New Ad Calls GM “Chinese Motors”, Fails To Understand Simple Global Commerce
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A new commercial titled “Chinese Motors” made by organization named “Let Freedom Ring” aims to portray General Motors in a negative spotlight as an un-American company that employs most of its workforce outside the United States while slamming the decision of the Obama administration for bailing out the automaker in 2009.
The ad starts with President Obama’s 2012 State of the Union address, in which the President states: “We bet on American workers. We bet on American ingenuity and tonight the American auto industry is back.” The ad then references a Forbes headline stating that almost two thirds of General Motors jobs are in other countries, followed by footage of a speech by CEO Dan Akerson where the chief states that seven out of ten GM vehicles were manufactured outside the United States.
The one minute-long commercial goes on to state that Akerson was appointed by President Obama and presents an excerpt from a CNN story stating that GM closed 13 U.S. plants while opening 15 new ones in China. Rounding out the clip is more footage of Akerson outlining a commitment to “working in China, with China, for China” — with the ad rhetorically questioning whether U.S. taxpayer dollars are working in favor of the U.S., or in favor of China. Underscoring some of those points are asides from two retired auto workers who question the actions:
The GM Authority Take
There’s an obvious political agenda here that we don’t feel the necessity to explore. However, we do feel obliged to point out that the ad takes an overly simplistic, if not foolish, perspective on the complexity and operations of a multinational organization such as General Motors.
For starters, GM is a global company that sells vehicles not just in the United States, but all over the world. In fact, Chevrolet — the automaker’s most popular brand by sales volume — sells more than 60 percent of its vehicles outside the United States — a statistic that truly underscores the global nature of the automaker. This reality doesn’t speak badly about the U.S.; rather, it demonstrates that GM’s products are desired by the world at large — in America, in China, and elsewhere, as well. As a business, wouldn’t GM be silly not to profitably meet the demand for its products in markets all over the world (and outside the U.S.).
To meet this demand profitably, it is often a prerequisite to build vehicles in and/or near their final point of sale. For instance, China — the world’s largest (by volume) market for automobiles — places hefty tariffs on imported vehicles. Failing to build vehicles for sale in China on Chinese soil can have disadvantageous effects on an automotive business. In fact, these negative effects are being experienced by Cadillac right now: except for for the China-specific Cadillac SLS, all Cadillacs are currently imported into China, and therefore face heavy tariffs by the Chinese government. These tariffs are then passed on to the Chinese consumer, resulting in a luxury vehicle offering that is priced too high, especially when compared to strong rivals (such as Audi) that build vehicles locally in China, thereby not being subject to the high import tariffs while carrying a lower price, which allows them to sell in higher volumes and earn Audi higher profits in the Land of the Red Dragon.
This is a problem that General Motors is in the process of addressing. The automaker is building a new plant in China in an effort to no longer subject its (Cadillac) vehicles to the high import tax set by the Chinese government. Building Cadillacs in China, for China will decrease the price of the luxury vehicles, putting them more in line with locally-built offerings (read: Audi), a move that will lead to an increase in Cadillac sales.
In summary, the story of Cadillac in China results in one new GM plant built in China — a move that is a simple reaction to increasing market demand and government sanctions imposed by the Chinese government on imported vehicles. This isn’t a move that supports China, or favors the country over the U.S.; instead, it’s a simple and natural response by a business (General Motors) that wishes to sell more vehicles and make more money in a market (China).
In addition, consider the fact that the U.S. auto market has stagnated in recent years, while the Chinese market — until recently — has been growing at an unstoppable pace. So why on earth would GM (again, a business run by sane business people) not want to meet demand of a growing market (China) and make more money?
Ultimately, the messages conveyed by the commercial, specifically regarding GM’s closing U.S. factories while opening new ones in China, is moot. Would American taxpayers rather GM not sell any Cadillacs (Chevys or Buicks) in China whatsoever? Would they rather GM not be able to meet Chinese-market demand for GM vehicles, thereby passing up revenues and profits? Doing either one of those would definitely not help anyone — not GM, not the U.S., and not the U.S. taxpayer.
At the end of the day, the Let Freedom Ring ad tries to spin facts that are simple realities of the business world at large against GM in ways that would only make sense to the uninformed. And it’s easy to see how a U.S. patriot without a keen understanding of global business would react to such a commercial, perhaps even electing to never buy vehicles from The General. The reality is that GM would simply not be a competitive business without serving global markets (such as China), and it can’t make all of its offerings in the U.S. thanks to a myriad issues such as cost structures, tariffs, and other complex factors.
