CAR FINANCING IN CHINA - A SERIES OF EXAM ANSWERS

QUESTION NO. 1
Essentially, I believe that GMAC should enter the Chinese market for auto financing. China has been referred to as a “sleeping giant”, and in very recent times, this “sleeping giant”, has evidenced many indications that it is now exerting its economic might, largely through exports. Similarly, China has become particularly adept regarding marketing and production in many industries, including the automotive industry. I believe that GMAC not only should enter the Chinese market for financing, but needs to enter the Chinese market for auto financing, largely because we are talking about global marketing and finance, and GMAC would be ignoring a most propitious opportunity. At the same time, this must be handled with care, as shall be expounded upon subsequently. GMAC maintains a competitive position vis-à-vis other foreign companies applying for entry (Czinkota, Ronkainen, 2004, 172). While GMAC needs to be cautious, especially in light of investment-grade ratings, GMAC will have sufficient funding flexibility to carry on its vital role of providing sales financing support to GM (PR Newswire, 2005, 2). In the o...