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Swedish media sceptical over Volvo sale to Geely

AFP/The Local · 25 Dec 2009, 08:48

Published: 25 Dec 2009 08:48 GMT+01:00

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The Volvo news, coming as uncertainty looms about General Motor's decision to shut down Saab, also raised questions as to the future of Sweden's auto industry.

Some of Sweden's major newspapers wondered if Chinese ownership would weaken the Volvo brand. "Volvo: Money can't buy everything," read an editorial in Dagens Nyheter newspaper. "In mass-production China, there is a risk that the trademark will hollow out."

Summing up opposition to the deal, TT news agency wrote: "The objections above all had to do with (Geely's) ownership structure and financing."

Ford on Wednesday announced it had agreed the main terms for the sale of Volvo to Geely – a former refrigerator parts maker that is now one of China's largest carmakers – and said the deal would be finalised early next year.

Dagens Nyheter's auto industry reporter wrote in an analysis piece this week that Geely's takeover was "a journey into the unknown."

"A little Chinese company that started manufacturing cars only 10 years ago is to assure Volvo's future," Lasse Swärd said, warning that Geely lacked the experience of "developing, building and selling cars on the world market."

Story continues below…

Others speculated about the demise of the Swedish auto industry in light of the Volvo sale and the Saab closure. "Both Swedish carmakers Saab and Volvo are on their way out of Sweden. Saab risks being shut down and everything points to Volvo becoming Chinese," public radio reporter Tommy Fredriksson said earlier.

"What's going to happen to Swedes' self-image?" he asked, calling Volvo and Saab modern-day examples of traditional "Swedish value."

AFP/The Local (news@thelocal.se)

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Your comments about this article

10:09 December 25, 2009 by BIL101
So, if not sell to Geely, what's the solution? maybe just to close it down as GM is doing to saab. Leaving both brands in the memory and history of sweden might be better way.
10:56 December 25, 2009 by livinginsweden
Swedish media is skeptical .... yea right ... the media has been part of the reasons why SAAB and VOLVO failed ..... not a word has been written in anger about SAAB and VOLVO being raped and pillaged and then thrown by the way side by their american owners ..the media thought it was good to partner with the GM and Ford .... SAAB and VOLVO have been destroyed by GM and Ford. Can the chinese do any more damage? .. maybe resuscitate Volvo or give it painless euthanasia ....

The media has been americanizing the swedish 'culture' and its worship of every red neck 'fashion.

Just to remind the media.... HWAWEI BEAT ERICSSON TO GAIN THE BIGGEST INFRASTRUCTURE UPGRADE FOR TELENOR 4G.... for a simple reason..... and it is not price ... becos 4G demands the best technology ... and HWAWEI won simply on merits ....

Some of the best car brands have the most successful joint ventures in China today .. better brands than Volvo or Saab. and they never demean chinese quality etc.

Learn to eat and love fried rice man .... becos too much potatoes make the brain soggy....

ha ha
11:46 December 25, 2009 by himilo
I suprised negative people comments on the local.se is this caused by immigrants comming to sweden? NO this is global failure. so please stop bad comments to immigrants. if there is job in the market no one would like to wait and recieve 3000 kr for what you said SFI course for 3 years.

12:17 December 25, 2009 by bjinger
@livinginsweden, you are telling a big truth and educational.

I see people in the west generally have a negective image on China for the time being. There are many resons for that, but one thing I would like to say is that the public are more or less brain washed by the western media and the "VIP" groups with a strong ideaology mindset of cold war. I have interviewed many who have visited China, 90% of them found themhself far behind the changing world and have a better image on China.

Volvo needs new inputs and through Geely's acquisition, Volvo should find itself in a better position than others in the world biggest market. Sweden is the first western country to recognize the new China in 1950, a pioneer.

I see no reasons to feel down by this acquisition.
12:26 December 25, 2009 by krrodman
I am not a fan of either GM or Ford, so do not take these observations as just an American protecting his turf.

Swedish cars have failed for two reasons:

The first is that they are not economically competitive. In the United States, a similarly priced Japanese car or even German car buy a larger engine and more features. Swedish labor costs are not competitive with the rest of the world, and it makes it hard to complete in a commodity market such as car sales. When GM and Ford purchased Saab and Volvo, the hope was to make the cars competitive by improving economies of scale. Needless to say, they failed miserably, especially with Saab.

