Volvo opens new China headquarters
- Source: Global Times
- [08:06 January 25 2011]
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A classic Volvo vehicle is on display at the 8th China (Guangzhou) International Automobile Expo, held in December 2010. Photo: CFP
By Liang Fei
Volvo Car Corp, which is seeking to increase its presence in the Chinese market, will inaugurate its China headquarters in Shanghai today, Volvo China spokesman Ning Shuyong confirmed Monday.
According to a report by China Business News Monday, Volvo CEO Steve Jacob will attend the ceremony, as the new headquarters falls under his jurisdiction.
Previously, Volvo's business in China mainly focused on sales, marketing and customer service, however, the new headquarters will foster a renewed focus on product design, manufacturing, quality control, procurement and investment.
"To set up a China headquarters means paying more attention to the Chinese market in the future," said Zeng Zhiling, an auto industry analyst with Shanghai-based Global Insight.
Last year, Volvo reported 36.2 percent year-on-year sales growth, selling more than 30,000 vehicles. But it still lags far behind its competitors, both in terms of growth and total sales.
Audi sold 225,588 units in China in 2010, up 43.5 percent year on year. Mercedes-Benz reported sales volume of 147,670 units last year, up 115 percent and BMW sold 169,000 units, up 87 percent in China.
Showing that Volvo is preparing a frontal assault on the Chinese market, it is also planning to set up a research center in the country, indicating a further domestication of the Volvo brand in China.
The general image of Volvo as a low-profile luxury car can gain ground in China, said Zhang Yu, an independent auto industry analyst, because "the image of Volvo is in accordance with the taste of the rising middle class in China."
Sun Wei, Volvo China's marketing director, said in a report by China Business News Monday that this feature of Volvo cars would remain for the future.
However, Zeng pointed out that luxury car buyers in China prefer larger cars, differing from Volvo's small, energy saving and environmental friendly cars. Therefore, Volvo needs to make adjustments to its products if they want to compete with other luxury cars in China, commented Zeng.
Not long after Geely acquired Volvo, the Hangzhou-based carmaker proposed setting up three plants in China, and increasing Volvo sales to one million units in five years.
But an earlier report with the Oriental Morning Post in December said that Geely Chairman Li Shufu and Volvo board had different opinions on this proposal, since Volvo just began breaking even and the proposal involved too much risk.
"To build up three plants at the same time would need a large investment. But since, as a luxury brand, the sales volume for Volvo could not be that large, it will be difficult to cover the costs in a short time," commented Zeng.
