#31 …and now even 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!
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March 12, 2013 @ 8:59 pm
The aforementioned blog demonstrates that international business hasn´t any barrier in breaking through cultural dimensions. For me it was also a huge shock to hear that a quite common brand like Volvo – defined by high quality, high standard, sustainability, timeless, solid etc – was purchased by Chinese company. Volvo was fortunately direct linked to the Swedish culture (no stress, work life balance, esteem etc.). I guess the strategy of Chinese must be to use this core competences of Volvo to change their domestic behavior in constructing cars and get inspiration from Swedish culture.
On the other hand I have doubt on stability of quality within Chinese organizations and structures. The new management would be well informed to stay as long as possible on the old Volvo “habits” to remain one of the world best car manufactories. If both sides can gain benefits from each other and Chinese management is able to build confidence and sustainability Volvo is going to stay with current reputation. The proper choice in strategy – and there are 10 different ways mentioned by Mintzberg – can make it possible. I believe they stay tuned.
April 20, 2014 @ 10:35 pm
Having Volvo owned by a Chinese company made me think about it, because I am a Volvo driver satisfied with a quality, safety, design and performance. Is all of this going to be under a question now? I doubt. Volvo already had a foreign owner, but it’s not done much in enforcing the brand for competing in the demanding auto industry arena. Although my first impression was a possible loss of reliability and attack on the Swedish national pride, I believe this example is going to show everything but that. Sides were ready for the internationalization (Swedish already was intl.), Chinese part was able to make investment, Swedish part was offering brand and knowledge, and both sides are gaining somehow. Volvo is getting new dimension, more aggressive appearance and new owner is getting the position in the international auto industry, a position which is going to enable them to place new products bit easier. Having in mind cultural differences, Chinese company is performing this in the long run to gate the readiness of the company for internationalization. Company readiness (with some more know-how and experience), entry mode and defining target market are already here. Is this the definite way for getting Chinese cars on European streets? Let’s watch and wait for the product readiness level.
January 1, 2017 @ 3:06 pm
I totally understand the concerns about the Chinese’s ability to understand the Volvo culture because there are a lot of differences concerning the Swedish and the Chinese culture. As Christian said in that case it would make sense to use the core competences of the Swedish culture such as their work life balance. I would like to express the huge differences between the Swedish and Chinese culture based on four of Hofstede’s cultural dimensions.
First of all, there is a huge difference concerning the power distance. Sweden has a low score (31), which means that they support being independent, they do not live their hierarchy and all employees have the same rights. In contrast, China scores high (80), which means that they have a very strict hierarchy and an impersonal relationship between subordinates and superiors.
Second, their score at individualism is totally contrary. Sweden is a very individualistic country (71). That means that they only take care of themselves and their immediate families. All in all, management is the management of individuals. In comparison, China is a highly collectivistic country (20) where it is common that employees represent the interests of the group instead of themselves.
The next distinction is the masculinity. Sweden is a very feminine culture (5). That means that they take care about their life/work balance and everyone is involved when making decisions. Solidarity and quality in their working lives is very important for them. In comparison, China is a very masculine culture (66) where everyone is success orientated and driven. They do not place value on having leisure time.
Finally, it should be mentioned that the uncertainty avoidance is the only dimension without a large difference. Both countries have a rather low score which means that they have a low preference for avoiding uncertainty. Swedish people believe that there are enough existing rules, they appreciate innovation and only work hard if it is necessary (29). Chinese people are adaptable and entrepreneurial. Chinese prefer small and medium sized family owned business (30). And they are neither avoiding uncertainty.
In my opinion, there are a huge number of differences which should be considered when a Swedish company like Volvo should be headed by a Chinese management.
July 7, 2017 @ 10:39 am
I’m happy that I found this blog post about Volvo. Back then, when the Volvo Car Corporation was bought by the Zhejiang Geely Holding Group one had to ask if the new Chinese ownership affects the core values that Volvo cars stand for. Now in 2017 the shares reached almost the value of 2007, before the financial crisis. Furthermore Volvo announced to produce only electric cars with combustion engines only as side unit by 2019 which is quite an interesting and brave move by the company. Until 2021 they want to offer five models with pure electrical drives. It seems that the Chinese owners understood the values of the brand and combined them with the spirit of the time concerning design and technology. According to the media Geely gives the operative team plenty of rope and hardly interferes in the daily business. The board of Volvo Car Corporation still consists of mainly Swedish managers and the Chinese owners preserve the independence of the brand. Maybe it’s too early to judge but this example seems to show how it’s done right.