The second reason, and this really applies to Saab more than Volvo, is that GM was never able to create a solid brand image for the car. BMW is sporty. MB is luxurious. Toyota(Lexus) is rock solid reliable. Volvo is safe. What is Saab? Don't say sporty because BMW has that niche , not to say that a front-wheel drive car can never really be sporty. They were never able to create a brand image that could compete with the big boys, and they were not competitively priced. Saab was doomed to fail.

Economically speaking, Sweden will survive if it is able to create unique products(pharmaceuticals, technology etc). It will never be able to compete in basic industries(consumer durables such as cars, washing machines etc) because its labor costs are too high.

For the record, this applies to the USA as well.
12:35 December 25, 2009 by Localer

Huawei won the 4G contract NOT BECAUSE of best technology, everybody knows they keep copied the technologies from the telecom giants.

Anyway, they won because the project amount offered was 40% less then Nokia Siemens and Ericsson.
12:42 December 25, 2009 by apostolos1975

You couldn't be more wrong. The only reason Huawaei won the contract is due to price. Ericsson equipment is superior but pricy. And the only way for the Chinese products to get into the world 3.5G market (LTE is 3.5G and not 4G) is to through into the deal the kitchen sink as well. ZTE and Huawaei were offering (not sure if they keep doing this still) software and services as part of the package whereas Ericsson sells them. Because the quality is so superior. The bottom line is what are the margins. And on top of that what methods are used to achieve these sales. The China Bank of Development has a 20B $$$ line of credit available as loans to potential customers for ZTE and Huawaei. This helps them sell their products (not always but in some cases).

In the future please do not simply reproduce gossips
13:09 December 25, 2009 by Roy E
The Chinese are really big on acquiring Western technology and know how. They really haven't demonstrated any innovation of their own. Form this purchase, expect a transfusion of Volvo's technology and know how into a Chinese brand name - national Image being paramount to communist regimes as it is, establishing Volvo as a superior vehicle will not be their priority.

That's been China's secret to 'success' - apply their very cheap and abundant labor to Western technology acquired by by honest and dishonest means. Exploit the cheap peasant labor, pollute as if there is no tomorrow, and subsidize their exports to undercut foreign competitors - yep, cherished Swedish values all.

Volvo is just being used as a disposable tool .
13:09 December 25, 2009 by ups
GM is a devil,they will shutdown Volvo if nobody willing to buy it .

So it is the only good method for Volvo.
13:14 December 25, 2009 by livinginsweden
Yeah Yeah Yeah .. for the last fifty years, when ever a new competition come into the market, from the japanese, the koreans, the taiwans, the south americans, .. every loser blame it on price.... price has something to do with it... but dont tell me that telenor is going to buy something cheap for something that is so important as the flagship 4G service in the world .. if quality does not come first.

Cheap, cheap, cheap ... the same old record .....

I used to have more friends driving Merc and BMWs than japanese cars ... and many times when we want to go to the golf club .. they would say ... my car is in service.

Merc and BMW owners like to play the status games and are too embarrassed to say they pay a bundle to fix their cars because they are so unreliable.

Many cannot afford to upgrade to a lexus

Cheap, cheap cheap .... thats what GM, Ford, and whats that forgotton brand? Oh chrysler used to say to potential car buyers... until the car buyers wake up to the fact that their cars break down more often than japanese cars.

The same with other manufacturers. Whats that famous us tv maker? whats its name? they used to appear on those old american movies as the center piece of every sitting room. I cannot remember it, they all used to say the same things .. cheap tvs, cheap mobile phones, cheap fridge, cheap radio, cheap, jacket, cheak, ...... the same grandfathers who said that those imports were cheap .cheap cheap and lost their jobs to those imports have grandchildren who are singing the same old song .. cheap, cheap, cheap .. and they are also losing their jobs to imports..

The local media are part of the same problem becos they sing the same cheap cheap cheap song and misled the local folks into a 'state of denial'.

