The Buick Excelle GT is one of General Motors' best sellers in China. It's a close sibling to the Buick Verano that GM sells here. Photo credit: General Motors Co.

Even while it was spiraling toward bankruptcy here in the United States, General Motors (GM 4.37%) was building an impressive success story in China. China has become the world's largest new-vehicle market, and GM has continued to lead it, as Chinese car-buyers have embraced familiar brands such as Chevrolet and Buick.

GM's leadership position in China is in danger, though: Through the first eight months of 2013, archrival Volkswagen (VWAGY 0.67%) outsold the General in the Middle Kingdom. GM has done a fine job of keeping pace with the market, but VW and its luxury brands have been on an absolute tear -- and GM may find it hard to respond.

In this video, Fool contributor John Rosevear looks at what's working so well for Volkswagen in China right now -- and at why GM really is at risk of falling behind in this critical market.