Tomahawk, WI 10/02/2013 (BasicsMedia) – General Motors Company (NYSE:GM) is making an effort to penetrate the China market and improve its financial performance in this region as a whole. This region has seen its middle class experience a major increase in the last few years, a trend which is expected to continue into the foreseeable future. GM is one of the numerous global car manufacturers which intend to get a bigger share of the market here. But equally important are its operations in Europe which have been ailing for quite a while now. What is GM doing to improve its European operations?

 GM is the Darling of the U.S

 GM holds a very dear place in the eyes of the American public. It is often seen as the gold standard of the U.S manufacturing sector. It offers the standards by which everything related to manufacturing sector is measured or compared in the U.S. The company might have fallen off the radar had the U.S government opted not to provide it with financial aid. It is now being used as the story on American companies which have risen once again from the ashes, even after they were completely written off. GM still has a large debt to pay off to the U.S government.

 GM has continuously done very well in the U.S. It gets a larger share of its revenue from its U.S operations. It has tended to struggle quite a lot with its European operations. It had been in talks with Peugeot, a French car maker, to form a partnership so as to find a way of staying relevant in Europe. The talks had been going on well even though it has now emerged that Peugeot had also been entertaining offers from a Chinese partner. Under normal circumstances, this scenario would probably have forced FGM to leave, but it has chosen to stay and continue with the talks.

 How Peugeot’s Agreement with Dongfang Will Impact its Arrangement with GM

 However, there are a few factors which have to be considered by GM regarding the entry by Dongfang Motor Group Co Ltd into its agreement with Peugeot. The French car maker appears to be completely focused on reaching an agreement with GM. But what if the deal with the Chinese partner ends up affecting GM’s Chinese operations? GM conducts its operations in China after entering an agreement with SAIC Motor Corp, and not Dongfang, which may choose to use its arrangement with Peugeot to sell cars in China thus creating a dilemma for GM.

 Secondly, it is still early days and one can’t tell with certainty how much influence Dongfang will have in this arrangement. While GM already enjoys the distinction of being the second largest shareholder in Peugeot, second only to Peugeot family, it could use this to work to its advantage. It already has a relationship with Peugeot which has proven beneficial to the two companies over the years. Thus far, GM has refused to increase its investments in Peugeot an act which might have been the reason behind the latter’s decision to talk to the Chinese.

 This is worth keeping an eye on, since the goal of GM is to improve its European presence and operations, and Peugeot seemed to be the perfect partner to help it. But is it ready to continue with this arrangement if it will jeopardize its Chinese operations?

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