Ford experience significant to Chinese auto companies

• Source: Global Times
• [23:02 June 10 2009]
• Comments

By Chen Xuegen

Chrysler and GM have filed for bankruptcy, leaving Ford as the lone Detroit automaker not in bankruptcy protection.

GM, with over 100 years of history, had been the leader of the US motor industry. But Ford has shown its ability to survive at a critical moment. This bears important lessons for the Chinese automotive industry.

When confronted with economic difficulty, which one should an enterprise turn to, the government or the market? This has always been a hot topic for Chinese enterprises.

Chinese entrepreneurs prefer to gain advantages from both. They always show off their relations with the government and even depend on the government.

US entrepreneurs, however, act in different ways. They will not ask for the government’s help unless they have no choice. Even if the government offers to help, they still keep alert, fearful that they will be condemned by the taxpayers. They also worry that the government will kick them when they are down. When US President Barack Obama offered to help, Ford answered with dignity, “No, thanks.”

They not only refused the government’s help, but also challenged the government.

In order to prevent industrial competitiveness from decreasing due to government intervention, Ford demanded that the government, after it became the principal shareholder of GM, should not change the competitiveness of different parties in this industry.

It even condemned the German and French governments for providing Opel, Peugeot- Citroen and Renault with funds.

Refusing government help protects the basic principle of a liberal economy, and draws a bottom line for government intervention during the financial crisis as well — governments cannot do anything to adversely impact fair competition on the market.

Long before the financial crisis, Ford had changed its brand strategy. It successively sold or reduced its corporate share in brands like Mazda, Jaguar and Land Rover, centralized resources for Ford, Lincoln, Mercury and Volvo, and established a unified platform globally.

GM acted in the opposite way and the excessive expansion of brands was the major reason that led to GM’s bankruptcy restructure. According to statistics, the number of brands GM owned amounted to more than 20.

The purpose of purchasing these brands was to keep capital leverage, but ended up causing a scattering of resources and a lack of efficient resources from production, research and development centers. This led to a serious problem in sales as well.

The Chinese motor industry is confronted with the same problems — an excessive number of brands and scattered production and research and development.