General Motors Takes OnStar To China

October 29, 2009

In what could be one of General Motors' smartest moves in recent years, the company has announced plans to roll out its popular OnStar system in China. This marks the first time OnStar will be offered outside North America. The service will be available as of December 6 -- first in Cadillacs, then Buicks, and eventually Chevrolet models. Subscription pricing was not included in the announcement.

GM's decision isn't surprising. China's economy is growing by leaps and bounds, and by all appearances, the country is recovering faster than others from the global economic crisis. Those factors, along with China's continuing trend toward de-isolation and the growing wealth of its citizens, have helped turn China into the second-largest auto market on Planet Earth. Sales for 2009 are projected to hit 12.6 million vehicles (many of which will bear GM badges). A booming economy, millions of potential customers, and pre-existing market share? We have a hard time seeing the downside.

(Well, okay, there could be one downside: the many, many dialects used across China, which might make communication between operators and drivers tricky. However, GM is rolling out the service in Mandarin, which is understood by about 70% of China's population.)

The launch of OnStar in China shows more than GM's familiarity with the country's economic data; just as importantly, it also demonstrates a degree of familiarity with Chinese culture. As the saying goes, China has (at least) two identities -- one rooted in centuries of tradition, the other forward-looking and extremely tech-friendly. OnStar's gee-whiz features, paired with its ability to put drivers in touch with real human beings, speaks to both those identies. Furthermore, China's exploding population of new drivers has given birth to widespread safety concerns, not to mention some curious new rules to address them; OnStar could give the country more peace of mind on that front.

Our only concern: China's general disregard for intellectual property rights (which has recently been a sticking point in Geely's bid to purchase Volvo from Ford). In the coming months, we wouldn't be at all surprised to see competitors launch aftermarket systems using the same technology but pitched even more harmoniously with Chinese cultural norms. Still, GM has the advantage of a head start.

[Autopia]

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