Companies like GM, Volkswagen, and others are expanding in China planning and building new state of the art and automated factories to keep up with demand across the Asian nation.
But darkness may loom on the horizon. As growth in China begins to slow down the amount of cars sold from these new factories begin to slow down and inventory begin to rise and profits drop. As the amount of cars increase China is already crowded and cities will begin limiting amount of cars. This can spell problems for the grow amount of cars being produced.
But automakers seem skeptical revising that the grow with actually be more than the overall growth in the economy. This is a bold opinion in my eyes and i think they should be scaling back to protect themselves from what slow down is bound to come.
They should be looking ahead to the next big market that is about to emerge in another part of the world..
Source: New York Times
http://www.nytimes.com/2016/03/29/business/international/china-automakers-cars-demand.html?ref=business
I agree with Zac, that if they stay in a market that'll yield more losses than profits than that'll hurt these various car companies. I was thinking China could expand roads to accommodate the increasing number of cars on roads, but that'll be a tough ask for the government. There's value in other markets, it just depends on picking the right moment to expand.
ReplyDeleteI also agree with Zac. However, I don't think they should pull out just yet. I would wait until they are in danger of losing profits. Then, while still remaining in China, they should begin to look for the next market. One market that sticks out to me is India. I think that would be a very profitable business venture.
ReplyDeleteChina is without a doubt beginning to present a lot of potential issues. I agree with Sam on the fact that companies should be a little more patient and see where the market goes before losing major profits. Since China is so crowded, maybe the amount of production/costs should be re-evaluated or maybe reduced. With the demand or even space for automobile use decreasing in China, a temporary drop in manufacturing could possibly avoid major profit loss. There are many other quality foreign markets that need to be analyzed and targeted for future production/sales.
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