The reality is htc, hwawei, and the likes are slowly infiltrating the bastions of capitalism ... one half of the population are still singing 'cheap cheap cheap' while the other half are paying big bucks to buy led, hd flat TVs, blue rays, etc.... which are not only stylish, expensive but a slap in the face of those who cry cheap cheap cheap ... and .. the commies are coming!!!!

Wake up folks ... 2010 is coming ... if there is anything you should know .... we have to start waking up and catching up instead of reminiscence on the past glories.

Imagine the horror of eating friend rice for breakfast, lunch and diner at the Volvo factory canteen but also singing or listening to the chinese national anthem 'The east is red' everyday before the shift starts!

Like the US, Sweden might get a colored prime minister one day ......

Wake up my friends.... In the cold dark long Swedish winter days and nights .. we should drink less and think more about changing for the future.... .. it is not too late....... we dont want ericsson to be bought out by HwaWei in the next decade......

ha ha ... God Jul allihopa ...!!
13:16 December 25, 2009 by Roy E
The truly unfortunate thing here is both Volvo and Saab's inability to stand up independently on their own two feet without some sugar daddy parent company 'benefactor' owning them.

Why is that?
13:39 December 25, 2009 by zircon
Go back to exchange luxury goods, and take Pontiac. Society is ready for this kind of economics today.
13:42 December 25, 2009 by bjinger
to #8,

It's easy to become an angry young man. Don't you think that's the industry development stories of all the western companies too. Just tell me where was the governments then, and where's the primeval forests, tiger etc now in Europe. Please feel humble to listen to the people in the developing countries what they are thining about the rich nations.
14:05 December 25, 2009 by Roy E
There's no anger there, bjinger. It's simply an unemotional statement of fact.

And sorry, but - it's not the 'development story of western companies, too' . the story of Western success has largely been based upon discovery, invention, and innovation. Most all the products and services you see today did not exist 100 years ago. Where did they all come from?
14:43 December 25, 2009 by morchad
@ Roy E "The truly unfortunate thing here is both Volvo and Saab's inability to stand up independently on their own two feet without some sugar daddy parent company 'benefactor' owning them.

Why is that?"

Am.....Volvo and SAAB were successful & profitable companies that's why Ford & GM sought to acquire them. Both Ford & GM spread themselves too thin by trying to monopolise the auto industry. To be honest they made a complete balls of the industry by being so greedy thus making themselves so vulnerable to a slowdown.

All businesses should have contingency plans for negative output.....obviously these two goons hadn't and then have the taxpayer to bail them out in the US.
15:03 December 25, 2009 by EtoileBrilliant
@morchard "Volvo and SAAB were successful & profitable companies that's why Ford & GM sought to acquire them" - by what metric? GM had 1 year of black ink in the 20 years of ownership. Volvo lost money throughout Ford's ownership.

I'm not saying they were a good thing for these brands but let's stick to the FACTS.

Look at the UK not one major brand owned by the British yet Toyota, Nissan and Honda all have very successful plants running there (Ford and GM too, but not so successfully). Ask Sweden why it is so hard to attract inward investment from similar companies. I don't know the answer but I suspect that it has something to do with (i) inflexible unions (ii) high gross-ups on employment costs and (iii) a mandatory 18 months pay to lay anyone off.

Sweden's third way only worked for so long as the Swedes bought with a sense of patriotism rather than rationale. sadly, those days are long gone.
15:13 December 25, 2009 by Roy E
The question still stands - why did Volvo and Saab see it advantageous to be acquired in the first place?
15:18 December 25, 2009 by witsltd

Lets not try to be hypocrits. Huawei is winning over Ericsson due to price only. Larger operators than Telenor and Tele2 are still relying on Ericsson and using testing Huawei. Lets also not forget why Huawei can provide lower cost, it has been mentioned earlier here.

The economic situation is such that it is in favor of cheap, and companies are weighing different options to trade off certain criterias.

God Jul.
15:51 December 25, 2009 by BIL101
Please close down both saab and volvo, I beg you GM and Ford!

I'm becoming tired of this topic, let them go peacefully, at least there is A-kassa available there. Now we can start talking about what is the next swedish iconic brand dispearing....

