of US$11 billion in China before 2016. GM is also investing heavily into the products， facilities， technologies and distribution network in China， ” says a source close to GM China. The Tailor-made Structure Some analysts think that the s

12、tructural adjustment and the shakeup of GM China is an introspection of GM headquarters about “degrading” GM China in 2005， a decision it regrets. Back in 2004， GM decided to move its headquarters in the Asian-Pacific Region from Singapore to China in June. Richard Wagoner， the CEO and President of

13、GM at that time， intentionally came to Shanghai to announce this news. In January 2005， the transfer was finished. However， two months later， Murphy， then the board chairman and CEO of GM China， suddenly announced his resignation. Murphys leave raised intensive scrutiny and suspicion. Since Murphy w

14、as the earliest and most experienced executive of GM in China， his leave was apprehended by the outsiders to be a result of his losing controlling of GM China to the headquarters of GM. “The move of GMs headquarters in the Asian-Pacific Region to Shanghai happened simultaneously with the transfer of

15、 its management and investment centers. The headquarters of Asian-Pacific Region began to stick its nose into the business of GM China， placing GM China in a very subtle position， ” says a source close to GM China. After becoming the neighbor of GM China， GMs headquarters of the Asian-Pacific Region

16、 subsequently took away the management function from GM China. The work of purchasing and marketing was given to Shanghai GM and SAIC-GM Wuling， two branches or joint ventures of GM in Shanghai. Therefore， GM China seemed to be out of place and weightless as an independent organization. Actually， af

17、ter the appointment of Kevin E Wale， Murphys successor， the chief of GM China was no longer called board chairman and CEO； instead， Kevin Wale was appointed president and general manager of GM China. This change， though subtle， reflected that GM Chinas responsibilities and duties had been downsized.

18、 Analysts believe that Murphys departure marked the shift of GM Chinas function to the public relations， brand promotions and campaign arrangement ? the implementation of trivial affairs. This time， Timothy Lee resumed the tile of board chairman and GM China stayed out of the control of GMIO（formerl

19、y known as GMs Headquarters of Asian-Pacific Region） ， showing GM headquarters determination of intensifying the responsibility and duty of GM China. “Generally speaking， separating a single regional market from the continental headquarters and placing it under the direct management of the headquart

20、ers shows how important this market is， ” says Chen Wenkai， CEO of Gasgoo. com. Presently， the Chinese market takes over 60% of GMs global business. This makes the GM headquarters realize that the former structural level of GM China and GM Asian-Pacific will have negative influence over the informat

21、ion exchange， decision-making process， and corporate efficiency. “The upgrade （of GM China） can doubtlessly reduce the levels between GM China and the headquarters， ” says Chen Wenkai， “This can improve the efficiency of GM China， enabling it to get more development resources.” Target Volkswagen Und

22、oubtedly， the structural adjustment of GM China and the change of executives of this area are closely related with the stress it is facing in China. According to the public data， GMs net profits dropped 23% to US$1.4 billion in the second quarter of 2013. The loss in the European market caused the d

23、ownsized net profits and forced GM to shift its global development center to the Chinese market. Meanwhile， in China， GM still ranked as the No. 1 foreign automaker in the first half of 2013 with the total sales volume of 1.567 million units， but it only sold less than 30 thousand more cars than the

24、 runner-up Volkswagen， which sold 1.54 million units in China in H1， 2013， up 19% year on year. For GM which wants a bigger market share in China， the narrowing gap between itself and Volkswagen ? and maybe other automakers ? has brought it the great stress of competition. In addition， GM has its ow

25、n problems in terms of its development in China. The Chevrolet Malibu underperformed in terms of sales volume after being introduced into China last year. The impatient dealers immediately reduced the price drastically to promote the sales， ruining GMs hope of making use of Malibu to improve the bra

26、nd image of Chevrolet. When the luxury auto market in China saw a decreasing sales volume this year， the China Automobile Dealers Association made a research into the dealers inventory and found that the inventory of Cadillac had exceeded the warning lines. Though Buick has seen better performance t

27、hese years， it is farther behind its major competitors. According to the statistical data from China Association of Automobiles， the sales volume of Buick Regal reached 46，334 units in the first half of this year. Passat， a medium- and high-class brand from Volkswagen， had the sales volume of 125，98

28、7 units in the same period. As for the A-class cars， Buick Hideo had the sales volume of 103，996 units in H1， 2013， while Volkswagens Lavida had 211，567 units sold. “The key to the competition between GM and Volkswagen in China is the introduction of new products. This is the most important task for

29、 Timothy Lee after his appointment， ” Chen Wenkai says. In these years， GMs biggest disadvantage in China is its weaker competitiveness in car models and technologies compared with German brands. So it is surprising that it could still keep the champion in terms of sales volume in China， though it w

30、ould be only a matter of time for this title to be taken by Volkswagen had no changes happened to GM. “Therefore， GM needs to focus on bringing more new models into China if its wants to keep the title as the largest auto company in China， ” says Chen Wenkai. As GM China has revealed， GM will launch

31、 over 60 new models in the world from 2013 to 2014. Timothy Lee， the director of GMs business in China， is also in charge of the global manufacturing of this company. This combination can somewhat help GM China to get more global resources. Anyhow， the structural adjustment and executive change of GM China basically established the structure of GM in China. However， whether the upgraded GM China can suppress the momentum of Volkswagen under the leadership of Timothy Lee and keep its leading position in China still rely on how the new structure works and any following improvement.