General Motors has gone from market leader to also-ran in the world’s largest car market, stymied by its own missteps and Chinese policies that favored its local rivals.
General Motors was a pioneer in China, where for a quarter-century the company drew enormous profits and vied with Germany’s Volkswagen as the top seller of cars.
Those days are over.
G.M.’s sales in China have entered a death spiral, falling 42.5 percent in the first 11 months of this year. The company now ranks 16th by sales. The dizzying collapse of its China business forced G.M. to take a roughly $5 billion charge against profits this month.
It was a drastic comedown for the company, which started in China in 1996 with an initial investment of $350 million and went on to build a network of factories, churning out vehicles and sending billions in profits to its headquarters in Detroit.
G.M.’s early China executives were highly responsive to the unique characteristics of the market. They built bulky minivans with lots of sparkling chrome to appeal to leaders of the state-owned companies that were big customers. They sold Buicks, a faded brand in the United States that still had cachet in China. For rural farmers, G.M. offered vans and pickup trucks with flimsy seats and no air-conditioning that cost only $5,000.
In many ways, the story of G.M. in China tracks the experience of all foreign automakers in what is now the world’s largest car market.
China allowed foreign carmakers like G.M. into the country only as part of a publicly stated, long-term policy to gain technology and build its own globally competitive industry. Government leaders were also intent early on to shift away from cars that needed gasoline, which China mostly imports, and toward electric cars powered by energy sources at home like coal, solar and wind.
