Quitting Chinese market will be suicide for US firms

[antonius123]

Quitting Chinese market will be suicide for US firms


By Hu Weijia Source:Global Times Published: 2019/8/25 21:25:29

US President Donald Trump has ordered US companies to "immediately start looking for an alternative to China." If US firms obey his dictate, such actions will have serious consequences.

China is now the biggest market for some US-based enterprises, such as US automaker General Motors (GM). The automaker's China sales came to 3.65 million cars in 2018, exceeding its total sales in the US market, where GM delivered nearly 3 million vehicles. Some statistics have shown that China's car market is even bigger than those of the US and Japan combined. GM is already facing weak sales in the US. The automaker will suffer a fatal blow if it loses the Chinese market.

GM is a big player in the US auto industry, an important component of the US economy that is particularly prominent in some Midwestern and Southern states.

According to statista.com, motor vehicle and parts dealers in the US had about 2 million employees as of March 2019. If GM's profits fall or it loses money, the whole US auto industry will be affected, the country's auto supply chain will shrink and mass unemployment will result.

In China, the vehicle industry is a fully competitive market. If GM withdraws from China, homegrown brands and automakers from countries outside the US will fill the gap in auto sales. As long as China has the world's largest vehicle market, there will be no shortage of auto-related investment. China has the initiative in this game.

There's not much chance that GM will obey Trump's outburst. The automaker needs its factories to be close to its customers to survive in a fiercely competitive market.

To keep its foothold in China, GM has to keep producing in China - despite Trump's order.

If Trump pressures US companies to take sides between the US and China, many of them will probably choose the latter. US business groups have already expressed their fierce opposition to Trump's gyrating trade policy.

"We do not want to see a further deterioration of US China relations," Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce, was quoted by media reports as saying.

US companies are welcome to invest and operate in the Chinese market, but if some US companies want to obey Trump's order and join Washington's trade war, the result is bleak. A decision to give up the Chinese market is just suicide.

http://www.globaltimes.cn/content/1162631.shtml

 

[Fawadqasim1]

They won't exit Chinese market it's simply too large and too lucrative it's brinkmanship
By Trump administration It's their way of trade negotiations it's Hallmark of trump and co so

 

[Hamartia Antidote]

China is now the biggest market for some US-based enterprises, such as US automaker General Motors (GM). The automaker's China sales came to 3.65 million cars in 2018, exceeding its total sales in the US market, where GM delivered nearly 3 million vehicles. Some statistics have shown that China's car market is even bigger than those of the US and Japan combined. GM is already facing weak sales in the US. The automaker will suffer a fatal blow if it loses the Chinese market.

The only reason GM will be dealt a fatal blow is because companies like Tesla have shown them how they are backwards when it comes to the future of sedans. If anything selling gasoline cars in China is only delaying their "day of reckoning".

BYD was supposed to wake them up in 2009 but BYD couldn't deliver and so GM didn't take the EV market seriously.

 

[Isotope]

The only reason GM will be dealt a fatal blow is because companies like Tesla have shown them how they are backwards when it comes to the future of sedans. If anything selling gasoline cars in China is only delaying their "day of reckoning".

BYD was supposed to wake them up in 2009 but BYD couldn't deliver and so GM didn't take the EV market seriously.

Just curious. So where is BYD currently now? It seems like at one time, it came into the EV foray with a huge fan fare and like it was going to take over the world, but now hardly hear any thing about them.

 

[Menthol]

The only reason GM will be dealt a fatal blow is because companies like Tesla have shown them how they are backwards when it comes to the future of sedans. If anything selling gasoline cars in China is only delaying their "day of reckoning".

BYD was supposed to wake them up in 2009 but BYD couldn't deliver and so GM didn't take the EV market seriously.

What is happening between Tesla and GM was like Nokia and Apple.

The concept of future phone or car have been exist for quite long. Nokia/GM even the creators of that future concept. But the funny is, it was Apple and Tesla who make it come true and lead both of the companies into bankruptcy... Well, GM is still exist.

 

[Hamartia Antidote]

Just curious. So where is BYD currently now? It seems like at one time, it came into the EV foray with a huge fan fare and like it was going to take over the world, but now hardly hear any thing about them.

BYD January 2009 Detroit Auto Show about a 100% electric sedan with a 250 mile range that can charge 50% in 10 minutes. The "death blow" to gasoline cars.

After years of delays they only sold a 100% electric e6 minivan in quantity in the Chinese market starting in October 2011 (BTW Tesla Model S June 2012). They were not sold in quantity to the general public overseas. https://en.wikipedia.org/wiki/BYD_e6.

The Tesla Model S stole all their thunder.

Then this:
https://www.theverge.com/2019/2/22/18236707/tesla-model-3-2018-best-selling-ev-global
Tesla’s Model 3 was the best-selling EV in the world last year

 

[lcloo]

What is going to kill GM is simply because it sold more cars in China than in USA. It is the same story for many big name US companies, without China, they go belly up.

GM 2017 Sales
GM Sold More Cars in China Than in the US (Again) Last Year
By Paul Ausick January 4, 2018 12:15 pm EDT
https://247wallst.com/autos/2018/01/04/gm-sold-more-cars-in-china-than-in-the-us-again-last-year/



GM 2018 Sales

Just curious. So where is BYD currently now? It seems like at one time, it came into the EV foray with a huge fan fare and like it was going to take over the world, but now hardly hear any thing about them.

