SHANGHAI -- Situated in the remote southwestern province of Guangxi, Liuzhou is one of China's more obscure cities. Its population of 1.3 million is small by Chinese standards and few foreigners have heard of it.
Yet Liuzhou looms large on China's carmaking map. This is thanks to its one automaker; a 50-34-16 joint venture between Shanghai Automotive Industry Corp. (SAIC), General Motors and the city government called SAIC-GM-Wuling Automobile Co. (SGMW).
In the first ten months of 2009, the local champion made and sold 893,729 light vehicles on the domestic market. That puts it second only Volkswagen AG.
Moreover, thanks to a recent deal Liuzhou's influence could soon be felt globally. Last week GM and SAIC announced they had incorporated a 50-50 investment company in Hong Kong to support their expansion in emerging markets outside China. First on the list will be India, where the two companies are planning to establish a joint venture early next year.
In sizing up India's potential, GM and SAIC have said both categories of product now produced by SGMW should be suitable for assembly and sale there. Yet in my opinion, one will clearly be a better fit for the subcontinent than the other.
SGMW's first product -- the small Chevrolet Spark car -- will likely find the going tough on the other side of the Himalayas. While sedans are the most popular kind of vehicle in China, in India it is small cars that are mainstream. The market there is truly crowded with them. Local players like Tata Motors and Mahindra churn out millions every year, not to mention international companies like Suzuki.
Selling to the Indians, however, should be a much easier proposition for SGMW's second product category -- the Wuling-branded microvan. For starters, competition in India's light commercial vehicle market is still comparatively mild. But much more than this, in China SGMW has already honed its microvans into a true killer application of automobile technology for third world markets.
Especially in China's rural areas, microvans are hugely popular because of their dual-use versatility. On weekdays they can be used to haul products to market. At the weekends friends and family members can be shuttled on outings.
Wuling microvans in particular are prized because of their combination of GM-derived quality, and value for money stemming from Liuzhou's low costs as a production base. Individual models are priced between 30,000 and 60,000 yuan ($4,400 to $8,800).
In the future, consumers in India will surely warm to these attractions as much as they now do in China, where 840,909 Wuling microvans were sold in the first 10 months of this year.
"I am not sure whether there is demand in India for the small cars built by GM's joint ventures with SAIC in China. But the prospects of SGMW's minivans certainly look good in the market there," says John Zeng, a market analyst with Global Insight in Shanghai.
In fact, both GM and SAIC have much to gain from transplanting the microvans of their Guangxi joint venture to the Indian market.
For GM, the move would offer quick entry to the fast growing light commercial vehicle sector of the world's second largest emerging economy. This will be a second feather for the American automaker's cap on its IPO road show next year; a success story from India to add to its remarkable achievements in the Middle Kingdom.
For SAIC, meanwhile, selling microvans in India offers an opportunity to vindicate its global ambitions after its recent and complete failure to turn around its South Koran subsidiary, Saangyong Motor Co.
"By leveraging our individual assets and those of our China joint ventures, SAIC and GM are in a strong position to introduce competitive products outside China that will satisfy the needs of consumers in India and other high-potential global markets," Hu Maoyuan, Chairman of SAIC said in a statement last week.
When talking of "joint ventures", I'm pretty sure he was referring first and foremost to his company's great success story in Liuzhou.