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3. To form an automotive joint venture, a foreign company must first secure approval from the central government. All models to be produced by the joint venture must also secure prior approval. A list of discouragingly prohibitive rules was often followed by declarations that China enthusiastically welcomes investments by foreign companies. China genuinely wanted foreign companies to invest. But businesses would have to develop on China’s terms and schedule. “Jump in, the water’s fine,” was the soothing, if misleading, message from the regulatory agencies.
An auto industry supplier based in China recalled a reception in Beijing one evening in 1993: “The guy sitting next to me identified himself as a policeman and showed me his ID. When I asked him where he worked, he said: ‘I smuggle cars down South. ’” Western car companies tended to think in terms of black and white. To them, success in China hinged exclusively on securing a car assembly license. But the Japanese took a more savvy approach, portraying respect for officials in Beijing while making money from exports through Hong Kong.
1 billion on its North American operations but made almost $2 billion outside of the home market. With Smith’s drive for a more global presence came new appointments and more money. Smith named Louis Hughes as vice president of international operations in Geneva. Many powerful people at GM headquarters remained very wary about China, given the nasty stings in Shenyang and the fiasco at BeiNei. But Smith ultimately approved a budget large enough for Swando to shift from his offshore perch in Hong Kong, the original headquarters of GM Asia Pacific, to a modest foothold in Shanghai in early 1995.