China's Government Signals All Clear To Volvo
No big deal in China is done until it’s signed and sealed – by the Chinese government. In the case of Volvo, there won’t be any Hummeresque killing me softly. Geely’s deal to buy Volvo from Ford, reached last month, will be waved through the (necessary) approval process.
In China, any deal of that size (or even smaller) must go through an approval process. Unless you have a collection of red “chops” from various “relevant authorities” on sundry applications and licenses, no deal. A deal can get entangled in red tape and eventually die from exhaustion, as it was in the Hummer case. Or it can happen very fast.
Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission (NDRC), went to the unusual step of saying that the Chinese Government is optimistic about approving Geely’s purchase of the Swedish brand Volvo Cars, state-owned China Daily reports.
“We will take an affirmative attitude towards the deal if the enterprise would offer a reasonable proposal on the preparation work,” he said Saturday while addressing a panel discussion at the Boao Forum for Asia.
In related news, China Daily reports that “American car buyers are undeterred by Geely Automobile Holdings Ltd’s purchase of Volvo, judging from their response at the New York International Auto Show.”
Even more importantly, “most potential buyers voiced little concern over Geely’s recently announced takeover of Volvo,” writes the state-owned organ. With that out of the way, the deal can proceed.
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I think the state owned organ will prove to be mistaken. Volvo will not be hurt by its Chinese association only if Geely does an excellent job of hiding it with some smart marketing. I don't ever see myself in a Geely wether it's called Volvo or anything else.
While some people in America may be scared away by the Chinese association, Volvo stands to gain more from Chinese government protection and procurement than they stand to lose in America. If Tata can run Jaguar and people still buy Jaguars, then why wouldn't it work with Geely and Volvo.
Give both the Tata and Geely deals some time to simmer. Right now, and for the short-term, you have two companies with the Ford imprint ... it will take some time for the new owners to replace that with their own (as the Ford-approved product plans are replaced with those of their new owners, and as any supply or IP agreements between Ford and its former subsidiaries expire. It will take a good 5 years to see vehicles out of both companies that are more Tata/Geely than Ford.
Reading this article on a Lenovo T61p laptop, formerly IBM. Been a pretty good computer. The Chinese are plenty capable of building good stuff. The question is will Geely cost reduce Volvo out of existence, destroying safety brand identity, or will they let Volvo be Volvo while shifting manufacturing to China? In my opinion Ford did a much better job of preserving the Volvo brand than GM did with Saab.