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Geely to harness Swedish 'tiger' Volvo
Geely's Li Shufu and Ford's Lewis Booth shake hands in front of a Volvo S60

Geely to harness Swedish 'tiger' Volvo

Published: 29 Mar 2010 09:27 GMT+02:00
Updated: 29 Mar 2010 09:27 GMT+02:00

Zhejiang Geely Holding sealed a $1.8-billion deal on Sunday to buy Volvo Cars, ending more than a decade under the ownership of Ford Motor Co which saw the up-market Swedish carmaker become a loss-making thorn in the side of the US giant, burdened with its own woes.

Geely chairman Li Shufu said he saw huge untapped potential for Volvo in international markets and especially in China, which has not only the biggest but also one of the fastest growing car markets in the world.

"I see Volvo as a tiger. (The) tiger belongs to a forest, it can't be found in a zoo ... We need to liberate this tiger," he told a press conference after the deal was inked at Volvo Cars headquarters in Gothenburg, southern Sweden.

"The tiger has a heart and it lies in Sweden, (and) in Belgium but it's power should be projected all over the world.

"I see China as one of the markets where Volvo can show it has the opportunity to liberate itself," he said.

In the face of concerns that the Chinese group would slash jobs in Sweden, Geely said that it would keep Volvo Cars plants in Sweden and Belgium and was considering opening factories in China for the local market.

Geely said that it had not only secured financing for the $1.8 billion it was paying, but was also eager to keep the struggling Swedish carmaker in operation.

It also said that the deal, which Ford initially agreed to in December, included agreements on intellectual property rights as well as supply and research and development arrangements between Volvo Cars, Geely and Ford.

The US group bought Volvo Cars, which is known for its sturdy, family-friendly cars, in 1999 for $6.4 billion as part of an international push into the premium market, that eventually cost Ford dearly.

Ford Chief financial officer Lewis Booth told journalists that his company got a "fair price and "we're very happy with the deal."

For Geely, which started out as a refrigerator parts maker, the deal marks a new chapter in its international expansion after two of its Chinese rivals failed to take over Western brands, Hummer of the United States and Saab of Sweden.

The deal had initially caused consternation among unions at Volvo Cars, which employs around 22,000 people worldwide, including 16,000 in Sweden.

Unions originally opposed the deal on grounds that it was vague on expansion plans and possible layoffs amid fears Geely would not provide financing for daily operations or future investments.

But on Saturday they pronounced themselves satisfied.

In addition to preserving Volvo Cars' factories in Sweden and Belgium, Geely said that the Swedish company would be run as a separate company with its headquarters in Gothenburg.

"Today I am reassuring that Geely is determined to protect and nurture everything that is great about Volvo. Volvo is Volvo and Geely is Geely," said Li, who is also the Chinese company's founder.

"Volvo will be run by Volvo management, and be strategically independent. They are distinct companies. Volvo is a Swedish business with a strong Scandinavian heritage," he said.

With a workforce of 12,000 people, including 1,600 engineers, the Geely group has grown into one of China's largest private carmakers since it launched its auto manufacturing business only in 1997.

It operates six car assembly and power-train manufacturing plants across China with a combined production capacity of 300,000 cars per year. The firm also owns nearly 500 dealerships and 600 service stations in the country.

Geely has an overseas sales and service network of nearly 300 outlets and runs plants in several foreign countries including Ukraine, Russia and Indonesia. Overseas sales have however totalled less than 200,000 units so far.

AFP/The Local (news@thelocal.se)

Your comments about this article

10:02 March 29, 2010 by livinginsweden
Geely should have two volvo units... one in SE and one in China... and make them compete to see which unit is more successful and profitable.

After 5 years, close down the unit that is making a loss. If both are profitable.. keep both.

ha ha ha ha ha
10:45 March 29, 2010 by bjinger
Volvo is a business. Having Volvo then having jobs and culture. But Volvo does not secure your job when you are not making Volvo a business.
10:52 March 29, 2010 by jack sprat
@livinginsweden,.......Actually I forecast that,that is precisely what will happen, and sadly you don't need to be mastermind to work out which country will be the winner.
11:00 March 29, 2010 by livinginsweden
@jack spart

SE of course. A bit of competition make svenska more productive....

ha ha
11:07 March 29, 2010 by hpunlimited
The Chinese problem is quality. By purchasing Volvo, Geely will learn alot of about the importance of quality. Regardless of where the jobs will go, Volvo and Sweden are winners, since this opens up the whole strictly regulated chinese market to Volvo.
12:32 March 29, 2010 by DaveN
Ha, don't the chinese kill all the tigers, and use them for medicine.
13:02 March 29, 2010 by babayaga
Hope he did not mean "paper" tiger!
13:08 March 29, 2010 by livinginsweden
Ha, don't the others kill all the cows, rabbits, chicken, bears, reindeers, deers, lambs (oh those cute lambs) and use them for food?

