Chinese market is a perfect business fit for GM

The new General Motors' August sales dropped 20 percent from August of last year in spite of the Cash for Clunkers in the US. But there is a market in which GM is performing extraordinarily well: China.

General Motors Co said Wednesday its sales growth in China, its fastest growing market, should exceed 40% this year after August sales jumped 112.7% year on year (y/y) to 152,365 vehicles.

In the first eight months of the year, the U.S. auto giant sold 1.11 million vehicles in the Chinese market, up 49.6% from a year earlier.

Bolstered by its growing China sales, GM has made an investment of 2 billion yuan ($293 million) for a new light commercial vehicle JV with FAW Group Corp. This 50:50 venture will have a combined annual capacity of 90,000 vehicles for the time being and will add 100,000 units of capacity by the end of next year.

In a sign of China's growing importance, the reconstituted, leaner GM has made Shanghai the headquarters for its international operations.

It is because of GM's issues with its American market that the Chinese market is a perfect business fit. It can allow the company to make a profit once again, re-invent itself, and make it a significant player in China's expanding market as well as in Asian, North African market.