Going global: Geely's grab for Volvo

Early next year an Australian car buyer will wander into a local car sales yard and be drawn to the smart-looking sedan with the $13,000 sticker on the windshield.

After the hand-clapping dealer wearing a starched white shirt and sporting a red tie swaggers across to the customer, the conversation could go like this:

Customer: "What's this? A Geely. Never heard of 'em. Another Korean car eh mate?"

Dealer: "No mate, this is a Chinese car."

Customer: "Chinese! You're kidding me right? I've heard they're crap."

Dealer: "Yeah mate, I know, a Chinese brand, but this mob own Volvo and they are using all their safety and technology into their cars."

Customer: "Volvo? Really?"

Dealer: "Absolutely mate. So you're getting Volvo quality for $13,000. You can't go wrong."

If Geely's reported deal with Ford to buy Volvo is true, the ninth-largest car maker in China can now proudly wrap itself with Volvo's world-best safety reputation and also use the Swedish auto icon's advanced green technology to significantly boost quality standards in its vehicles.

In February, Geely will ship 500 hatchbacks and sedans to a Perth car dealer, who is confident his Aussie customers will be happy with the value. The Geely vehicles are a similar size to the $22,000 Toyota Corolla but will have a $13,000 price tag.

The West Australian car dealer may be exaggerating a little by saying Geely has used Volvo technology for the car in the lot, but Geely's association with such a reputable brand name will make customers stop and think.

And most importantly, the price tag will make them buy.

The 73-year-old West Australian car dealer working with Geely is John Hughes. Twenty years ago was one of the first operators Down Under to import Korean cars. "I've been around a while and I know my cars and compared with the early Korean cars, the Chinese cars are streets ahead," Hughes told the West Australian newspaper.

"It's chalk and cheese. I believe we can get a far quicker acceptance of the Chinese cars, partly because people can already see that in a lot of product areas China is already world class."

In 1986, Hughes was the first to import the Hyundai Excel to Australia and today it has become one of the most popular cars in the world.

Could Geely be heading down that same successful road?

The Volvo deal will give car salesmen in developed nations a powerful sales pitch to win over local buyers skeptical about China-made cars. If you look up car safety in the dictionary, the biggest entry will likely be under V for Volvo.

Hangzhou-based Geely is a private company and is not a joint venture. It has not partnered with the Germans, Japanese or Americans and is as homegrown as a panda.

But in March this year, it did pay $56 million for the Australian automatic transmission supplier Drivetrain Systems International to boost its capability in parts technologies.

Geely's chairman Li Shufu is the self-styled Henry Ford of the Middle Kingdom and is on the verge of cleaning up the made-in-China reputation for poor safety and dirty engines.

Volvo's likely acquisition takes Geely's sales game to whole new level and Geely could do for China what Toyota did for Japan.

Li is even talking about selling 1.3 million cars abroad by 2015.

This is very ambitious considering Geely sold about 30,000 units outside China last year and assembles cars from kits in Russia, Ukraine and Indonesia. It also plans to build factories in South Africa and Mexico.

But Geely has always believed its cars can now pass the strict emissions and safety standards.

The problem has always been with reputation - but the Volvo deal would go a long way toward fixing that problem, leading the way for Li Shufu's exporting dream to come true.

And it remains a big dream. China last year produced about 9.3 million vehicles but exported only 680,700, according to the China Association of Automobile Manufacturers.

In comparison, Japan built 11 million vehicles and shipped 6 million, while Germany made about 6 million vehicles and half were exported.

But Li, born to a peasant family, now heads China's most exciting homegrown car company, so he well knows that dreams can come true.

Patrick Whiteley is a senior editor of China Daily

(China Daily 08/24/2009 page5)