I bet: Ericsson (unfortuanatly only half left, Sony has step in... )
16:07 December 25, 2009 by tigger007

PLEASE STOP leaving comments the are prejudice and gossip. most of you left comments that are truthful by far! if you really thing that price wasn't the main factor in this deal,then you are DUMB. when it comes to price margins security and quality takes a backseat. like you said in your comments CHEAP CHEAP CHEAP!

you used the word redneck! there's an old saying'' it takes a redneck to know a redneck! the difference between the 2 is that you live in sweden and they live in america!
16:27 December 25, 2009 by uffia


@Roy E


It is easy to dismiss Huawei as a cheap copycat. The myth or stereotype still resides in a few people's minds. But the reality is quite opposite.

Huawei undercuts its competitors only in certain strategic projects, but more offen an not, it is Huawei's innovative solutions that are responsible for its success, as explained clearly in those (see below) articles by various service providers and market analysts.

Another evidence to show how innovative Huawei becomes is that Huawei topped the list of Patent Co-operation Treaty (PCT) applicants in 2008. According to a report issued by the World Intellectual Property Organization, Huawei Technologies Co Ltd, a telecoms company based in Shenzhen China, filed 1,737 PCT applications during 2008, to finish in top spot above Panasonic (1,729) and Philips (1,551).

Besides, Huawei actually made a profit of $1.2 billion on the sales of $18.3 billions in 2008.

Look at what happened to MG/Rover. MG/Rover unions and their British workers learned the hard lessons when the so-called Phoenix Four bought MG Rover from BMW in May 2000 for a nominal £10. They received a £427m interest-free loan and

thousands of stock cars from previous owner BMW but when the company collapsed five years later it had debts of more than £1bn while the Phoenix Four enriching themself £30m-£40m through pay and pensions. Tens of thousands jobs are lost.

My point is simple: if you can't fight them, join them to share the success rather than die. The best solution of today's Volvo is to sell it to Geely. I wish BAIC would have

bought Saab as well.

Both Wall Street Journal and New York Times had some articles about Huawei.

China's Huawei Challenges European Rivals on Quality


Upstart Chinese Telecom Company Rattles Industry as It Rises to No. 2

18:17 December 25, 2009 by Roy E

You sound far too eager to surrender, rather than examine and address the reasons why you find yourself at a competitive disadvantage in the first place.

Let me guess - you work in Huawei's marketing or public relations department.
18:36 December 25, 2009 by livinginsweden

is that all you can say? cant say anything slightly intelligent?

ha ha
19:30 December 25, 2009 by Localer

i definitely can tell that the 4G price tag offered by Huawei were 40% cheaper then others competitor...part of that, Huawei is offering free RNC(radio station) equipements upgrade without any charges......
20:11 December 25, 2009 by Bender B Rodriquez

Ericsson is not shared with SONY. SonyEricsson (the mobile phone division) is a separate company owned by both Ericsson and SONY. Ericsson and SONY are still two separate companies.

It is the same with Volvo who sold their car division (Volvo Cars) to Ford, and SAAB who sold their car division (SAAB Automobile) to GM. The mother companies still remain but nowadays focus their energy on their main product lines.
21:22 December 25, 2009 by bjinger
All comsumers including American and Swdes like cheap and quality products. Huawei has done it and accepted by the market. Why pay more... It's rediculous to argue over a business that essentialy decided by the market,

By the way, China is at the top of world patent and innovention registration every year. Just go to the world major labs and research centers, Indian, Chinese... are seen hard working there. It tells a universal truth, no pain no gain.
12:18 December 27, 2009 by wenddiver
Lot's of Luck China, I didn't buy a single gift from China this Christmas. You are a force for evil in this world. We have made it a game to find goods not made in China, in our family.
05:55 December 28, 2009 by uffia
@Roy E

I don't work for Huawei or its PR firms, nor do I work for any related companies. I own a Volvo and that's why I care.
06:49 December 28, 2009 by zhqwang
I think that Volvo have a beautiful future when Geely buy it.Do you said that china stole the technologies from west, of course ,I stole some,but not all. please answer me, do you have a lot of projects, such as satellite,rocket,long-distance missile,beidou GPS,cross paddy,etc.. do you have them? Chinese are not spoony, of course Geely can well manage Volvo. I will buy Volvo car if Geely buy Volvo.
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