Ironically, General Motors is the only automaker (American and foreign) to build a sub-compact vehicle in the U.S. But the commercial, in its infinite wisdom, doesn’t mention that. In fact, the ad reminds me of full-scale propaganda campaign… only this time, it’s an American lobbying organization doing its best to beat up an equally American automaker. The move will only hurt GM, hurt America, and hurt the U.S. taxpayers in the long run… because ultimately, the profits flow back to the U.S. — whether a GM car is built, and then subsequently sold in China, Europe, or elsewhere.
I’ll leave you with the following: would it be un-American and against the values of freedom and free commerce to limit GM’s ability to make money in China, or to criticize it taking advantage of the opportunity to do so?
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I’m pretty sure they don’t know the fact that the U.S. borrowed so many money from other countries INCLUDING and mostly from China(I think… somebody better check first)!!! That’s pretty much how broke we are in the United States and now people are complaining that GM now is called China motor??
Good job posting the one sided crap against GM. I was lucky enough to hear Mr Ackerson speak. I did not waste my time reading the print that went along with this video. This man understands the things that are required to run a global, competitive business.
Your bashing and uneducated posts are sickening. Have you heard of global manufacturing?
I look forward to your attempt of redemption character.
Scott, you really ought to read the GM Authority Take in its entirety before commenting. In it, you will find plenty of facts that come to GM’s defense as it relates to this silly commercial.
I look forward to YOUR redemption of character.
I view this website every day. I will not disregard the times that you are ahead of the others on inside info. Please understand that many will do as I did, and just jump to the video. After reading the whole post, I understand your motive. As a GM employee and exclusive member to see new Buick GMC product, I initially took this as an attack of GM investing in markets that will benefit the U.S.
Reading on, I think we are on the same page.
Scott — my apologies if my reply seemed brash, which it was. I jumped to a conclusion too soon. Again, please accept my apology. 🙂
Alex
I accept and appreciate your sincerity and apology. The best is yet to come from GM. We should all realize China as a benefit to North America as other companies would. Their strengthening economy helps our auto industry immensely.
Personally, however, I’m rather dubious as to the long-term benefit of China as it relates to the American auto industry at large. Given that every foreign automaker is required to partner with a laggard Chinese automaker (SAIC in the case of GM), a technology transfer from an American creative firm (like GM or Ford) to a slacking Chinese manufacturer worries me.
Given their propensity for copying/stealing our technology and producing it for pennies on the dollar I share your concern.
But your response to the ad was really great, well done.
On China, I think their is a mid term problem, but a long term benefit. China is trying to build a domestic auto industry right now, once that happens, they will be a lot easier to do business in. The requirement for foreign automakers to partner with domestic companies will soon be lifted. Then, as Chinese firms gain market share and prominence in China, they will want to sell in America and Europe. However, here , stealing technology and copying design blatantly wont work.
I agree, Babersher. I wonder if it would be possible, if not for the sake of trial and error as well as a bit of fun, for the U.S. and Europe to require Chinese automakers to partner with U.S. firms when and/or if (most likely when) they begin to export their vehicles. Wouldn’t that be an ironic turn of events?
Whoever made this video was using equipment that was in part or entirely built in China. But I dont think this organization believes what its saying, look at its website, its run by smart people. This is propaganda by a group that is intending to create propaganda , and scoring political points.
Im sure many honest, good Americans living in rural/lower population/Midwestern areas can see this and believe it, because its sounds good and plays to fears and natural assumptions.
If I were an American taxpayer (which I’m not) I would be pretty anxious to get back my $30billion in bailout money no matter where GM sees it fit to sell or build their cars. The fact that GM has done its duty and has paid back the portion that was to be paid back (the balance is held in stocks owned by the US govt and can be redeemed whenever) means that at least 60% of Chevrolet’s contribution alone (according to Alex’s figures) came from foreigners. The fact that more Buicks are sold in China than anywhere else, says to me that the Chinese are spending their fare share of money on American brands too. Let’s not be fooled. America and China enjoy a VERY lucrative symbiotic relationship that will not end anytime soon.
Im an American taxpayer and I dont care at all if we never get a penny back. Do you know why? Let me explain
American’s obsession with this $30 billion spent on GM befuddles me, never mind that this bailout saved millions of jobs, never mind that an iconic American company was saved, forget that this 30 billion will eventually be recovered, who cares about this $30 billion when both administrations spent hundreds of billions on banks during 2009. Take a look at one number:
16,000,000,000,000+
The GM Bailout is 0.18% of our National Debt.
Oh and did I mention that our debt is increasing by about 1 Trillion every year for the almost the past decade.
Now we as a nation need to wake up, stop crying about a one time bailout on a budget that didnt cost much, unquestionably saved jobs, and is being paid back and focus on why our government needs to spend more money that the entire world spends combined, and maybe start some controversy over inefficiencies and structural problems our Government has, rather than a inexpensive, once in lifetime, bailout.
That’s what I was saying!!
