"China and Brazil cannot be compared"
Some people now have different views on the sustainable development capabilities of the Chinese auto industry. They are optimistic that at least a dozen years of good results will be achieved, but they are also worried about the prospects for Brazil.
Recently, when the reporter spoke with Mr. Murphy, Chairman and CEO of General Motors China, he categorically denied this possibility. He said that China and Brazil cannot compare the two. When Brazil imports foreign capital, it has a large amount of foreign debt. The ratio of China’s foreign debt to GDP is very low, and there is a huge amount of foreign exchange reserves.
Mr. Murphy took out a "Morgan Stanley" report, the data show that in 2003 China's thousands of car ownership is almost at the lowest level, lower than Thailand, and the Chinese consumer's demand and purchase intention is no different from other countries China's demand potential is huge.
He believes that the main reason for the rapid development of the Chinese automobile industry in the past two to three years is that the personal income of the residents has grown rapidly. By 2010, there will be more household incomes in China, and there will be more and more families with medium and high income levels. Globally, after the per capita GDP reaches 3,000-4,000 US dollars, the automobile industry will take off quickly.
The reporter believes that this is a traditional view. China’s national territory is smaller than the United States, its population is six times that of the United States, and all resources are in short supply. In addition, the economic community has a perception that a large part of China’s current GDP growth is driven by foreign investment, which means that Chinese people get GDP, while foreigners get profits, so the Chinese’s wealth is not The simultaneous growth of GDP, which is different from the situation in foreign countries.
In this regard, Murphy's view is that the shortage of resources is a global issue. The development of resources in the United States and Western Europe has reached a very high level, and China has many resources that have not been developed and utilized. For example, in the past 100 years, China has spent less on oil exploration and development than on the United States. From this point of view, China should have more opportunities than the current United States.
The role of foreign investment, Murphy first stressed that "creating employment opportunities" is an important factor in the growth of household income. GM's employees in China in 1997 were 1300. In 2004, there were 10,000 employees. Last year, the turnover was about 4 billion US dollars, which was created in China. The consumption of employees is a kind of domestic demand, and their consumption stimulates investment. Generally speaking, an employment position in the auto industry can drive 14 related employment opportunities, and 10,000 jobs indirectly create 140,000 job opportunities. Murphy believes that in the late 1990s, the development of China's economy used more cheap labor and products were all exported. From this perspective, the above judgment is more correct. However, since 2000, domestic consumption has become an important factor in promoting China's economic growth. The increase in disposable income of residents has also generated more domestic consumer demand, which has also promoted the growth of investment. This is a virtuous circle.
Talk about market goals only brings public relations results
Because it is optimistic about the future development of China's auto industry, multinational companies have proposed market goals that seem difficult to achieve. When the reporter asked about the market goals of General Motors, Mr. Murphy first gave a "principal" answer: GM's strategic objectives were determined from the first day of entry into China, and they have not been shaken. First, to become a full-fledged partner for the Chinese automobile industry, and secondly, to continuously bring high-quality products and services that meet the needs of Chinese consumers. Then he commented, “We have never talked about our market goals, nor have we talked about our investment plans in China. It is not meaningful to talk about the goals. Every investment company wants to sell more products and try to increase their output. We can truly meet the needs of consumers and the market, do a good job, and the results can be shown naturally."
For some companies to declare how much to invest and how many plants to build, Murphy said that “this will give manufacturers a good PR publicity, but will not achieve all of their investment in the short term. Look at such an introduction, to see How much of it is for public relations and corporate image, and how much is actual action."
Murphy's reason is that it takes two years to establish a new factory. After two years, the market has changed. Few people can predict clearly. The general operating rules are: phased construction in batches, adjusting investment plans according to market trends, rather than investing all the funds in the first year, “No one does this,†Murphy said. By 2010, it will have a 10% share of the Chinese market. It is estimated that the sales volume will reach 800,000, and at least four or five new plants will be required. In fact, no one is making four or five new plants at the same time, and each has only one new plant. Everyone's approach is to build a new factory while watching the market. It may be that one company will make a mistake and become the loser in the market. There will certainly be such a loser.
Having said this, it naturally brings up the issue of possible overcapacity of the car. Murphy is not worried about this. He said that if everyone implements the announced future capacity plan, there may be 14 million capacity by 2010, and it will certainly be surplus. However, everyone does not actually do so, so there will not be such a large amount of output. Everyone will Adjust the capacity plan according to the market.
Now, a large number of private enterprises may enter the auto industry. What impact will this have on Chinese cars? Murphy thinks this is very similar to the situation in the United States in the early 20th century. At that time, the American automotive industry was in an explosive development stage. There were a lot of companies coming in, and there were probably more than a hundred companies. Because it appears to the layman, the auto industry is particularly profitable. In the short term, a few may succeed, but most of them are difficult to succeed. The automotive industry is one of the most complex industries in the world. It is not easy to succeed in the automotive industry. There are only 3 American auto companies remaining in excess of 100, and the rest are bankrupt. "China will have a similar situation, and competition will allow some companies to withdraw from the industry."
Why does General Motors and SAIC "continue from the beginning"?
We all know that most multinational companies entering the Chinese market adopt the multi-partnership model. For example, after joint ventures between Shanghai Volkswagen, FAW, Toyota, and FAW, Volkswagen entered Guangzhou, but General Motors and SAIC only "continueed." What kind of consideration comes from?
Murphy believed that GM's approach was correct. He said, "GM China is a local company. Although there is a US name, I firmly believe that to succeed in China, we must base ourselves on the local market and integrate into the development of local industry."
Murphy said that the business needs to be successful and profitable. This is the common purpose of all companies. However, if we want to succeed in the long term, we must have a strong competitive edge, and at the same time we must help create a healthy industry development environment and make a real contribution to China’s economic development. Among all foreign-funded enterprises, GM’s approach is unique. GM’s goal is to “create a fully functional automotive company in Chinaâ€, including the development, design, manufacture, sales, and service of automobiles, to form a complete system. A complete value chain.
"Only by truly forming a complete value chain can we truly create value for China's automobile industry and economic development," said Murphy.
He believes that it is costly to establish an effective marketing network. From the perspective of business operational efficiency, establishing two or three independent marketing networks is not economic from the perspective of cost control. If there are two or three partners, everything will increase and the overall cost will increase.
In addition, other companies may be headquartered far away in the operation of the Chinese business, and General Motors "is not the operation of China's business by Detroit", "We maintain a good relationship with SAIC, there are problems in time to communicate. Has a problem, Will be patient to discuss together to find a solution, there will be no problem with a partner, they turned to find another partner."
We would like to know that this kind of multinational company has joint ventures with several companies at the same time, which is not a unique phenomenon in China. Mr. Murphy told reporters that China is indeed more unique, because China's regulations must operate through joint ventures, so there are many partnerships.
The reorganization model adopted by SAIC-GM-Wuling is different from that of Dongyue and Shenyang Jinbei GM. GM only has a 33% stake in SAIC-GM-Wuling. We asked if GM would later ask to change the stock ratio.
Mr. Murphy said with certainty: “There is no such idea. SAIC-GM-Wuling’s situation is a natural and natural solution. It is now operating very well and there is no reason to readjust it.†He said that he heard that other companies have an absolute controlling stake. But at Shanghai GM, there is no relationship between who controls who. For GM, the management right is not an important issue. The most important thing is that the company can develop successfully and the investors can get a return.
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