The running of Geely and Volvo

Volvo Car Corporation (Volvo Car Corp.) recently introduced the latest design, causing the outside world attention, but because of its own with a departure from prudent known for their style a bit nervous. This high-end sedan has a smooth line and has a lilac LED light in the grille, which was launched to make this Swedish company stand still in the luxury car market.

Volvo executives have different visions for the future of the company, and this car is a product of mutual compromise. Among them, one is Volvo's chief executive and European Stefan Jacoby, and the other is the company's new boss and Chinese doer Li Shufu. The latter's Zhejiang Geely Holding Group (Zhejiang Geely Holding Group Co.) acquired last year from Ford Motor Company (Ford Motor Co.) in the hands of the Volvo, which is a landmark deal, marking the first time a global automaker Enterprises are handed over to the Chinese people.

In the nearly 10 months after the acquisition was completed, Jacobs and Li Shufu worked hard to coordinate their vision for Volvo and different management styles, and determined the development path for Volvo's rejuvenation. In order to face head-to-head brands such as BMW and Mercedes-Benz in the luxury car market, Volvo has also upgraded its products, but this may dilute its manufacturing safety and household use. The reputation of the car. Friction from time to time in the coordination process can be seen in a series of high-level talks, but these talks also provide the outside world with a rare opportunity to understand the international expansion of Chinese companies.

A core part of the arguments between the two parties is that Jacobs wants to concentrate on producing safe, energy-saving small cars, while Li Shufu believes that Volvo must vigorously develop luxury cars that can compete with BMW, Mercedes-Benz and Audi. In China, the world's largest car market, a large number of new rich consumers are buying luxury cars at dazzling speeds.

In an interview in March this year, Li Shufu said that Volvo and Mr. Jacob can occupy a moral high ground and adhere to the low-key and more moderate traditional style of Volvo brand, but this style has no future in the Chinese market unless it can adjust. Strategy to cater to Chinese people's pursuit of greater and longer luxury car taste.

Li Shufu said in the conference room at the Geely headquarters in Hangzhou that it was like producing cigarettes and said that he had done a pretend smoking cigarette. He said that smoking is harmful to health, but tobacco companies are still making and selling tobacco. The same is true for the development of Volvo. It needs to cater to the rich people of China's love for ultra-luxury cars.

Whether Li Shufu and Jacobs can overcome their differences and lead Volvo's success will have broader implications for Chinese companies that have expanded globally. In recent years, Chinese companies have spent tens of billions of dollars to acquire foreign assets, most of which are resource companies, but have had little success in understanding and managing foreign consumer brands.

Lenovo Group Limited (Lenovo Group Ltd.) acquisition of International Business Machines Corporation (International Business Machines Corp.) PC business in 2005, had spent many years trying to keep market share. Shanghai Automotive Group Co., Ltd. (SAIC Motor Corp.) in 2004 acquired South Korea's Ssangyong Motor Company (Ssangyong Motor Co.) about half of the shares, but in turn sold all of last year, due to the 2008 financial crisis, Ssangyong The car's business dropped sharply. Previously, Geely did not have any experience in managing international auto companies. If the cooperation with Volvo succeeded, it could provide a roadmap for other Chinese companies to use.

Let's compare Jacob and Li Shufu. The former 53-year-old, is a conservative German, wearing a pair of sleek frame glasses, he received a business degree in the University of Cologne, Germany (University of Cologne), and before the jump Volvo has long played for the German Volkswagen (Volkswagen AG The United States subsidiary of ) was the head of the company. Li Shufu is 48 years old and is very talkative. He was born in a peasant family. After graduating from high school, he began to establish a largest private automobile manufacturing company in China, starting from running a tiny rural photo studio.

