GM Harnesses the opportunity of Emerging Chinese Market

In a next step to recovering some of the value of GM, CEO Rick Wagoner has announced a massive investment in a joint venture research center in China. The $250 million investment will be focused on research into alternative fuel technologies, and will take place in Shanghai. The joint venture with China's state-run Shanghai Automotive Industry Corp and Liuzhou Wuling Motors Ltd will undoubtedly attract some degree of criticism from protectionists here and in Europe. But the strategic intelligence of this move must not be underplayed.

Since the developed world's competitive landscape is becoming ever more commodetized by the overall flattening of the world's labor and knowledge markets, there is a corresponding growth of opportunity to do business in emerging markets. As the world's fastest growing marketplace and most populace nation, China is the next great frontier. Failing to try to seize some piece of that huge pie would be worse than neglectful--it would be idiotic.

In the US, GM will never regain is pre-eminance. It's current "big" plans for alternative fuel cars are limited to a relatively efficient hybrid, the Volt, which can go 64 kilometers on electricity alone. But it won't be available until 2010. By 2010, it may not even be efficient under current standards.

The declaration of focus on China and India as growth opportunities for GM is a step in the best possible direction. In those markets, there is still a huge opportunity not only to grab market-share (a wondrous possibility in itself, if accomplished), but also to alter the environmental disaster that is imminent as 20,000 new cars are introduced to the road in China, each and every day!

This move is a tremendously progressive track for Wagoner to take, and is consistent with his successful agreement with UAW--an agreement that virtually "eliminates the cost advantages of Japanese automakers". This trend, of exploiting the opportunity to make a difference to the global community through capitalism is a key trend identified in the Powered by Principle approach. Today, it is wise for entrepreneurs to look around for the greatest global problems--and solve them--solving them with the ingenuity that capitalism inspires, and reaping the profits while making an impact that benefits all of us.

This isn't to say that Wagoner is free of principle violations--but to be in such a Principle-Powered "state of grace" is a highly aspirational goal, and one that is progressively more seemingly unattainable the more complex the enterprise. I could argue (and so could you) that lobbying Congress against tightening emissions standards is a contradiction of the very mission embodied by the Chinese venture--and it is. But that doesn't make the choice to be opportunistic about China's needs any less superb. Kudos to Wagoner and GM.