I could not agree with you more! I want to know why everyone focuses on GM when Chrysler accepted help too. (The real number are: GM $17.4B, GMAC $6B and Chrysler $1.5B) There are much bigger arguments to be had about where our money is going. I am still a bit miffed at the bank bailout. But this is about cars! GM is better off with this LOAN and I think they are doing a great job putting that money to good use. This is one use of my tax dollars I am happy about!
I agree with the commercial,Saic had 15% last I knew,so technically and sadly for this GM Fan it is Chinese Motors. 🙁
What do you mean by SAIC had 15%?
By Chinese laws any auto company building vehicles in China has to be 50% owned by a Chinese company. So every worldwide entity like Audi, Ford, Kia, Toyota that builds and sells cars in China is 50% owned and by your definition is Chinese *******.
So what did we want GM/Ford to do? Stay out of China and let everyone else have all the sales?
Anyone who is against GM and Ford doing business in China either really does not know how this is working or, what can I say?
Last time I checked 15% isn’t a controlling stake so how is that Chinese Motors? When the US government had a majority of the shares that’s a fair case to be made about government motors, but their remaining minority stake is still larger than that owned by SAIC so at least go in the right order – “government motors” before “Chinese Motors” (neither of which are accurate).
I guess if there is an Autoblog in Europe and Aisa they are saying the same thing. Damn Audi,VW,MB, Toyota, Honda, Nissan etc etc are building more factories in the US than they are here. The people that would write that are just as stupid as the ones that write it here.
What about Chrysler who has been bailed out twice? I hope with Fiat in the picture, they can truly build some better vehicles than they ever have in the past, although from what I understand, Fiat is not a very quality built vehicle to begin with.
Who ever made this video is an idiot.
Yeah, they are. I don’t understand why GM got so much negative attention when Chrysler was bailed out twice. I never heard anyone bad mouthing Chrysler. Not that anyone should, American jobs were saved. Our families, friends, neighbors. That’s what’s important.
The destruction of the American infrastructure and way of life is happening before our very eyes, the attacks on corporations that are based in the United States are so prevelant now… There is a reason why we should buy from domestic based companies (what few are left) when they provide quality product; GM gets this now, producing world class vehicles.
Save the United States! Buy American!! =)
Yeah, people who buy foreign don’t realize that when you buy American you’re supporting three times as many jobs. Most of the vehicles that GM sells in the US are built right here in the US. GM, Ford, and Chrysler design, engineer, and build here. Most fore gin vehicles are designed and engineered somewhere else. This website explains a lot of it. http://www.levelfieldinstitute.org/jpc_rating.html
This GM Authority Take should be sent to those idiots at Let Freedom RIng, so they know their errors. Sorry about the hard word. Just needed to let it out.
The Big Three, GM, Ford, and Chrysler are global players, which means imported vehicles for all three manufacturers. I believe the real burr under the saddle is the use of taxpayer dollars to finance GM operations outside the states. I don’t feel that should have been done. Be it Ford, GM, or Chrysler if you don’t have the money, then don’t borrow from Joe Taxpayer for you global ambitions. Work with the country’s lenders you want to operate in. Now if you can’t borrow in we’ll say Spain, then you’re sunk. Don’t prop up another countries job numbers and GNP with our tax dollars. This isn’t a Ford vrs GM vrs Chrysler thing. It’s a being a fiscally responsible thing. In farming purchases I don’t borrow unless it’s necessary. Borrowing only when necessary is something all governments should observe, if they did we wouldn’t be in the fix we’re in with the National Debt.
Brad – in addition, how do you know that “taxpayer dollars were used to finance GM operations outside the states”?
The money for expansion in China (the subject at hand) comes from profits made in China. GM now sells more vehicles in China than in the US. And GM is not building any vehicles in China and importing to the US (at least not yet).
Ah 62vett we meet again. If you don’t think GM don’t import Asia built vehicles think again. Chevy Aveo, Chevy Spark, Chevy Sonic all three imports. And U.S. taxpayer dollars financed the effort. Those taxpayer dollars supported their economy. The U.S. makes a few bucks on the sale at the dealer/distributor level. The lion’s share of the profit stayed overseas, and benefited the overseas economy at the expense of ours. The only way to stop this is labor (UAW) has to make concessions so that the vehicles can be made here. Things like job classifiation makes the auto industry way to expensive to build certain vehicles. Mexican built autos are North American, but still built in a foreign country, benefiting a foreign economy. Obama’s billions given to GM might have saved American jobs, but much of it went overseas to support operations there. If the big three can’t make it on their own they need to cease doing what is wrong and built vehicles where it is profitable for them to do so without any taxpayer support.
First of all, they don’t make the Aveo anymore, so that can’t help your case.
