Hindsight can be a cruel and beautiful thing, especially if you happen to live in Detroit and drive a Buick. The collapse of General Motors 24 months ago stunned the US and portrayed the giant of American motoring as a lumbering relic of a bygone age.
Yet across the sea, in the only market where cars matter, GM China was racking up accolades for exactly the kind of nimble thinking and foresight that went so painfully AWOL in the US.
While Detroit was collapsing in 2009, GM China’s Aussie General Manager Kevin E. Wale was receiving the Magnolia Award from the Shanghai government for his contributions to the economic and social development of Shanghai.
Wale recalls his globetrotting journey to Shanghai, “In 30 years, probably the most interesting thing is that I grew from a person who started in a very small part of GM in Australia to working at every operation around the world, and meanwhile, seeing the world change into a very integrated global community.”
Based in Shanghai, Wale is responsible for the overall coordination of GM’s extensive operations on the Chinese mainland, in Taiwan, and Hong Kong.
Wale began his GM career with Holden, the automaker’s Australian unit, in 1975, working in various roles within the company’s finance department.
Australia needs to prepare for the rapid development of China as an automotive engineering powerhouse or risk losing work to foreign competition, he says.
“China is maturing rapidly as a center of automotive expertise – not only for manufacturing but also for design, technology and engineering. It will be the dominant player in the region,” he explains.
“China is going to be bigger than Japan. Australia could never dominate Japan, so over a period of time, China is going to build up its capability in its industrial chain, including design, manufacturing, tooling, and suppliers,” he adds.
In 2009, Wale was elected to the AmCham Shanghai 2010 Board of Governors. And by the time he took the driving wheel in China in 2005, GM was pushing a $176 million annual profit across Asia.
At the same time in North America, General Motors was hemorrhaging over $120 million a month.
The apparent “schizophrenic” GM crossed its personal Rubicon in 2009 when China became GM’s single largest market and the US division stumbled into the clutches of a government-led resuscitation.
Simply put, in China the GM brand is everything it has not been for 50 years on home ground because of floundering US strategies.
“Here, we respond to China’s needs and we have learned to never, ever underestimate China’s market. We anticipate industry growth for 2011 to be between 10 and 15 percent. While this would be a significant drop from last year’s growth, it is a number that my colleagues in Europe and North America would be thrilled with,” Wale says.
“Over the longer term, between 2010 and 2020, we anticipate growth in the top nine global markets (excluding the US) to total about 25 million units. We expect nearly half of that growth to come from China.”
When speaking of how successful businesses enter China, Wale is blunt. “The Chinese consumer defines us.”
A native of Melbourne, he has a bachelor of commerce degree with honors from Melbourne University and did additional study at General Motors Institute, now Kettering University.
While he began his GM career with Holden, the automaker’s Australian unit, in 1975, it was in Singapore, as executive in charge of operations for GM Asia-Pacific from 1998, that Wale, now responsible for the general management of GM’s operations across the region, began to gain the insight into the many moods of the diverse Asian market.
Wale’s harvest of local knowledge will see GM, over the next five years, introduce more than 60 new models and major product upgrades. Its two mainstream brands, Buick and Chevrolet, will account for nearly half.
His mission and focus – through partnership – is to utilize local knowledge and respond to local needs.
“Through its 11 China partnerships – ten JV’s with strategic partner SAIC (Shanghai Automotive Industry Corporation) and one with FAW – General Motors China now operates more than a dozen vehicle manufacturing and powertrain facilities in eight cities producing experimental mini-cars all the way up to luxury roadsters,” says Wale.
The centerpiece of this prolific fizz of corporate inspiration is the Volt (scheduled to roll out in the last quarter of 2011) an electric Chevrolet, capable of over 500-kilometer journeys.
Wale was appointed president and managing director of the GM China Group in May 2005 and almost immediately began stepping up GM’s presence in smaller, inland cities which are quickly replacing coastal cities as the major industry growth driver. That expanding series of distribution networks now numbers almost 2,700 outlets.
In his first year (2005) running GM China, from the flagship joint venture Shanghai General Motors Corp, Wale’s team sold 325,429 vehicles, up almost 30 percent from the previous year.
“Last year GM sold more than 2.3 million vehicles across China – the first global OEM in China to surpass 2 million annual sales. It happened four years earlier than we had anticipated,” says Wale.
According to Wale, the GM difference has been simple, however lacking it may have been in Detroit.
Spend some time in the passenger seat, is Wale’s mantra.
“I’ve made it a priority to visit dealers,” he says. “This gives me the chance to meet the customer, to hear what he or she likes about our products, and to learn more about what we can do to improve the shopping and ownership experience.”
“GM is tapping directly into the leading driving force emerging in China: the country’s tier 2, 3 and 4 markets,” he adds.
Wale says, “Our China accomplishments are a story of partnership.”
“We often say even if partnerships were not required, we would still use the partnership model because of the advantages it offers. Our partnerships enable us to do more than we could by going it alone. I meet frequently with my counterparts at SAIC and FAW, and always walk away wiser. Partnerships are like a marriage. Careful balance is needed to ensure that all sides win,” he adds.
Wale refers to the Pan Asia Technical Automotive Center (PATAC) joint venture – launched in 1997 – as one of GM’s best examples of a committed partnership, “that draws on the deep well of Chinese talent, technology and innovation.”
PATAC is China’s “leading automotive engineering and design centre” and the first Sino-foreign joint venture to create a passenger car in China.
“The Chevrolet New Sail small car was completely locally developed and has been an outstanding success,” he says.
With an instinct for sets-of-five Wale gives GM’s key lessons for success in China:
“First, you will not succeed without your company having a long-term commitment to grow in China – through good times and tough times.
“Second, to win in this major market, you must at least build a great partnership model based on mutual trust and respect.
“Third, you need to understand the depth and complexity of the market. China is not a single market. It is many markets within a large geographic region.
“Fourth, you need to build a great local capability.
“And finally, you need to participate in the future. This requires understanding of where the industry needs to go and actively participate in helping to form that future.”
And the future – according to Wale’s five-year plan announced during the Shanghai Auto Show – will see GM finally take a lead in the energies of the future.
“We need to displace petroleum by diversifying the energy sources and ultimately reduce tailpipe emissions to zero. The Chevrolet Volt will be the first extended range of electric vehicles in China,” he says.
According to Wale, GM has all the fundamentals in place to double GM sales volume to around 5 million units by 2015 but with a premium on sustainable growth in a manner integrated with the growth of China’s capability.
At Shanghai’s World Expo, GM introduced its vision of sustainable transportation in 2030 – free from petroleum, free from vehicle emissions, free from accidents, and free from traffic congestion – not an easy leap of imagination for anyone living in urban China.
“Mate, I’m confident that we will achieve our goals. We’ll just follow the strategy that got us here – working in China, with China, and for China.”