China Competition Heats UpChina Competition Heats Up

Competition in China is starting to chip at the strength of General Motors Corp.'s joint venture with Shanghai Automotive Industry Corp.

The $1.5 billion Buick plant piloted at full line rate of 27 jobs an hour and added workers to bring it to 30 an hour to meet demand that exceeded expectation. The JV produced 20,000 units in 1999, and that figure will hit 40,000 in 2000, says John Wiley, GM's vehicle chief engineer for the China project team.

But the rate has since been scaled back to 21 units an hour, closer to the original projection, with newcomers Honda Accord and Audi A6 now on the scene, and the specter that competition could get fierce.

But GM isn't about to back down. The JV made $75 million in profit in the first year and continues to be profitable, says Mr. Wiley.