Automotive News   |   Automotive News Europe   |   Autoweek   |   Automobilwoche

Automotive News China Newsletter
Register our free newsletter, sent each Monday and Thursday

     Automakers   Suppliers   Auto Show   Comment   Car Cutaway   Newsletters   Press Releases   Chinese Version   Register for Newsletter
  Contact Us:   Editorial   Advertising   Subscription Information   |   About Us   Media Kit
Home >> Comment Email this story   Print this story
 
COMMENT
What has emboldened GAC to enter U.S.?
Yang Jian | 2018/1/19

SHANGHAI -- China's state-owned automakers tend to be risk-averse creatures.

As profits pour in from their partnerships with foreign automakers, they hesitate to rock the boat. 

So why is Guangzhou Automobile Group Co. behaving differently? What led the company to disclose plans this week to enter the U.S., widely viewed as the world¡¯s toughest market?

The reasons are twofold. 

The first is its entrepreneurial culture, which has much to do with GAC¡¯s location. The company is headquartered in Guangzhou, the capital of south China¡¯s Guangdong province.  

The port city, 70 miles northwest of Hong Kong, has been a foreign trade outpost since the late 1700s. After Beijing launched economic reforms in the 1970s, Guangdong province attracted huge investments from foreign companies and Chinese expatriates.

GAC, which is controlled by Guangzhou¡¯s municipal government, is immersed in this entrepreneurial stew. Influenced by this culture, GAC is less risk-averse than its state-owned peers.

Here¡¯s proof. A few years ago, GAC acquired two small, private automakers -- Gonow Automobile Co. and ZX Auto Co. -- to expand production. The gamble paid off. Last year, GAC¡¯s vehicle sales soared 37 percent to 508,000.

Those growing sales -- along with the company¡¯s joint ventures with Toyota, Honda and Fiat Chrysler Automobiles -- have given it ample cash flow to finance an overseas expansion.
 
A fast learner
In the automotive world, GAC¡¯s rise and breakneck expansion are almost without precedent.

Established in 1997 as a producer of motorcycles and small buses, the company did not start producing passenger vehicles until 2010. That¡¯s right: In one of the business world¡¯s most demanding product segments, GAC has exactly seven years¡¯ experience.

Unburdened by a legacy business, GAC is accustomed to moving quickly. In recent years the company has rolled out a wave of crossovers and SUVs under the Trumpchi brand, and consumers snapped them up.

Which brings us overseas. GAC exports vehicles to 14 countries and now it wants to test the waters in the most challenging market of all. 

In characteristic fashion, the company has prepared methodically. It has opened an r&d center in Silicon Valley. It soon will open a second technical center around Detroit. 

It has conducted market research and it has cultivated close relations with two key allies: FCA and the National Automobile Dealers Association. 

FCA and GAC jointly produce and sell Jeeps in China, where Jeep is highly regarded. And NADA has invited GAC to recruit dealers at its annual convention in March.

To be sure, this is a highly risky move for a little-known Chinese brand. For example, it is unclear whether FCA will allow its dealers to sell GAC models.

But the potential reward for GAC is huge. 

The U.S. arguably has the strictest regulatory framework of any market. If GAC can establish itself there, it can crack any other market in the world. 

For a company steeped in Guangzhou¡¯s can-do business climate, that risk is worth taking.

Related Stories
  • Zotye, GAC make connections at NADA to build retail network
  •     --Published:2019/5/2
     
  • Zotye rolls out first wave of U.S. dealers
  •     --Published:2019/29/1
     
  • GAC selects Calif. for regional HQ as U.S. debut looms
  •     --Published:2019/18/1
     
  • Qiantu Motor to build EVs in North America with local partner Mullen Technologies
  •     --Published:2018/18/12
     
  • GAC: Electrified vehicles to make up 10% of 2020 sales
  •     --Published:2018/27/11
     
  • U.S. accuses China of continuing IP theft amid trade war
  •     --Published:2018/23/11
     
  • Zotye's U.S. goal: No-hassle retailing
  •     --Published:2018/20/11
     
  • U.S. to hold off on light-vehicle tariffs
  •     --Published:2018/16/11
     
  • Big automakers set to sell same car to game Beijing rules
  •     --Published:2018/6/11
     
  • Honda, GAC Group to produce plug-in hybrids, EVs in China
  •     --Published:2018/2/11
     
  • GAC may delay U.S. plans in wake of trade spat
  •     --Published:2018/5/10
     
  • U.S. brands losing ground in shrinking market
  •     --Published:2018/14/9
     
  • Aptiv to supply advanced driver-assistance system to GAC's electrified vehicles
  •     --Published:2018/21/8
     
  • GAC forms 2 joint ventures with CATL to ensure EV battery supply
  •     --Published:2018/24/7
     
     

    Our Newsletter Editions
    Automotive News China produces two email newsletters each week. You can sort your news by the articles highlighted in each of our newsletters here.

    Select your newsletter     

     
     

    Automotive News China
    Room 1303, Building 2, Lane 99, South Hongcao Road,
    Shanghai 200233
    Telephone: 86-139-1851-5816
    Fax: 86-21-6495-0895
     
    Home | Help Center | About Us | Privacy Policy | RSS
    Entire contents © Crain Communications, Inc.
    Use of editorial content without permission is strictly prohibited. All Rights Reserved.
    »¦ICP±¸06057291ºÅ