BYD is the best selling EV in China, and the EV sales in China related to rest of the world (including Tesla) is shown by chart below. Western press generally do NOT report on news favourable to China, silence on BYD sales is an example.

Electrical car Sales in China for the month of April 2019 and the first four months of 2019 (VW 11th place, Tesla 15th place)

 

[antonius123]

The only reason GM will be dealt a fatal blow is because companies like Tesla have shown them how they are backwards when it comes to the future of sedans. If anything selling gasoline cars in China is only delaying their "day of reckoning".

BYD was supposed to wake them up in 2009 but BYD couldn't deliver and so GM didn't take the EV market seriously.

Then both GM and Tesla will suicide if they exit from china market.

So that means GM will go into museum.

 

[kris]

Quitting Chinese market will be suicide for US firms


By Hu Weijia Source:Global Times Published: 2019/8/25 21:25:29

US President Donald Trump has ordered US companies to "immediately start looking for an alternative to China." If US firms obey his dictate, such actions will have serious consequences.

China is now the biggest market for some US-based enterprises, such as US automaker General Motors (GM). The automaker's China sales came to 3.65 million cars in 2018, exceeding its total sales in the US market, where GM delivered nearly 3 million vehicles. Some statistics have shown that China's car market is even bigger than those of the US and Japan combined. GM is already facing weak sales in the US. The automaker will suffer a fatal blow if it loses the Chinese market.

GM is a big player in the US auto industry, an important component of the US economy that is particularly prominent in some Midwestern and Southern states.

According to statista.com, motor vehicle and parts dealers in the US had about 2 million employees as of March 2019. If GM's profits fall or it loses money, the whole US auto industry will be affected, the country's auto supply chain will shrink and mass unemployment will result.

In China, the vehicle industry is a fully competitive market. If GM withdraws from China, homegrown brands and automakers from countries outside the US will fill the gap in auto sales. As long as China has the world's largest vehicle market, there will be no shortage of auto-related investment. China has the initiative in this game.

There's not much chance that GM will obey Trump's outburst. The automaker needs its factories to be close to its customers to survive in a fiercely competitive market.

To keep its foothold in China, GM has to keep producing in China - despite Trump's order.

If Trump pressures US companies to take sides between the US and China, many of them will probably choose the latter. US business groups have already expressed their fierce opposition to Trump's gyrating trade policy.

"We do not want to see a further deterioration of US China relations," Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce, was quoted by media reports as saying.

US companies are welcome to invest and operate in the Chinese market, but if some US companies want to obey Trump's order and join Washington's trade war, the result is bleak. A decision to give up the Chinese market is just suicide.

http://www.globaltimes.cn/content/1162631.shtml

Chinese have a point. Their market is too big to be n left alone
But USA also is a big market. If the USA companies start moving out of china it's only keeping exports in mind
Nothing else.

 

[antonius123]

Chinese have a point. Their market is too big to be n left alone
But USA also is a big market. If the USA companies start moving out of china it's only keeping exports in mind
Nothing else.

Exporting to china when imposed by high tariff + devalued yuan, will mean suicide.

 

[Beidou2020]

US is facing complete humiliation by failing to defeat China in a trade war. US couldn’t stop China building infrastructure in the SCS and placing military assets on them. Now they can’t defeat China in a trade war.

Just a paper tiger.

 

[Menthol]

I remember decades ago, the most popular USA economy policy is a free market, with no government interfering.

The reason is that the market is a very complex thing, almost like an ecosystem.

The USA dare to do so because some experts say that the USA economy is in overheating. The negative effect of the trade war will help the USA economy to cooler. At the same time to destroy or slowdown China's economy.

 

[lcloo]

There are basically two types of US companies in China. First one is those that established a foothold in China's market by having companies physically operating within China. Second one is those companies using cost advantage in China to produce goods for US consumers.

If all US companies leave China, the first group that eyes China market will be the biggest losers, some of them will have to face high possibility of Chapter 11 (filing for protection against bankruptcy ). Beside the sellers of physical goods like car, aircraft, electronics etc this group is inclusive of services providers like FEDEX, DHL, AIA Insurance and Disney etc.

Since their sales are aimed at China market, the vacuum they left behind will be filled up by domestic Chinese companies, and other foreign companies not in agreement with Trump's tariff war.

The second group which we previously called “contract processing factories"-来料加工厂 that produce for exports customers , will be able to survive but their products are expected to cost more than made in China due to inefficiency factors like backward infrastructures, unfavourable and incomplete supply chains and workers lack of proficiency in early years of re-location..

Also the Supply and Demand theory means that the originally cheap labour in new host countries will increase as shortage of labour becomes acute over times. And the one time re-location expenses and workers training expenses will have to be written off against profits. The out come for US consumers is higher costs than present.

 

[Isotope]

BYD January 2009 Detroit Auto Show about a 100% electric sedan with a 250 mile range that can charge 50% in 10 minutes. The "death blow" to gasoline cars.

 

[Ra's al Ghul]

how so ?