The friction between Geely and Volvo was evident in the meeting of senior executives of both companies last year. Not long after Geely and Ford revealed the preliminary acquisition agreement, they met at Volvo's headquarters in Gothenburg, Sweden. At that time, about 40 Geely executives went to Gothenburg to learn about Volvo. One of the executives felt that the information provided by Volvo was too simple and rude. According to informed sources, the executive was furious and you thought we were a bunch of laymen? After leaving the conference room, he took the earliest flight back to China.

The purchase transaction was completed in August but suspicions remain. In September, on the eve of his trip to Sweden for the first time to attend the Volvo board of directors, Li Shufu told a reporter from the Wall Street Journal in Beijing that Geely plans to quickly build up to three new factories in China and thus quickly start Volvo sales. At that time, only one Ford joint venture plant in China produced a small amount of Volvo. When Li Shufu arrived in Gothenburg, the article he interviewed disturbed Volvo executives and board members. They were worried that the new boss was taking a risky, too radical approach.

Volvo executives expressed concern at a meeting with Li Shufu. Jacobs worried that the situation might lose control. He brought Li Shufu and an interpreter into his corner office on the second floor. Jacobs emphasized that Volvo should prudently establish production capacity in China in order to maintain the quality and image of Volvo. Jacob said in a recent interview that we basically solve this on a one-to-one basis; we do not want to do this in large public places and do not want to embarrass any party.

Indeed, the two seem to be looking for a common ground. Concessions are often made by Li Shufu who is practical. At a press conference held in Beijing in February, the two men announced the Volvo’s ambitious plan to reverse. It will invest approximately US$10 billion in the next five years and increase global sales from the 373,000 vehicles last year by 2020. More than doubled to 800,000 vehicles. Volvo announced plans for a factory instead of three. The factory will start production in 2013, but Volvo said that it may build another factory in the future.

Li Shufu said in a recent interview that we are now following Jacob's guidance and we are gradually establishing a manufacturing footprint for Volvo in China, one by one. He emphasized that he got along well with Jacob. Jacobs said that Li Shufu is no different from other real-life shareholders he has dealt with in Asia or the West.

Perhaps the most obvious sign of compromise is the so-called Concept World Universe, which was released in Shanghai in April. As the company prepares to upgrade Volvo's product structure, Li Shufu strongly feels that the company needs bigger super-luxury cars to compete with the Mercedes-Benz S-Class and the BMW 7 Series. According to J. D. According to statistics from Power & Associates, sales of luxury cars in China rose by 49% last year, while passenger car sales increased by 37%.

Jacobs advocated that Volvo should stick to the more low-key luxury tradition and focus on core mid-size cars such as the S80 sedan and the XC90 SUV crossover. He said that we need to first address the quality of our core products, not in the S-class and 7-series, but also in high-end and luxury.

In an interview with the Wall Street Journal in March, Li Shufu responded that Jacob needs to better understand China. He said that many of China's new rich people are unrestrained, showing off their wealth, finding lover, etc. are commonplace. The metaphor of cigarettes was then elicited. It is these people who purchase Volvo brand luxury cars.

In the end, the "Heavenly Land" concept car embarked on a more luxurious direction that Li Shufu wanted. The car is not as big as the S-Class or the 7-Series, but it uses the "Extensible Platform Architecture" (SPA), which is designed to produce larger four-door cars in the future. Volvo Chief Spokesman Olle Axelson said that "Heaven and Earth" is a move to the S100. The S100 is the vehicle that Li Shufu wants.

Michael Dunne, a veteran automotive analyst, said that Volvo’s image in China is now on the edge of luxury. To move closer to the center of the circle, Volvo Cars has to come up with an eye-catching design that completely changes its original thinking. "The concept car is an important step in this right direction. Dunn currently manages an investment consulting firm in Hong Kong.

The question, he said, is whether Volvo can persuade Chinese consumers to compare the Swedish brand with German luxury cars and Lexus. Most other well-known luxury car brands, such as Cadillac, Lincoln, Jaguar, Acura, and Infiniti, have failed to succeed in this regard. He said that Mercedes, BMW, Audi and Lexus are occupying nearly 90% of China's luxury car market.