Volvo deal to help Geely's going-global ambition

• Source: Xinhua
• [08:53 December 28 2009]
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The significance of the deal is far beyond acquiring advanced technology, however. It offered a shortcut for Geely to get access to the world auto market, said Zhao Hang, director of China Automotive Technology and Research Center. In Li's words, it was "a way for Chinese made cars to enter the global market".

Volvo's brand as a safe and reliable car would also help dispel quality concern about Geely, which was unfamiliar to foreign consumers, analysts said.

"If the deal succeeds, nothing will change for Volvo, except the boss turns to Li Shufu," Li said. "Volvo and Geely will be two independently-managed brands."

Geely would keep intact Volvo's existing production and research and development facilities, union agreements and dealer networks.

According to Li, Volvo has the brand and technology while Geely, based on the booming Chinese market, could help Volvo reduce production costs and tap into the huge market.

His Hong Kong-listed Geely expanded fast thanks to a sales boom in China, which has replaced the US to become the world's largest auto market this year. China is expected to sell more than13 million vehicles this year, up more than 40 percent from 2008.

Geely netted a profit of 560 million yuan ($82 million) in the first half of the year, up 110 percent year on year. It aims to sell 300,000 vehicles this year, up from 204,000 units in 2008.