General Motors just extended a joint venture in China for twenty years. Twenty years. The company that needed a government bailout to survive 2009 now thinks it can predict what cars people will want in 2046.
They'll sell Buicks and Cadillacs domestically in China. Buicks. The car your grandfather drove to the Sizzler in 1987. Apparently that brand still moves units in Shanghai, which tells you everything about how Americans understand Chinese consumer taste, which is to say we don't, but we'll keep pretending we do for two more decades.
The Chevrolet angle is even better. They're building Chevys in China to export everywhere except the United States. So GM will manufacture American-branded vehicles on the other side of the planet and ship them to markets that presumably want them less than we do. Stunning vertical integration. Really inspiring stuff.
The deal happens "despite geopolitical tensions" which is corporate speak for "we don't care if Washington and Beijing are three news cycles away from a trade war because we've got quarterly earnings to hit." Nothing says long-term strategic vision like ignoring the single biggest risk factor in your entire business model.
Twenty years is longer than most marriages last. It's longer than the average American keeps the same job. It's certainly longer than GM's last three CEOs combined. But sure, lock yourself into a partnership with a Chinese automaker while both governments are actively trying to kneecap each other's industrial base. What could go wrong.
Somewhere right now a retail trader is Googling "how to buy Chinese GM stock" and discovering that's not how any of this works, but he'll find a way to lose money on it anyway. He always does.
Photo by James Yarema on Unsplash
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