1.0 Executive Summary

This strategic marketing report prepared for the General Motors (GM) detailed a thorough analysis the motor vehicle market in China.

GM was a US automaker company, and entered the market of China by joint ventures. SAIC is GM’s major joint venture partner, and it had become the largest plant in China. GM was earning high profits from China by 2004. However, GM faced the challenges from both foreign and local competitors, overcapacity and intervention from Chinese Government. In 2004, the sales dropped sharply.

The first part will be analyzed by STEP theory of the motor vehicle market in China in 2004. Then we will use SWOT analysis to examine if China is still an attractive market for GM. Next, we will
GM needed to think a more efficient value chain in order to produce the higher quality products.

4.3 Opportunities

Rapid economic growth rate
As the economic was rising, the needs of people also increased. According to Maslow’s theory of hierarchy of needs, people are motivated by unsatisfied needs. People satisfy lower needs before moving to higher needs (OUHK B891, Unit 1, p.29). With higher consumer income of Chinese, more people could satisfy their basic needs such as food, daily items, safety and love, etc. They were seeking higher needs for a better life style, more people could afford to purchase cars rather than bicycle or motorbike.

Long term growth potential market
Continuous population growth indicated that there was a long term growth potential in China. In 2004, there were only 0.5 cars per 100 people in China. Compared to 80 cars per 100 people in US, China was a great potential market for GM.

Continuous GDP growth
GDP had risen steadily. It indicated that the purchasing power increased in the past few years. More people are willing to consume goods, and they would have the ability to buy their own cars.

Westernized of newly rich
In China, young consumers’ purchasing patterns are