**Abstract**
The Financial Times, June 11th, reported an article titled *"Foreign Automakers Squeeze China's Cash Cows"*. In the 1950s, General Motors' president was misinterpreted as saying that benefiting GM would also benefit the U.S. Fast forward 60 years, and it’s now the Chinese market that has become a major source of profit for GM. In the first quarter of this year, its Chinese joint venture earned $595 million in net income, while GM’s profits from all other global markets combined were only $100 million.
Over the years, China has proven to be a highly profitable market for American companies. It is also a goldmine for Volkswagen. Last year, the German automaker topped the Chinese market, with China accounting for 31% of its global sales. Its joint ventures generated €9.6 billion in operating profit, compared to the company’s total global operating profit of €11.7 billion.
Beyond just vehicle sales, multinational automakers also earn significant revenue through technology licensing, brand royalties, and spare parts sales in their Chinese joint ventures. Janet Lewis, an analyst at Macquarie Securities in Hong Kong, noted: “It’s very profitable to make cars in China, but few are willing to highlight it. If you do well in this market, it feels like printing money.â€
Chinese auto consumers have continued to surprise many analysts. After a period of high growth last year, many expected the market to slow down. However, from January to May this year, sales growth exceeded 11%. According to Macquarie Securities, since 2010, the utilization rate of Sino-foreign joint venture car manufacturing plants has been at or above 100%, with some factories operating up to 80 hours per week. This year, Shanghai GM and Changan Ford plan to push equipment utilization beyond 120%.
Author: Tom Mitchell
Translated by: Wang Xiaoxiong
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