Headquarters economy booming in the Chinese auto sector
Post date
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10/08/2009 17:09
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Source: Adsale Industry Portal 2456.com
Pony Liu
Headquarters economy has grown rapidly in China in recent years. More and more international carmakers have been attracted to set up regional headquarters and R&D centers, which are high up in the company hierarchy, in the country.
New GM to set up second headquarters in China
General Motors Co has gone through Chapter 11 bankruptcy protection on July 10, ending a 39-day insolvency, much faster than most industry watchers thought it could. Meanwhile, the new GM has withdrawn all its previous regional operation establishments in Latin America, Europe, North America and Asia Pacific. It is planning to set up its global operational base in Shanghai to coordinate its operations in various areas around the world, which will be second only to the Detroit Headquarter in terms of significance.
Nick Reilly, the former President of GM Asia Pacific, has been appointed the Executive Vice President of GM international operations.
The establishment of GMˇs operational base in Shanghai demonstrates the emphasis GM has placed on the Chinese market, the auto giant said in a statement.
Sales of China's domestically made vehicles stood at 6 million units in the first half of this year, up 17.69% over a year earlier, which makes China the worldˇs largest auto market followed by the US and Japan. During the same period, GM Chinaˇs sales surged 38% to a record 814,442 units. In 2008, its sales in China climbed 6.1% to 1.1 million units. GM China President Kevin Wale said the companyˇs sales in the country are expected to jump by more than 20% in 2009.
Auto giants move AP headquarters to China
In 2004, Volkswagen AG and General Motors has relocated their Asia Pacific regional headquarters to China to seek greater growth for their regional businesses.
In the same year, Volkswagen AG set up a subsidiary, Volkswagen Group China, in the nation while GM moved its headquarters of Asia-Pacific Region from Singapore to China.
Later, Chrysler established its Asia-Pacific headquarters in Shanghai. Mercedes-Benz also set up its new northeast Asia headquarters in Beijing in 2005 to oversee its businesses in China and South Korea.
Leading auto manufacturer Ford Motor Company has recently confirmed that it will move its headquarters for Asia-Pacific and Africa from Thailand to China, in order to enhance management efficiency and tap the potential largest car market in the world.
Concerns over headquarters economy
Headquarters economy refers to an economic mode with unique regional resources that attracts enterprises to locate their headquarters or regional headquarters there, and therefore a cluster of headquarters is formed boosting the development of the region.
In fact, some regions vow to develop headquarters economy, coveting the effects of industrial agglomeration, industry correlation and the possible increase in tax revenues. However, as far as China's automotive industry is concerned, the more headquarters are settled in the country, the more competition Chinese home-grown carmakers have to confront, according to Jia Xinguang, an independent auto industry analyst.
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