SHANGHAI — China's state-owned automakers tend to be risk-averse creatures.
As profits pour in from their partnerships with foreign automakers, they hesitate to rock the boat.
So why is Guangzhou Automobile Group behaving differently? What led this company to announce plans last week to enter the U.S. market, widely viewed as the world's toughest?
First, GAC is infused with an entrepreneurial culture that has fueled its growth. Second, the company's great success in its home market has given it the confidence — and cash flow — to expand overseas.
The entrepreneurial spirit derives in large part from GAC's location. The company is headquartered in Guangzhou, the capital of south China's Guangdong province.
Located 70 miles northwest of Hong Kong, the port city has been a foreign trade outpost since the late 1700s. After Beijing launched economic reforms in the 1970s, Guangdong province attracted huge investments from foreign firms and Chinese expatriates.
GAC, which is controlled by Guangzhou's municipal government, is immersed in this entrepreneurial stew.
Influenced by this culture, GAC is less risk-averse than its state-owned peers.
Here's proof. A few years ago, GAC acquired two small, private automakers — Gonow Automobile Co. and ZX Auto Co. — in a bid to expand production. No other state-owned automaker has taken that kind of gamble. But those acquisitions have paid off. Last year, GAC's vehicle sales soared 37 percent to 508,000.
Those growing sales — along with the company's joint ventures with Toyota, Honda and Fiat Chrysler — have given it ample cash flow to finance an overseas expansion.