Although expanding a brand into global markets has substantial risk, General Motors is receiving a positive response for their Buick brand in China. Since China is a bigger seller of Buick compared to the United States, GM is looking at this strength as another market development strategy for its Cadillac brand.
This opportunity for General Motors is less risky now that they have already launched one of their brands in China. GM has an advantage since they completed most of their market research prior to releasing Buick into the Chinese market. As a result, GM has already developed an economic, sociocultural and governmental analysis which has familiarized the company with this attractive global market.
Furthermore, GM has chosen a global entry strategy of a joint venture, partnering with Shanghai General Motors. Although the ownership and profits will be shared, GM will lower their risk by sharing the financial burden, as well as gain a better understanding of the market.
The local manufacturing of the Cadillac XTS luxury sedan has begun, and Cadillac plans to produce a new model every year until 2016. By 2020, Cadillac anticipates to own a 10% share of the luxury car market in China. GM’s prompt identification of the growing luxury car market in China puts them ahead of their competitors in the long run due to their experience and greater understanding of this global market, making their projection of owning 10% of the luxury car market very attainable.