February 14, 2008
GM Turns to China
General Motors posted another record loss this week and now wants to lose its union labor force. GM is offering buyouts to all 74,000 union workers in the United States. This is yet another sign that GM is shifting its production overseas and I expect a lot of it will end up in China.
GM says its China operations are the one bright spot for its future. Last year GM sold over one million cars in China, a surge of 18 and a half percent. Indeed GM is poised to overtake Volkswagen in the success of its Chinese investments.
Just last month, GM and Shanghai Automotive Finance sold almost $2 billion Yuan worth of bonds backed by its car loans, the first ever securitization of car loans by an automobile financer in China.
In its efforts to fast track production of the Chevy Volt electric car, GM announced Monday a new global organization for hybrids and electric cars that will be partially based in Shanghai. Through a German consulting firm GM is recruiting engineers and senior managers for a future operation in Shanghai.
And visitors to Detroit’s new international air terminal are greeted with Chinese announcements, signs, and even a China UnionPay ATM. UnionPay is the ironically named debit card network in China. Detroit is ready for an influx of Chinese moneymen and business travelers when the new Northwest Airlines Detroit – Shanghai route starts a year from now.
Across the Detroit River in Ontario, the Canada China Business Council is actively encouraging Chinese direct investment in the region’s depressed auto and auto parts industries. China’s actual foreign direct investment in Canada is nearly one and a half billion dollars with more anticipated.
All this activity makes me wonder why opportunistic politicians in America are so worried about the Mexican border when parts of Michigan and Ontario may become Shanghai suburbs.
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