Recent announcements made by Home Depot, General Motors and Ford show the aggressive tactics of these US giant companies, as they expend efforts to tap into China's huge consumer markets.

Following China's move to drop restrictions on all foreign retailers, this Monday Home Depot (NYSE, HD) announced its plan to open stores in China. This is the first time in the company's history where they have decided to expand into a market outside of North America. Home Depot has selected China, with an eye on the huge home improvement market that exists there, which also currently contains no significant competitors. The company has estimated that China's home improvement market rests at around $50 billion, growing at a rate of 20%.

China's home improvement market is different from North America's, in the sense that the majority of homes in China are located in concrete department buildings with limited room for "do it yourself" improvements. In order to succeed in this market, Home Depot will have to make changes to its North American model.

General Motors (NYSE, GM) said on Monday that it would invest another $3 billion in China over the next three years in order to double its capacity there. The company also expected to start its car financing business in China later this year. This will make it the first foreign auto maker to provide financing service in that country. Currently China has no national credit rating system and procedures to reclaim cars that are defaulted on.

Ford (NYSE, F) who has been left far behind by GM in the China marketplace, also announced today that it will triple output in China this year. The company also plans to invest $1 billion to set up a second plant in China.

Over the past two years, China has seen a flood of auto makers come into the country and it now probably hosts the largest number of auto makers in the world. Beginning in early 2004, the central government has been trying hard to cool down the overheating of investments in several industries however, with the auto industry included on this hit list. Recent moves by both GM and Ford however, reflect their optimism concerning China's auto market, as well as a sense of eagerness to strengthen their positions there.

About Frank Liu:

Frank Liu is a Chartered Financial Analyst. He also holds a MBA from University of British Columbia and a Bachelor of Economics from University of International Business and Economics in China. Having served both public and private companies in Canada and China, Mr. Liu has 7 years experience in industry research, financial analysis, portfolio management, and business development. Currently working as an independent investment consultant, Frank Liu provides economic research and financial advising services to clients from Asia and North America. Feedback: fliu@investorideas.com