Voice of China on Geely buying Volvo

Shanghai, March 29 (Gasgoo.com) March 28, Zhejiang Geely Holding Group, China's No 10 automaker, closed a deal to buy the Volvo brand from US car giant Ford for almost $1.8 billion. The agreement was signed at Volvo headquarters in Gothenburg by Geely president Li Shufu and Ford's financial director, Lewis Booth.

The following are some major media reports and experts’ view from China.

Zhang Yi, a senior reporter at Xinhua News Agency, concludes that Geely buying Volvo is of great significance.

(1) A good thing for the Chinese auto industry.

The acquisition will help boost China's own brand car makers up to the global market, bring them access to more advanced technology, and demonstrate the potential of the Chinese automotive industry.

(2)Volvo brand is worth buying.

Although the Volvo Cars has been hit hard by its declining sales, it is still a sustainable global automotive company with strong production capacity and over $1.5 billion net asset.
  
(3) Geely has bought Volvo’s key technologies through the acquisition.

According to the agreement signed by both parties, Geely has not only bought all shares of Volvo, but its key technologies, intellectual property, manufacturing facilities and global marketing channels.

Zhang Zhiyong, Automotive Marketing Communications Expert, states that the significance of the acquisition is way beyond the scope of the automotive industry.

Zhang says that, unlike Lenovo’s acquisition of IBM, Geely buying Volvo is 100 percent, which signals Chinese private enterprises’ truly entering the international market. On one hand, Geely will take advantage of Volvo’s magnificent brand image and influence to enhance its status and competitiveness. On the other hand, it has witnessed the transformation of the China’s economic growth mode from quantity to quality.

Xu Changming, Director of Information Resources Development, National Information Center, holds that Volvo will become a mid-range brand.

Xu said when took an interview at Sohu.com that Geely’s successful acquisition of Volvo is surely exciting news, but how it is going to run Volvo well is a huge challenge. Volvo’s sales volume is likely to rise greatly within three to five years in China, but its brand image will no doubt be inferior to the Mercedes-Benz, BMW and Audi and finally down to a mid-range brand.

Zhou Qing’an, from International Communications Research Center of Tsinghua University, states that Geely buying Volvo has set a good example for China's own brands.

Geely’s acquisition of Volvo has put forth a new concept for China’s own car makers and joint ventures because we have had the largest production and sales volume in the development of the automotive industry, with which, we should not only grow bigger and stronger in the domestic market but also take root in the overseas market.

Jia Xin’guang, a non-mainstream researcher in China’s auto industry and well-known expert in car reviews of China’s domestic auto industry, gave his answer to the question ---- Is Geely able to run Volvo well?

Question: Since Ford didn’t operate Volvo well, can Geely do it?

Answer: Ford’s failure to run Volvo well does not make any sense to Geely’s operation of Volvo.

(1)Three things not to be changed

Resources said, after the acquisition, the things are not to be changed, which contains production sites, the dealership network and quality. Shen Hui, vice president of Geely Holding Group, said the company will maintain the independence of the Volvo brand and take an operation mode similar to that of Volkswagen and Audi, and will not within few years transfer Volvo’s manufacturing and research facilities to China. The company is committed to protect the brand and value of Volvo well.

(2)Volvo’s only hope is the Chinese market.

It is not that Chinese automotive industry can be developed only after getting the Volvo, but that Volvo’s revival can only be realized in China. Therefore, Geely resources said after the acquisition, the company will continue Volvo’s global marketing work and pin its hope on the Chinese market.

(3) Volvo should be self-reliant.

Before the acquisition, Geely has already hired Roland Berger Strategy Consultants for a 100-day internal review on the project. After that, the company also hired Deloitte & Touche Case Studyv for the enterprise integration after the acquisition including the domestic marketing, network distribution, logistics and global co-operation.

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