GM shifting power from Detroit to Shanghai image

One largely overlooked aspect of recent sweeping management reorganization of the new post-bankruptcy General Motors Co. was a shift in power from Detroit to Shanghai, the Detroit Free Press reported yesterday.

Nick Reilly went from overseeing GM’s Asia operations based in Shanghai to overseeing all of the automaker’s operations outside of North America, except for Opel, which is up for sale. So while GM’s Canada and Mexico operations report through the United States, most of the rest of the world reports through China.

As GM looks to sell off majority control of its Opel division in Europe, the Detroit automaker will likely draw on lessons from its China operations, where it is partnered with Shanghai Automotive Industry Corp (SAIC)., Wuling Motors, and FAW Group Corp. for managing its new relationship.

“We are familiar with operating in a shared ownership environment, which is quite different than what I call a ‘command-and-control environment,’ ” Kevin Wale, president of GM China, told the Free Press recently. “You have to communicate very well.” That communication requires time.

While GM sales in the U.S. are down 37.7% to 1.1 million so far this year, its sales in China are growing rapidly. GM’s July sales in China surged 77.7% to 144,593 units. For the first seven months of the year, GM’s China sales were up 42.8% to 959,035. In early August, GM celebrated the sale of its 1 millionth vehicle in China this year.

China’s promotion of low-end vehicle consumption has helped GM’s Wuling venture, which saw sales jump 90.7% year on year to 87,925 units in July. GM plans to export Wuling-made mini-commercial vehicles under the Chevrolet brand to South America, the Middle East and North America.

On August 30, GM launched a joint venture with FAW Group Corp., the second-biggest Chinese automaker, to make light commercial vehicles in China.

“So far, China’s growth has exceeded anything anybody thought possible,” Mike DiGiovanni, GM’s executive director of global market and industry analysis, said in July. And for GM, Shanghai is “the crown jewel in the new empire.”

General Motors CEO Fritz Henderson said on July 10 that the company would set up its global operational base in Shanghai, a base which is likely to equal the Detroit headquarters in significance.