By Jason Simpkins
Most experts view the pollution problem in China as one of the world's biggest problems. But General Motors Corp. (GM) Chief Executive Officer Rick Wagoner views it as one of the world's biggest business opportunities.
With incomes soaring and a new wave of middle-class consumers emerging across China, car and truck sales are soaring. But with clouds of pollution roiling the atmosphere, the market could very quickly migrate to such new technologies as alternative fuels and hybrid-powered automobiles.
GM is taking a decisive step to capitalize on that shift.
The Number One U.S. carmaker on Monday announced plans for a $250-million research and development center in Shanghai, The Associated Press reported. The center will develop eco-friendly technology, including alternative fuels, hybrid cars, and more-efficient power trains, including those utilizing new technologies.
The R&D center will also serve as headquarters for GM's China and Asian-Pacific operations. The main goal of the venture will be to help alleviate China's surging pollution problems, while also capitalizing on the fastest-growing auto market in the world.
China has already become the world's second-largest auto market after the United States. In the first nine months of this year, there were 4.58 million vehicles sold there, a 23.84% increase from a year ago. GM, working in conjunction with Shanghai Automotive Industry Corp. and Liuzhou Wuling Motors Ltd., expects to sell more than 1 million vehicles in China for the first time this year. That would be a 20% jump from the 830,000 sold in 2006.
But there's a problem: A recent report from the State Environmental Protection Administration said vehicle emissions accounted for 79% of the contamination in China's most polluted cities.
China is home to 16 of the 20 most-polluted cities in the world. So the fact that it recently overtook the United States as the Number One emitter of greenhouse gases on the planet – a title the U.S. held for more than 100 years – is hardly a surprise.
With the new R&D facility, Wagoner, the GM CEO, is banking on the hope that the Chinese government, and China's consumers, will increasingly demand vehicles that are more fuel efficient, and less harmful to the environment.
"We believe China has the potential to become a leader in the adoption of alternative propulsion systems," he told reporters during a visit to Beijing on Monday.
According to Wagoner, what happens in China will have a major impact on the global auto industry's adoption of environmentally friendly technologies. If China accepts hybrids and other alternative technologies, 50% of auto sales could be environmentally friendly vehicles in five to six years, versus 10% today.
The General Motors Center for Advanced Science and Research would have the explicit mandate of helping China overcome its reliance on fossil fuels. According to the AP, Wagoner said GM picked China for the research center because of the country's fast-growing vehicle market and the government's push to develop alternative energy sources.
"We see a lot of [government] interest in working with auto manufacturers to bring those to market as quickly as possible," he said.
A solid foothold in the Chinese market and the blessing of the government in Beijing might be just what General Motors needs to reclaim its position as the world's Number One automaker, a post that Japan's Toyota Motors Corp. (TM) has snatched away.
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