dont the white colonialists, used to go to other countries and kill the tigers and hang them up on the walls?

don't the white colonialists used to go to other countries and kill the aborigines and take their bodies home as curios and study them and place them in museums?

dont some comments sound like they are laced with poison?

ha ha ha
13:17 March 29, 2010 by jack sprat
Whilst the Chinese may learn a few things about the importance of quality, little doubt quantity will always come first, and in five years time the Swedish production lines will be left sitting on the sidelines enjoying a permanent fika!
13:32 March 29, 2010 by texasgubbar
"The Chinese problem is quality." Exactly the same thing was said about Japanese then Korean cars. The roads look filled with Toyotas and Hyundais to me, including the ones wearing European badges such as Peuguet and Citroen. Its only a matter of time.

Guess what the little mobile broadband dongle you see advertised below is made by guess who? Ericsson? Nokia???? Telia??? Nope... Huawei, one of the rising brands of China...

Volvo in Sweden will eventually be marketing and design... Volvo needs the cache of Sweden to be successful.
15:00 March 29, 2010 by Nemesis
You people making comments have no idea.

China has changed a lot over the last few decades and especially the last few years.

Have any of you been there recently? I think not.

Your attitude that China is third world and backward is very wrong.

China is the new superpower and also the new engine of the worlds economy. They have quite a few good designers and engineers as well.

I have a feeling that in a year or two, you people will have egg on your faces over your comments.

China will most likely take Volvo from strength to strength. If China feels it has something to prove, nothing will stand in the way of them making it the best.
23:15 March 29, 2010 by americanska
Nemesis, they are a huge power. and they are growing and polluting at an exponential rate.

i guess you've been to china - the cities. Yes wow mega cities, very modern, everyone living on top of each other just like in europe.

Funny thing is they have millions of people in their country that are so backward they don't have access to TV. But yea, major superpower.
00:07 March 30, 2010 by Thebinary1
Like Chinglish....
04:17 March 30, 2010 by volvoman9
Alas, Whatever happens the brand will suffer as it did with Ford. Trying to turn an obscure brand into a large volume brand always will spell disaster where quality and innovation are concerned. I have owned six Volvos and was a true convert but I am ordering a new Mini this year as Volvos have become too expensive and I feel have lost the cache and quality that made them great. Too many second and third tier parts vendors of dubious quality. I wlll always lament their passing.
04:54 March 30, 2010 by Ghostrider
A disaster for Sweden. Shame on you Ford. Shame on the Swe Government.
08:58 March 30, 2010 by Nemesis
@ americanska

I have also been to the USA.

You should try visiting Europe. We are not living on top each other.

In the USA a lot of people are also living in multi-story buildings. The next time I am at a property expo buying property, should I refuse to buy due to Miami and New York having apartments, one on top of the other.

If ever in China, give the Maglev a try. It is an interesting method of public transport. I know that for you from hickville in the USA, it will be very backward, but you might find it interesting, the same as Shanghai and Gāoxióng.

Get the train to small towns such as Changzhou, Mǔdānjiāng, Chángchūn, Shenzhen, Taichung, Táizhōng, Xiānggǎng, Guìyáng, Wǔhàn and Nánchāng, to see the China away from the largest tourist spots.

China has taken more out of abject poverty in the last 30 years than there is people in the USA, where'as the USA has increased its amount of people living in poverty.

Regarding Geely. I once met an engineer from Geely two years ago. I got talking to him at the bar in the Old Bull bar in Lund, here in Sverige. I was sitting with my friend at the bar, having a chat and a drink. My friend, she designs specialist high temperature combustion chambers in high effficiency power units and has helped her brother rebuild a drag racer. My friend sat listening to the Geely guy talking and comparing notes on there laptops about high end engine design. She actually said to me that the guy knew more about her subject than she did and was wondering why she had never heard of him. My friend made clear the ideas the Geely guy was working on, were very advanced.

I have a friend who works in a local university who has visited the Geely factory, who came back to Sverige shocked. She also expected third world and got a very serious wake up call. She is worried about the way she is being dismissed for saying people need to have a major rethink and rightly suspects the advancements made in China will come back to bite us on the ass.

My brother lectures electronics. He has told me roughly the same thing about Chinese lecturers he has met at conference. They know there stuff.

I am seeing more Chinese names of researchers appearing in research journals at an increasing rate. That I expect to see a lot more of in the future.

The China of 100 years ago, were there was signs on the lawns stating "no dogs, no Chinese" is long gone.

The China of 50 years ago is long gone.

The China of ten years ago is gone, maybe even the China of 1 year ago.

China is changing so rapidly it is impossible to keep up with the latest events.

The naysayers can whinge and whine all they want. There opinion will not stop the Chinese making a better country and better lives for themselves.

