GM bankruptcy, lessons to China carmakers

Shanghai, June 17 (Gasgoo.com) Many reasons are behind the free fall of General Motors Corp. (GM), which had put it on a slippery slope from being the world's top automaker for 77 straight years to filing for bankruptcy protection. The epiphany to China's auto industry can give multiple lessons, said Chinese media juggernaut People's Daily online.

The first lesson is about how to properly address the relations between becoming big and becoming refined and strong, the paper said.

Numerous mergers and acquisitions (M&A) have brought GM over 10 brands, including Buick, Cadillac, Chevrolet, GMC, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, GM Daewoo and Holden. Its annual sales once reached 10 million units, making it the "giant" in the global auto industry.

But focusing on the size only has given rise to some ailments commonly found in large companies, such as low efficiency, rising costs, sluggish market response, and difficult operation of numerous brands.

Nowadays, China's auto industry has jumped on the bandwagon of getting bigger. Nearly all the auto companies plan to develop all ranges of products. A lot of carmakers have drawn up multi-brand strategies and some have announced high-profile goals of producing and selling one million and even two million units a year.

The impulse of M&A and corporate restructuring is also running high. GM's filing for bankruptcy undoubtedly sounds a wake-up call to these companies' pipedreams of growing-bigger.

The second deciding factor behind the GM kingdom's collapse is its all-out worship for profits, the People's Daily pointed out.

The global auto industry has developed a major trend of saving energy and reducing emissions by producing small engines and light-weight cars since the 1990s. However, GM was an exception, still focusing its long-term development on high-profit, high-emissions SUVs and pickups. It could only end up watching Japanese automakers, such as Toyota and Honda, dominate the North American auto market.

China's auto companies should learn from the experiences, including mistakes, of GM. Not only should they have a long vision, they must also take their development scientifically.

They should shift their "profit-driven" pursuit to "value-driven" pursuit and only judge their achievements by the value they can create for their shareholders, customers, the industry chain and even human society, the paper said.