Innovating in China`s Automotive Market

Innovatingin China’s Automotive Market

In2010, Chinese buyerswerethebiggestmarketforvehiclesby American automaker General Motors. Thetotalnumberof vehiclessoldby thefirm andotherpartnersin theregionexceeded2.3 million, which exceedsthenumberof unitssoldin theUnited States. Due to themassivescopeof thismarket,theautomaker is settingup an Advanced Technical Center in Shanghai Constructionis currently goingon forthesecondhalf.Oncecompleted,itwill havea Vehicle Engineering Lab, China Science Lab, Advanced Design CenterandtheAdvanced Powertrain Engineering Center, makingitan importantresearchanddevelopmentcenterfortheentireorganization(Leibowitz &amp Roth, 2012).

Accordingto thepresidentof GM China, there has beenan uptick in therateof innovationin China which is growingat a fasterratethan anywherein thepast.Localcompaniesare leadingin innovation,andtheyare quitesuccessfulat it,consideringthelargenumberof consumerswhowill readilyusetheseproducts.Additionally, China has manyskilledworkerswhosenumbersare increasingeveryyear.Mostof theseare peoplewhowantto leavea markandare moreinnovative in thetechnicalsector,aidedby increasedsupportfrom theChinese government.There is a differencein themannerin which Chinese automakers andforeignautomakers embraceinnovation.Chinese automakers havelowlevels of technicalinnovationdue to limitedcapabilitiesforresearchwithin thecountry.Ratherthan embraceinnovative research,Chinese automakers rely on innovativecommercialization (Leibowitz &amp Roth, 2012). Theypreferto testan ideaseveraltimesthrough commercialization before decidingona particularproduct.In theWest, companiesfocuson testing,researchandvalidation before commercializationof their products.

Themodelis applicablein China since theyunderstandthatmistakesneedto be madeforone to progress.Whenever theyencounteranyhurdles,theymakechangesandaddthenecessaryimprovementsandeventually,theywill findout whatthecustomerswant.GM China has adoptedthisapproachwithinthecountryalthoughtheorganizationisgovernedby certainlegalandglobal requirementsthatdeterminetheactivitiesof theorganization.Theautomaker has to be ableto identifyopportunitiesanddevelopproductsandreleasethem whilemakingchangesas theyarerealized.Itis theonlywaythat GM China can operatecompetitively. To facilitatetheinnovative natureof theautomotive market,GM China makesuseof thecompany’sexpansiveinternationalcapabilities.Thesehaveensuredthat,even though, thereis constantinnovationwithin thecompany,itstills maintainsinternationalstandardsthat areexpectedas a global brand.Thecompanyensuresthatitcan meettheseinnovative needsby maintaininga closeworkingrelationshipwith their localpartnersin thecountry.Thesearethenmixedwith expatriateswhohaveproveninternationalcapabilityandare outgoingandableto complement theseinnovationideas.

Dueto theinnovative natureof operationsin thecountry,GM China has setup a unitwhoseaimis to spearheadtheinnovationprocessby identifyingandtakingadvantageof variousopportunities.Innovative ideasaredrivenby taskteamswhoare giventhetechnicalandfinancialsupportto exploretheir ideas,buthavea responsibilityto thecompany.Theseteamsareledby teamleaderswhoare smart,flexibleandshould havethepersistencerequiredto developinnovative ideasuntil theyare actualproducts(Leibowitz&amp Roth, 2012). Apartfrom beingcreative,teamleadersshould be ableto takebusinessrisksto achievetheir goals.Luckily,theorganizationhas a lowturnover ratesince mostworkersliketo beassociatedwith a global brand.Themainadvantageforsettingup theresearchanddevelopmentcenterin China is totakeadvantageof talentedlearnerswhograduatefrom universities.Thesewill providea linkbetween thecompanyandthepeople,anditwill bebasedon productsthatmeettheneedsof thepeople.Furthermore,China is thefastestgrowingmarketin theworld,andthecompanywantsto developdesignsthathavehighdemandin theregion.

Thesearchfortalentat theresearchcenterwill bespearheadedin localuniversitiesanda programby GM China knownas PACE.Thecompanyalsooffersinternships to technically talentedlearners,in additionto skilledresearchers from variouslocationsaround theworld,mostlytheUnited States. Thetimeframe forthefacilityto be operational would be an averageof 5 yearsto ensuretheteammembersto blendandgettherightmentorship. With thenewfacility,GM Chinawill be fullyintegratedinto theglobal operationsandcan matchoperationsin theUnited States andGermany. Ratherthan focuson reinventing otherproducts,thenewfacilitywill inventnewproductsthatcannot bedevelopedby otherglobal capabilitiesof theautomaker. Theexamplesof productsdevelopedwithin thecountryincludelow-cost mini commercialcars,which wasnot designedfortheglobalmarketbutspecificallyfortheChinese market.Anotherproductpopularwithinthecountryis theBaojun brandthatmeetsthetransportationandincomeneedsof Chinese citizenslivingoutside themajormarkets.

Reference

Leibowitz,G., &amp Roth, E. (2012, February 1). Innovating in China’sautomotive market: An

interviewwith GM China’s president. Retrieved March 9, 2015, fromhttp://www.mckinsey.com/insights/asia-pacific/innovating_in_chinas_automotive_market_an_interview_with_gm_chinas_president