My personal opinion of China is this.

I don't think we have seen anything yet and that we are all going to get some shocks.
09:44 March 30, 2010 by americanska
nemisis - you've been to the US as a tourist. I have been living in europe for a long time.
10:00 March 30, 2010 by Nemesis
@ americanska

Wrong.

I have worked in the USA.

I have relatives there.
11:00 March 30, 2010 by Thebinary1
Here is what happens if things don't go the way the Chinese government wants regarding the business dealings of foreign enterprises. No wonder Google stepped out of China altogether:

http://www.abc.net.au/news/stories/2010/03/30/2860573.htm?section=justin
21:32 March 30, 2010 by spy
'likening Volvo to a caged beast....'

And Chinese are renowned for treating their beasts really well, especially their dogs.
18:49 March 31, 2010 by zhqwang
I am lazy to print the sentense in the borad. I am a chinese person. I wish that you should go to China qu see, not print nonsense here.

Especially, americanska!!!,
21:52 March 31, 2010 by spy
Looking at the photo it strikes me one of the gentlemen looks considerably happier than the other... And the body language is rather interesting too.
12:12 April 1, 2010 by Eric1977
@ Nemesis

Wow that was hard work reading your life story, achievements and the rundown of all the important people you know. Also thanks for the train timetable. I get it you are smarter than us people and well travelled oh and you dabble in property. A little pompous too I may add

I have been to china and have no third world view but as you are so quick to put the Chinese on a pedestal you must also be willing to see the major faults.

Pollution: Let's be very realistic they have built amazing cities in recent years but seem to have placed waste management at the very bottom of their priorities, not the work of great civil engineers. Also the catastrophic effect such boom industry is having on their local environment, disgraceful river pollution and poor drinking water & waste (general sewer systems) services to the poorer communities

Poverty: you stated china has taken more people out of abject poverty but neglected to mention has created a colossal disparity in wealth and have yet to implement an all inclusive school, health or welfare system even though they are the financial superpower of the world a disturbing neglect of their social responsibilities.

Freedom & Human rights: This is a pretty important point, we have really no idea of the poor human rights practices that continue in china, what we do know is the industry is driven on the back of very little regulation when it comes to health and safety, so most of those who have as you think risen from abject poverty have done so at severe risk to their health in unskilled factory work. If you want to be recognized as a great power you must get all aspects of society right. Any nation who pays subsistent wages to unprotected workers and then fails to provide any social structure has the opportunity to become a superpower.

Last but not least the country still operates a policy of censorship not exactly something to be revered.

I do agree on other aspects china has an amazingly talented workforce and with the right implementation of a decent education policy that workforce has untold potential.
22:38 April 1, 2010 by Canada_Girl
Perhaps NOT the best metaphor to use.
10:48 April 4, 2010 by a little helper
I am sure that many people have a doubt of Chinese government and Chinese style of managment. But the history can proof. Before 1997, many Hongkongese were afraid of the Politic system from mainland China, and they foresee that economy of Hong Kong will go backward after China takes over HONG KONG. Many of them flee to other countries. Now, everyone can see Hong KONG's economy is even more prosperous, under PRC's two systems' policy. Those who left have missed great opportunties. More and more now come back to Hong Kong.But they have already missed the fastest growth period, with their own prejudgment. Prosperity will land on us who have a long term view.
12:10 April 4, 2010 by kunkun
what China doing now is what you have done already. like pollution..poverty.. I think it is inevitable for every modern sociaty. it is not good but it is true.

Hope everything is fine with Volvo and Geely.
09:15 April 6, 2010 by cwb
Americanska, Sounds like you should really consider moving back to the states....your not doing yourself, your family, Europe or the world any good by hating the place you live and wishing you were back in the promised land. Let me know when I can plan a road trip for you around the USA to see the poverty in our nation...I have driven around the USA 3 times over the last 30 years and the poverty is continuing to grow. I am an American, I lived in the good old USA for over 40 years....I will take the raising a family and the life here in Sweden over the USA any day. Nobody is saying that all the Chinese have a better standard of living than those living in the USA, but I think it would be very wrong to think that China is only a nation that only produces toys with lead paint. I believe it is this kind of thinking that is destroying the the standard of living in the West....we have all had the blinders on for too damn long...while China has been advancing it's economy at a rapid pace.
18:21 April 7, 2010 by spy
cwb

'Nobody is saying that all the Chinese have a better standard of living than those living in the USA' Infact many are saying exactly the opposite and it is no wonder why when you look at:

- China's treatment of Tibet

- Lack of freedom speech and media reporting or censorship of the internet

- Supression of religious beliefs

- Torture of prisoners and no judicial independence to ensure fair trials

- Death penalty (and the fact that people can be put to death for nonviolent crimes such as theft)

- And don't get me started on how they treat their dogs
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