DETROIT - The key to General Motors' future will be the growing Asian market, particularly China, Chairman Jack Smith says.
"We've got to treat that like it was the equivalent of the U.S. market because it's going to be," Smith said. "That's where the game is played. It's got to have great product coming into that market and if it doesn't, we'll really get hurt."
That will require GM to think globally, despite its roots in Detroit, he added.
"We'll need to have a focus that is broader than the U.S. market," Smith says. "We've always been so huge here that it's kind of dominated our thinking, but I think over time that will change."
Smith is retiring as from GM on May 1. CEO Rick Wagoner will add the duties of chairman.
Smith said GM needs to beef up operations in Asia and elsewhere to counter overseas-based automakers who are growing in the United States.
Last year, GM, working with its Asian partners, bought the assets of the bankrupt Daewoo Motors to form GM Daewoo Auto and Technology Co. The new company will produce one car for Chevrolet in the United States, the Aveo.
GM also moved quickly in December when an existing Chinese plant came on the market. It added 100,000 units of capacity by buying the Yantai Bodyworks plant in the northeast China province of Shandong. Shanghai Automotive, GM's partner in Shanghai GM, also took a stake in Yantai.
Now, Smith says GM is well-positioned in China. He foresees sharp growth there, based on two factors:
1. The Chinese government is working on steps to support vehicle loans for individuals, which are foreign to the current Chinese legal and banking system. That could sharply increase sales.
2. China's surging economic growth has created a group of 400 million to 500 million people in the coastal provinces who have the income to afford small cars for personal transportation - if loans are available.
"Personal transportation has not arrived yet in China," Smith said. "You cannot finance your automobile purchase. That is coming. That happened in the '20s in the U.S. market and it blew the market way open."
The upshot, according to Smith, is that, "We have a great opportunity to do a tremendous job in places like Korea and China. And we need to. We need to play on a global scale or we lose."