Geely-Volvo Deal a Win-win

Chinese companies should not simply be onlookers but need to scan the Geely-Volvo deal as a prime example of Chinese enterprises going overseas and becoming globalized, a senior official of Invest Sweden said on the sidelines of the 14th China International Fair for Investment & Trade (CIFIT).


“Chinese entrepreneurs can gain extensive experiences from this takeover: How rising Chinese enterprises battle with courage and wits with their international counterparts, how the two sides, who were unfamiliar with each other at the beginning, have built up a good partnership, and how the deal, despite starting amid great doubts, has finally achieved success and gained wide support in both countries,” Eddie Chen, vice-president and chief representative for Greater China, Invest Sweden, told China Daily.


Invest Sweden, a government investment promotion organization responsible to the Swedish Ministry of Foreign Affairs, has been actively involved in pushing the marriage of Geely and Volvo. It inked a memorandum of understanding with Geely in Beijing in August, only a few days after the Geely-Volvo deal was completed.


“The whole process is undoubtedly a Long March and a baptism of mind and soul,” Chen said.


He appreciated Geely’s determination, far-sighted vision and quick decision-making once it recognized the strategic value of cooperation with Volvo. “Chinese private enterprises are born to react rapidly and positively to possible opportunities for advancement,” he said.


He also gave thumbs up for Geely’s ability to build an international team in a short period of time. The competitiveness that Geely has gained through its deal with Volvo will definitely help it leap ahead of many top Chinese automobile enterprises.
Chen said his organization will promote in-depth cooperation between Chinese automobile industry and Sweden providers of high-end automobile spare parts and relevant services. “It will surely be a win-win deal, which not only helps Swedish enterprises gain a foothold in the emerging Chinese market, but also enable Chinese enterprises to upgrade their products and services,” he said.


However, Chen does not see a trend for Chinese enterprises rising in international competitive capacity through purchasing a foreign company. “Big takeovers like the Geely-Volvo deal often imply great challenges in terms of financial and material capabilities and human resources, and not every enterprise could afford that,” he said.


He suggests it was an equally vital strategy to purchase stock shares for Chinese companies, who are ambitious to invest in foreign markets.


“Some Chinese entrepreneurs consider the language barrier a major reason why they sometimes shun away from becoming a shareholder of foreign companies they are interested in. I tell them that language is only a tool, and it is the wisdom of negotiation that really matters,” he said.


“It is a process of acquiring lessons of international cooperation and competition, which large and medium-sized Chinese enterprises must go through to grow in strength,” he said.


 

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