Volvo drives into China market thanks to Geely, but concerns remain

• Source: Global Times
• [16:34 March 30 2010]
• Comments

 By Chen Xuefei in Stockholm

Geely Holding's signing of an agreement to purchase Volvo from Ford on March 28 signaled the carmaker's ambition to acquire technology and expertise from overseas to improve its own brand.

While Swedes may be relieved the renowned car brand will continue to thrive, there will still be challenges in the road ahead.

Hans-Olov Olsson, 68, a former Volvo chief from 2000 and 2006 during the Ford period, is very positive about the deal.

"Geely means a fantastic future for Volvo, otherwise, I will not be back with the brand. I think this is the best for Volvo," said Olsson who is now a board member.

"Now Volvo can get both flesh and blood, meaning to get help from China's huge market," he said.

Journalist Jonas Froberg writes for the Swedish daily newspaper Svenska Dagbladed and believes this is a good opportunity for Volvo to increase its market share in the huge Chinese car market.

He does understand the union's concerns about the future due to the cultural differences between the two countries, and the future of the automobile industry which is in its late period in the western world.

"Generally speaking, Chinese car companies don't have a good reputation overseas," Froberg says. "This is the first time for Chinese company to purchase a famous brand like Volvo which is trying to sell luxury cars. So it is a challenge to keep the standards. People can only wait and see because there isn't a precedent."

"It will be wise for Geely to produce cars in China for the Chinese market while the Volvo in Sweden and Belgium for Europe and US market," Froberg said.

Another reporter from the same paper, Nils-Olof Ollevik, is concerned about funding.

"If Geely borrows money from government-controlled banks, it will restrict its future development," warns Ollevik.