Deadly Sins of International Business Blog

Chinese carmaker Zhejiang Geely will acquire Swedish Volvo from American Ford Motor. Geely has come a long (and fast) way from its modest beginnings as a motorcycle parts manufacturer to what is now China’s 12th largest automotive manufacturer. Being the 12th may not mean a lot in other markets, but consider two things: First, China is a huge market. Second, Geely has impressed at many car shows with high-powered concept cars and seems to be determined to grow further and gain market share. For Ford, selling Volvo is not only part of its recent strategy to sell off non-core brands (it earlier sold Jaguar and Land Rover to Tata of India), but it’s also quite an infusion of liquidity – out of the reported selling price of 1.8 billion US$, 1.6 billion will be in cash. For now, Geely has promised to leave Volvo alone, but it has also not failed to mention that it has already recruited a new team of executives to ‘oversee’ things at Volvo…!

Volvo of Sweden which has been owned by Ford for a number of years will be sold to a consortium led by Chinese carmaker Zhejiang Geely. It has been reported that the consortium is willing to pay about $2bn as it seeks to capitalize on the brands’ good reputation in the Chinese market. The first voices of concern from inside Volvo have already emerged. The head of Volvo’s engineering union expressed severe concerns about the Chinese’s ability to understand the Volvo culture – understandaby. Swedish culture is almost everything that Chinese culture is not – valuing individual initiative, egalitarian and risk-seeking. Brace for impact!