“China’s a big piece of the value of the company,” said Stephen J. Girsky, G.M.’s vice chairman for corporate strategy and business development. “And since we pull cash out of China, it helps fund investments in other parts of the company as well.”
Analysts estimate G.M. is worth $50 billion to $90 billion, with China accounting for about $15 billion of that total. The United States government converted about $43 billion of aid to G.M. into its equity stake, which is expected to be sold off over time after the company is publicly traded. A valuation above $70 billion or so would allow the government to earn a profit on its stake.
Through joint ventures with China’s S.A.I.C. Motor Corporation and other local manufacturers, G.M. is this country’s largest vehicle manufacturer, accounting for about 13 percent of the nation’s fragmented car market. Its product line aims to cover the broad spectrum of needs, like the $5,000 Wuling Sunshine, a barebones minivan wildly popular in rural areas, and the luxurious Cadillacs that can be seen in the wealthy neighborhoods of Beijing.
This week, G.M. announced plans to create a seventh brand to sell small passenger cars. In the United States, G.M. is down to just four brands, after shedding Pontiac, Saab, Saturn and Hummer during its bankruptcy.
“This is not some sort of flash-in-the-pan investment strategy,” said Michael Robinet, an analyst with the research firm IHS Automotive. “During the bankruptcy process, G.M. China was the beacon in the night that G.M. always had in its back pocket, and China will be a vital cog in G.M.’s machine going forward.”
G.M. said it earned about $400 million from its China joint ventures in the first quarter of this year, when it earned a total of $1.2 billion outside of North America and Europe. Its total corporate profit for the quarter was $865 million because of losses and other costs elsewhere.
While GM’s fast-growing China operations are helping to offset the automaker’s problems in the United States, it ultimately will need to do better on its home turf to restore its financial health. On that score, G.M. earned a first-quarter profit of $1.2 billion in North America, after losing $3.4 billion the previous quarter, but its market share in the United States so far this year is down from 2009. Analysts said G.M.’s overall prospects still hinge more than anything else on its North American operations being healthy, because that is where it can generate the most income.
The company’s success in China has been helped by the fact that Chinese consumers do not have the skepticism about G.M. that is commonly seen in the United States. In China, many shoppers know little about cars and go to a dealer for guidance.
“What we offer is accepted at face value,” said Kevin Wale, the president of G.M. China. “We don’t carry any baggage, basically. We get treated for what we deliver.”
G.M. officials say no American taxpayer money has been used to expand in China, though a Chinese government stimulus program that encouraged sales of clean vehicles and helped farmers and other rural residents buy vehicles has fueled consumer demand here.
Buick is the company’s star. Favored by China’s last emperor, Buick is perceived as sumptuous and stylish, a contrast with its staid image among many Americans. G.M. sold nearly half a million Buicks here last year, almost five times the brand’s sales in the United States.
“I was so fascinated by the shape of this car,” said Xu Tianpei, who bought a Buick Regalat the Yongda dealership in Shanghai for 230,000 renminbi ($34,000), including taxes and insurance. “