Strangers In Not-So-Strange Lands: Ford, GM Expanding In China

By Blake Z. Rong | April 19, 2012
Ford and General Motors have been in China for a while now. Most famously, GM hedges its bets on Buick's popularity there, while Ford follows closely behind. Now, however, both companies are surging in China and expanding big-time. First, on the GM front. Today, GM reinstates its 50-percent stake in Shanghai GM, becoming even partners with Shanghai Automotive Industry Corporation, or SAIC. This is significant because GM was forced to sell a part of its stake in February of 2010, when it was going through its messy financial proceedings. It's the largest of GM's 10 joint ventures in China, it made the company $1.5 billion last year, and sold 2.5 million vehicles last year—more than GM sold in America—so it's understandable that GM wants to maintain and even increase its presence in China. There's precedence for this, of course. The company was the first to partner with a Chinese firm to build cars, back in 1997 with SAIC. Shanghai GM, the result, first started building the Buick Regal in 1999 and has been, on and off, the biggest domestic manufacturer in China, with GM products only coming behind the Volkswagens and black Audis so beloved by the populace.
On the Ford front, that company is investing $760 million into a new plant in Hangzhou, on the east coast of China. They're partnered up with Chang'an Automotive; Chang'an is among the "Big Four" of Chinese automakers, but they're all the way in fourth place in terms of sales. Changan Ford Mazda Automobile will add an initial capacity of 250,000 cars annually, but eventually will double output of the Focus, Mondeo and Maverick SUV to 1.2 million cars per year.
"These are incredibly exciting times for Ford in Asia,” said Joe Hinrichs, president of Ford Asia Pacific and Africa. “So far, Ford’s investments in China and across Asia represent its largest and most rapid global expansion in fifty years. Building this plant helps lay the foundation for that growth and reconfirms our commitment to China, which is expected to have sales of about 30 million vehicles by 2020.”
The Hangzhou plant will open in 2015. And by then, Ford will have spent more than $4.9 billion in China since 2006—including $600 million to expand a plant in Chongqing and open another one in the area, in order to build 600,000 of the new Focus. The Ford vs. Chevy battle goes overseas: GM may be on top right now, but Ford is catching up.
Sources: Ford, Detroit Free Press