Geely – a bit like Volvo

Yesterday Geely announced that it is bidding for Ford’s Volvo unit. There are several question marks surrounding the deal.

Will the production stay in Sweden? Geely has said so. Will Geely bring more Volvos to the Chinese market? Probably. Will the competing bidder, Jakob, present a better bid? Who knows.

Many seem to worry about technology transfer to China. “Geely is just interested in getting Volvo’s technology” say some commentators, as if they had just discovered a new reason for corporate mergers.

Others say subcontractors may refuse to deliver to Volvo for fear of losing their technology to the Chinese. This would be brave given the sorry state of the auto parts industry.

All of these question marks will be straightened out as the deal gets closer. In the meantime, speculating is fun.

Few seem to have any insight into what kind of company and brand Geely really is. I asked some Chinese friends for their opinion on Geely and the deal.

The prevailing opinion is that Geely is a low-end brand, the opposite of Volvo. It’s the kind of car first-time car buyers on a budget would get. Others felt some pride in the fact that it is one of China’s successful car companies.

“The Geely buyer is practical and does not want something fancy. They don’t care about face”, said one friend. A statement that could have been about Volvo, with their block-shaped models, a few decades ago.

Some had apparently not seen the news at all, and were frankly surprised that Geely would be buying Volvo. Perhaps that says something about the relative importance of this deal in China. While Volvo may be one of our crown jewels, it’s just another company here.

Patrik Lockne, consultant at Springtime’s Beijing office