General Motors plans to bolster its auto sales in China include
setting up a joint-venture auto finance company with a top Chinese
financial institution, according to GM President John F. Smith in
an interview Sunday following the end of the meetings of
Asian-Pacific Economic Cooperation (APEC).
The company will combine General
Motors Acceptance Corp. (GMAC), a financial institution that is
a subsidiary of General
Motors, and a Chinese financial institution in the non-banking
sector.
"In light of the large market of 13 million consumers in China, we
will manufacture more economy cars that most Chinese can afford. In
addition, to facilitate sales, we plan to set up a joint-venture
auto finance company to introduce state-of-the-art car financing
service into the country," Smith said.
Smith said that GM's application has yet to be approved to the
People's Bank of China, adding that details about the company will
not be available until after approval. But the company is expected
to combine the international experience of GMAC with the local
know-how of a Chinese financial institution to give Chinese
consumers their first access to foreign financiers in more than 50
years.
Founded in 1919, GMAC provides services that covers retail and
automotive financing, mortgage banking, residential mortgage
funding and insurance. It offers financing to auto dealers, whether
GM-affiliated or not.
Today, only some 12 percent of private car sales are financed in
China, compared to around 80 percent in the West. But with China's
World Trade Organization (WTO)
entry now basically a formality, things are expected to change.
The China-US bilateral access agreement included a specific
provision allowing foreigners to provide auto financing on China's
entering WTO. GMAC is now endeavoring to be in a position to be
operational in line with China's expected accession and possible
competition from other world auto giants like Ford, Daimler
Chrysler, Daewoo and Honda, after China's accession to WTO, Smith
said he is confident about the future of General Motors in China,
noting that GM already has had a good start - the largest car
manufacturer sold 30,000 cars in China last year and expects to
double that number this year.
Economy cars including the Sail and Buick have enjoyed good sales
in China, but less that expected -- blamed in part on the lack of a
related credit infrastructure for consumers in China. What credit
China does offer has been hampered by the lack of a credit rating
system, making for a long and complicated process of examining
financial backgrounds of prospective borrowers.
Both GM and its Chinese counterparts should focus more on producing
economy cars that people can buy, along with high-quality
standards, said Rudolph A. Schlais, Group vice president of GM and
president and chief executive officer of Asia Pacific General
Motors Corporation, who accompanied Smith to Shanghai.
Smith and Schlais left Sunday with the rest of the GM delegation to
APEC for
Japan to attend the Tokyo Car Exhibition, the largest one this year
in Asia.
(china.org.cn by Guo Xiaohong, staff reporter October 22, 2001)