Second, the Chevrolet Sonic that is sold in North America is made in Orion Township Michigan. A Wikipedia search could have saved you the embarassment.
Thrid, the Sonic and Spark’s primary engineering efforts were done by GMDAT, GM’s Asian engineering arm.
So you’re only right about the Spark. Woopie.
So what’s the problem? Do you genuinlely think that GM should do ALL design and engineering efforts in the US and not leverage the talents of thousands upon thousands of automotive engineers available worldwide?
That’s what I could never understand. It’s okay for Toyota, VW, and PSA it have design and engineering studios all over the Earth, but GM cannot? What kind of business playbook are you reading?
You might wanna add Ford and Chrsyler and people think it’s okay for them to have their cars built in Mexico and nobody is talking about that.
Hey Grawdaddy,
Good follow-up. The person that wrote all the BS about GM making everything out of the USA probably drives one of those Toyota’s or Honda’s that were designed in Japan.
it looks like ” if it’s GM it’s bad. if its foreign it’s good”
The Spark is made by GM Daewoo, which is a GM company in South Korea, and the Koreans are better trade partners than the Japanese. The Spark is sold in many countries, so it is an international vehicle. Every Spark sold brings income to GM in America. That is why the Japanese cars assembled on American soil are never American, because their sales generate income to their Japanese owners, not to Americans.
Brad, that’s a very narrow-minded perspective that ultimately won’t bode well for any global business, bailed out or not, automotive or otherwise.
GM was supported (propped up, bailed out, etc.) by the country where all of its profits and operations are conducted, as is the case with every other automaker around the world. When Toyota gets funds from the Japanese government at times of crisis, Japanese citizens don’t b&tch and moan that Toyota is now building cars in the U.S.
Ultimately, GM is a global company. Sometimes, it does not make fiscal sense to design or manufacture in one country — especially for a global company with creative and engineering talent as well as manufacturing efforts around the world.
The ultimate goal is for GM to be profitable — and the best way to accomplish this goal is to operate in an efficient way that makes the best use of the company’s resources (talent-wise as well as quality, cost-efficiency, etc.)
It seems to be that your perspective is such that since GM was bailout out by the U.S. (as well as Canada), all of its operations should be conducted here/there. Keeping the goal (profitability) in mind, doing so would not accomplish them.
Or am I not understanding you correctly/entirely?
Tell it to Mikee, he’ll believe anything. We drive Ford and Chevys, raise the largest of the horse breeds, the Shire. All made in America. Mikee you plainly don’t understand how the economy works. If I wanted to start business in England for instance to build garden equipment. Two things have to happen, 1- I’d better have the funding in place. And 2- I’d better have a lender in England lined up for finance, they protect their economic interest better than we do. I’m retired from a green tractor company and know first hand how things work. Been there, done that, and got the European and Asian t-shirts to show for it. Foreign economies protect themselves better than the U.S. does, we need to do better. And foreign economics are hard to explain in detail, I’d need at least 20 pages, and hours to type.
For Grawdaddy … When the United States Taxpayers don’t shoulder the financial burden of GM anymore, then GM can design on Main Street Tokyo if they want to.
As far as for the Sonic being built in Michigan, maybe so, but the foundation work or design was done in Asia, not the States.
“When the United States Taxpayers don’t shoulder the financial burden of GM anymore, then GM can design on Main Street Tokyo if they want to.”
Funny. Japanese taxpayers subsidized the early costs of the Prius’s HSD. They didn’t complain, and I don’t think Prius sales are going to fall off the map any time soon.
“As far as for the Sonic being built in Michigan, maybe so, but the foundation work or design was done in Asia, not the States.”
Your point being? What part of “GMDAT is GM’s Asian engineering arm” was beyond your comprehension?
Have you considered that perhaps the engineers GM has in the ‘States were busy with other products? Why the hell would GM want to overload them with more work?! Why not have their under-utilized engineers in another studio have at it? Spread out the workload…..
Or, in your case, give it to overworked engineers that may end up cutting corners or neglect critical structual and load requirements resulting in a grossly inferior product.
You’re not really thinking about this. You still think GM is (or should forever be) tied to the USA and to never leave. That kind of xenophobic attitude is what would kill GM and leave every other automaker to reap what GM wouldn’t do.
I mean just lately, BMW announced plants to build a plant in Brazil:
http://www.reuters.com/article/2012/10/18/bmw-brazil-idUSL5E8LIOBA20121018?type=companyNews
I wonder if any xenophobic Germans are making videos calling BMW “Brazil Motor Works”?
This isn’t the 1950’s. Car building is a thourouly GLOBAL business. Wherever it is best to design and engineer is what matters. If GM choose to ignore qualified engineering talents outside the US, then what’s to stop Toyota to seize what a xenophobic GM ignored?