Why Ford moving Asia Pacific HQ to China?

Shanghai, February 4 (Gasgoo.com) Ford Motor (China) Ltd told Gasgoo.com yesterday that Ford Motor Company's Asia Pacific and Africa region headquarters, with supporting corporate functions, will be moving to China, and the former headquarters in Thailand (Bangkok) will function as the company's base camp in Southeast Asia.

"Ford Motor Company's Asia Pacific and Africa region is continuing the process of regionalization in order to achieve more effective integration and leverage of global assets, and improved management processes that deliver the consistency, efficiency and effectiveness to be competitive in today's business environment," said Ford China in an email statement to Gasgoo.com on February 3.

Of all the global auto giants, Ford Motor is a late comer to China, and its development in this market is far from satisfactory. Up to date, Ford's performance in the Chinese market has not matched up to its status in the world's auto industry. In Europe, Ford performs better than General Motors and its partnership with Mazda Motor has achieved multiple synergies in R&D and products; in South America, Ford Motor has also seen remarkable growth as a global auto giant.

In the Chinese market, Ford China along with Chinese ventures had ranked among the top 10 automakers in 2008 auto sales, but only achieved 66% of its sales target of the year and its market share had not seen much growth, even smaller than some homegrown Chinese automakers.

This time, Ford Motor has decided to relocate its Asia Pacific headquarters to China from Thailand. The reasons behind this move should be self-evident -- at least it is a significant symbol of Ford Motor's search for change in China.

In the days ahead, Ford is expected to come up with a series of strategic readjustments for the China market. As China is one of the fastest-growing markets and the world's second largest auto market, the performance of any global automakers, including Ford, in this huge market will surely influence their future in the global auto industry.

One of the root causes of Ford's slow growth in China lies in its local partnership. Because of its conservative strategy at the beginning, Ford missed the golden opportunity of joining hands with China's auto giant Shanghai Automotive Industry Corp (SAIC) and chose to form joint ventures with Changan Auto Group and Jiangling Motors. And then Jiangling was merged into Changan, and Ford came to have actually only one Chinese partner.

This has led to a slew of problems and difficulties for the U.S. automaker's operation in the Chinese market. In addition, Ford China has had its top management controlled by executives from Taiwan and the company has adhered to the motto of "doing things right rather than doing right things" as advocated by some executives. As a result, many problems have accumulated and combined to put Ford at a disadvantage in China.

To address these problems and other challenges, Ford Motor has decided to move its Asia Pacific headquarters to China. Apart from the symbolic significance of focusing on the Chinese market, this move by Ford will also bring the U.S. automaker at least three obvious advantages:

First, Ford Motor will get first-hand information on the Chinese market directly; second, Ford will be able to speed up its strategic solution to its existing problems in China and avoid further problems such as in seeking local partnership and government support; third, Ford will bring more of its resources and support to its Chinese operations for better growth in one of the world's fastest-growing huge markets.

In 2004, Volkswagen AG and General Motors relocated their Asia Pacific regional headquarters to China to seek greater growth in the center of this region's auto business. China has become the world's second largest auto market after the United States. It is time for Ford Motor got onto the fast China track by stopping its "twist and turn" there now.