by Xinhua writer Wang Jiangang

    NEW YORK, June 6 (Xinhua) -- When Shirley Young, former corporate vice president of General Motors Corp., heard that the auto giant filed bankruptcy petition on Monday, she felt grieved, but not surprised. It was GM's fundamental problems that had led to its decline, she said.

    "Only by eradicating its existing problems can GM walk out of the difficulties," she said in an exclusive interview with Xinhua.

　　INTERNAL PROBLEMS

    Young, senior adviser to General Motors-Asia Pacific, said: "Financial crisis had accelerated the pace for GM to go bankrupt, but its intrinsic internal problems accumulated over the years were the core factors leading to its decline."

    "The U.S. government has cleared the track for GM's restructuring process. However, the rebirth of a new GM hinges on whether the new managerial team is equipped with a brand-new management philosophy or not," she said.

    "GM must reexamine its ways, learn from other counterparts and pay even greater attention to the real needs of market and customers," she said. "It should be aware that under the current circumstances, no company or business can maintain a leading market share unless it is able to change to adapt."

    "If a company has been successful for years and becomes fixed in its ways and unable to change, it is doomed to be cast aside by the market." she noted.

    Starting 2005, the production cost of GM's automobiles has been on a steady rise with the rapid increase of medical insurance expenses and labor costs, which made GM's products less competitive.

    "I noticed while I was working to make marketing reforms at GM that serious problems could be seen not just from its structural costs and balance sheet but also with its ability to respond to customer needs and rising competition," said Young, adding that with some other problematic practices, "risks at GM began accumulating."

    THREAT OF JAPANESE CARS

    Historically, GM had been very successful in its first 30 or 40years, but GM became "complacent" later, said Young. So while the Japanese cars were penetrating into the U.S. market aggressively, GM did not start to aggressively change to meet the challenge until much later.

    "GM's market share began shrinking with each passing year, and finally walked into a situation of insolvency with the added pressure of the economic crises which shrank the market dramatically," she said.

    For example, Young said, although GM had been making hard efforts in brand name building, there were problems with this effort. "GM had many brands and many other sub-brands, and new brands were replacing old ones at too fast a pace," she noted.

    "GM can learn from the good practices of Japanese carmakers," she said. "Some Japanese brands, such as Accord and Camry, although with constant changes in outer design and functions, have never changed the model names. This allows them to keep building customer interest and new customers will know what to buy instead of having to learn about new brand names."

    "The new management of GM must concentrate their energy on fewer mega brands," she said, while praising the GM decision to give up four out of its eight brands.

    In addition, Young pointed out that because of history, GM had too many dealers, which made them less competitive and efficient in sales and customer service.

　　OPEN MINDSET AND GOVERNMENT SUPPORT

    Asked whether a new GM will come into being as planned, Young said that businesses are different from human beings who will naturally become old and feeble when age grows, and a company can try to stay young if constant and correct reform initiatives are introduced. "In this aspect, corporate culture and art of leadership play a significant role," she stressed.

    "Senior executives of GM must always be ready to absorb new ideas and concepts," she suggested. "If they continue to eye its internal world to the neglect of the vast outer world, they will surely tumble under the current circumstances of fierce market competition."

    While government control is not desirable in a normal market, Young commended the "critical" role that the Obama administration played in the restructuring effort of GM.

    "The Obama administration has removed many obstacles for GM's revival effort," she said. "The basic conditions are there, but the key lies in the new management team which should seize the time and make the best use of these hard-won conditions."

    "We can not be sure whether a new GM will rise as planned, " she said. "Only time will tell. I hope it will happen with all my heart."

    WORDS FOR CHINESE AUTO INDUSTRY

    Speaking of the Chinese auto industry, Young said: "Although GM has met some problems, it does not mean the global auto industry is going downhill."

    The global auto industry will continue growing, so will the auto market, she said. "China has become one of the most important car markets in the world, so Chinese auto companies including GM's joint ventures should seize this hard-won opportunity to develop itself."

    GM's business in China has been extremely successful, she said. "It proves that GM has within its company the products, technology and market approaches to be successful. The success of the Shanghai GM joint ventures was because it could start with a blank sheet, and because senior executives of GM in China were open to new ideas and concepts, and implemented them quickly."

    "This and other factors such as paying close attention to customer needs have made GM's joint ventures successful in China," she said.

    China should avoid the mistakes GM made in the United States, she said. "It should know the importance of controlling costs, avoid changing brand names, avoid having too many car dealers, and focus on meeting customer needs in products and service."

    From 1988 until Dec. 31, 1999, Young served as corporate vice president of General Motors Corp. and was involved in the development of GM's 1.5-billion-dollar joint venture in Shanghai.

    She is governor and founding chairman of the Committee of 100, a national Chinese American leadership organization, and serves as chairman of the Committee of 100 Cultural Institute whose objective is to bridge the cultural gap between the United States and China through arts and education.

    "China is critical to the success of GM," Young said. "It is a key market which ensures the success of a new GM."

    China's auto industry is still in need of core technologies, but it could grasp more advanced technologies by cooperating closely with first-class automakers in the rest of the world, Young noted.

    "I was born in China, and I have warm feelings for the land of my birth," she said. "I hope to see the Chinese auto industry become stronger and more effective as part of the world economy in the future."