Up to now, Chinese companies taking over Western brands was a Beijing opera of well-placed rumors, followed by ambiguous statements or outright denials. The Chinese government did their part in the play encouraging their automakers to acquire foreign assets, then warning them that it might not be a good idea, and then saying that they would back them if they do. Welcome to China. Now, for the first time, a Chinese company went on record that they are willing to make international acquisitions. They’ve even said why.
Geely, which is on the roster of suitors for Ford’s Volvo brand, said Friday that it is interested in using international acquisitions, the Wall Street Journal [sub] reports. They also said why: “To gain access to technologies and sales networks, and to circumvent trade barriers it might otherwise face as a Chinese auto maker. In its “path to internationalization,” Hangzhou-based Geely didn’t name any specific international acquisition targets. But all bets are on Volvo.
“In order to seek capital, to seek markets and to seek partners for international cooperation, overseas mergers and acquisitions is an important method for Geely Auto,” the statement said. Overseas deals “will help Chinese car companies with their own brands ease the competition in the domestic market, and at the same time create bigger space for growth,” it said.
Geely thinks China’s lower labor costs are also a good reason for it to get involved in overseas mergers or acquisitions. It didn’t elaborate on that point. But an individual familiar with Geely’s interest in Volvo has said Geely might be interested in shifting some of Volvo’s manufacturing capacity to China to reduce costs.
The plans disclosed by Geely jibe with TTAC’s previous analysis: Chinese manufacturers are not interested in buying foreign factories. They want established foreign brands, preferably with already certified designs, which they can manufacture in China. China’s sore point is exports. An established brand with homologated (both in the US and the ECE-zone) cars would bs a shot in the arm for Chinese exports. A foreign brand also sells better in China than a home-grown.
Purhaps Geely should buy GM and Chrysler, prune back the dealer network and get to work.
I can’t help it.
Every time I see their company name, I think “Geli”. You know, Hitler’s niece that shot herself during a questionable relationship with Adolf in Munich.
Too much coffee perhaps?
@Johnny: “Geli” (Raubal) and “Geely” are pronounced totally differently. “Geely” like in “gee-whiz”, “Geli” like in “Gelt.”
What is much funnier is this:
http://zonaeuropa.com/20070427_1.htm
And GM shares are up, does anybody know of any new new new new new new recovery plan Rick might have revealed to Wall Street?
@Bertel:
“Geli” like in “Gelt.”
Every English documentary I’ve seen pronounces her name Geely, and I’m sticking with that. However, with a name like Schmitt,I know you’re right. :)
Geli is short for Angela. Pronounced An-ge-la
I can’t wait for the post acquisition coverage. I wonder if all will wait for them to spend their money before reminding the world how totally worthless all chinese piston engines have been to date.
$500 motor cycle anyone?
Geli is short for Angela. Pronounced An-ge-la
OK, now I understand. This is just the kind of knowledge I use to impress friends at cocktail parties. Thanks.