Li Shufu commenting on Geely's strategy towards Volvo: setting free the tiger back to the mountains

Source:Globaltimes.cn Published: 2015-1-5 13:59:24

Recently, Chairman of Geely Holding Group Li Shufu gave an interview to the reporter from China Business News, talking about Geely's strategy towards acquisition of Volvo and the philosophy designed for Volvo in the Chinese market.   

Reporter: Chairman Li, thank you for giving the interview. The new Volvo XC90 has been launched on the market. Has the status quo of the brand come up to your expectation when you acquired the firm?  

Li Shufu: Our decision to acquire Volvo then was mainly motivated by its technologies in safety, R&D capability and brand influence in the world. The past four years have proven that we made a right decision. Volvo has been occupying a leading position among the luxurious cars brands in terms of technologies in safety, product quality, management and research and application of new technology, which is inseparable from the special environment and unique nature of Northern Europe and Volvo's long-lasting virtuous characters.    

Reporter:  How about the sales? Do you satisfy with it?  

Li Shufu: The sales of Volvo are growing year by year. And the growth rate has basically met the targets set by the board members and the management team. With the adoption of new technologies and launch of new products, the sales are expected to see a rapider growth. The over 11 billion dollars Geely planed to invest for R&D when purchasing Volvo has basically been funded and is taking effect. A series of new products will be put into mass production and more models will also be launched in the future.   

Reporter: What's your expectation for Volvo's development in the future?   

Li Shufu: I've made it clear to Volvo's staff and management team that Volvo is a tiger which cannot be imprisoned. It should return to nature and conquer its own territory. On the path back to the market, Volvo has attained some results, but will be faced with tougher tasks and challenges. Only by joining efforts to conquer the challenges can Volvo constantly increase its market share.

Reporter: Culture integration always counts a lot in the acquisition and merger cases in global market and sometimes even plays a decisive role. Could you please share with us some impressive cases in your memory in the cultural integration between Geely and Volvo?  

Li Shufu: As two firms located in two continents geographically far apart, it's no doubt that we have differences in culture, but the common interests outweigh all the differences since both Geely and Volvo as well as everyone in the two firms are working together for their common interests. Therefore, as long as the strategy is clear enough and all the plans are implemented earnestly, the so-called cultural gap could be conquered. Meanwhile, Geely and Volvo are promoting a global corporation culture. As their business covers every corner of the world, instead of focusing on a specific country's culture, a global culture regardless of the nationalities, languages, complexions and races should be pursued. A common development strategy brings everyone in the two firms together to contribute to the automobile industry.   

Reporter: Nowadays more and more Chinese enterprises begin going global to seek market share abroad. Geely's acquisition of Volvo four years ago has now been proved successful. Could you please offer some advice and suggestions for those Chinese entrepreneurs that have gone out or plan to go out?

Li Shufu: Just like one learns to swim, those entrepreneurs pursuing foreign markets have to learn by themselves and overcome challenges. It can't be worked out by a formula or illustrated by an article, while the experience gained from both failure and success can be discussed. However, the approaches and models for internalization may be varied among enterprises due to their difference in industry, background, business opportunities and other factors. Only though constant practice, can the enterprises finally survive and develop in foreign markets.

Reporter: Taking swimming you cited as example, if you are recruited as a swimming coach, would you please give some brief instruction before your trainee dive into the pool?

Li Shufu: A comprehensive preparation must be made at first to prevent from danger. Secondly, you need to try the temperature of the water in the pool. The international arena is a platform with complicated situation rather than a small swimming pool, which requires the divers keep caution. While if you give up exploring the market out of fear, you may lose the opportunities to go out.

Reporter: What is the most important thing?

Li Shufu: It is important to take the balance of the interests of all parties including the government, community, industrial chain, board members, executives, staff and the labor union into consideration. Failure in the balance of interests may lead to conflicts, therefore, only by taking the interests of all parties into consideration, a harmonious development can be achieved.

Reporter: Is there a golden rule to keep a balance?

Li Shufu: I think mutual respect is crucial. In the current world, the interests of various nations, groups, industries and individuals compose a cable-stayed bridge, of which the fracture in any cable may result in the collapse of the bridge. The philosophy can also be applied in the operation of enterprises in overseas market. They also need to take their relations with the suppliers, dealers, staff, executives, directors, counterparts and the whole industrial community into consideration and take responsibility for the products, the future and the consumers.

Reporter: Would you please rank the above factors by importance?

Li Shufu:The most important factor is undoubtedly the interests of customers, which are closely related to the interests of all stakeholders. Therefore, those enterprises going global must be bold and resolute in the investment in the R&D of products and dedicate to the competence of the products. An accurate position also should be set for the products. The reason for Geely to invest over 10 billion dollars in the project is that we have to produce products with which the consumers are satisfied with. The second important factor is the staff since every outstanding product is out of the hands of the employees whose positions may cover research, production, sales, management, purchasing, services and other chains.

Reporter: The Chinese market is now vital to Volvo. What's your expectation for Volvo's development in the Chinese market? How can Volvo's development in China in turn promote the growth of Geely?

Li Shufu: One of the biggest challenges for Volvo now is that the scale is too small. We must expand its scale, which means that Chinese market is of vital importance for Volvo. I believe that the present plan for the first phase to reach 200,000 units in China and 800,000 units for the global market is far from being enough. They must substantially exceed 200,000 units and 800,000 units respectively, only with which can the strategic goal of "setting free the tiger back to the mountains" be materialized. Well, how can we realize this strategy in specific terms? We should consolidate and strengthen Volvo's traditional market positioning in Europe and the US, exploit and develop emerging markets including China, and respect its fine corporate culture and European commercial civilization. The preliminary product positioning for Volvo is more luxurious, more high-end and more globalized. Therefore, in the five-year plan formulated by the firm, we decided to invest more than 11 billion dollars within this period in R&D of products. The plan has been proved as a right choice.

Reporter: How does Geely benefit from Volvo's development in turn?

Li Shufu: Geely's decision to acquire Volvo is not a financial investment. Apart from realizing strategy of "setting free the tiger back to the mountains" for Volvo, its objectives and mission are to improve Geely's R&D capability. As two brands under the Geely Holding Group, Volvo and Geely have forged a brotherhood relationship in their R&D and their cooperation will extend to other fields since the cooperation can contribute to elevating Geely's R&D ability and cultivating Chinese auto engineers, R&D engineering technicians in particular. With the help of Volvo, I believe that Geely will see a great improvement in its R&D ability, technical levels, engineers' R&D capability as well as competitiveness and ultimately witness an increase in its added-value, thus boosting its competitiveness in the global market.

Reporter: As more Chinese enterprises go global, Chinese capitals emerge in the overseas market and Geely's successful acquisition of Volvo offers valuable experience for more Chinese entrepreneurs. Thank you for giving the interview.



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