Internationalization of the Geely Brand

Acquisition of Volvo

The rise of Geely’s international reputation owes much to its acquisition of Volvo.

Geely, a Chinese private automobile manufacturer with a history of just 17 years, buying internationally famed Volvo? It may seem strange, but Li Shufu, did just that.

Because most Chinese automobile companies entered the international market later than their foreign counterparts, Chinese cars have lower brand recognition overseas. “But when you mention Geely now, foreign consumers know Geely bought Volvo,” said Zhang Lin, vice-president of the Geely Holding Group.

Yang Xueliang also admits that the acquisition of Volvo has greatly boosted Geely’s brand value and brand recognition overseas. It has also helped strengthen the confidence of overseas partners to cooperate with Geely. Now several foreign partners and dealers are willing, to the extent of competing, to cooperate with Geely.

However, from Li Shufu’s point of view, Geely is Geely, and Volvo is Volvo. Geely is a popular brand, and Volvo is more of a luxury brand. Li does not place too much hope on Geely’s future with Volvo. “Cross-border acquisition is not the only way for a domestic brand to achieve global development. Our lifeline depends on realizing scientific and technological innovation,” Li said.

In fact, it is innovation that is helping Geely to make today’s achievements. Geely Automobile invested hundreds of million yuan to establish the Geely Automobile Research Institute, building up a strong capacity to develop complete vehicles, engines, transmissions, and automotive electronics. The company has been honored as a national “corporate technical center,” “postdoctoral workstation” and “high-tech enterprise.” Geely has 13 academicians from the Chinese Academy of Sciences and nearly 9,000 patents in automobile technology.

The acquisition of Volvo was no doubt a boost for Geely, because joint development of different brands under the same group allows for the sharing of development platforms, resources, technology and personnel. This helps Geely to make further progress in terms of details and automobile systems.

In March and November 2012, Geely signed agreements with Volvo to launch cooperation in modular architectures of mid-sized vehicles, interior air quality control, and safety technology. In September 2013, the Europe research and development center jointly built by Volvo and Geely began operation. “The operation of the R&D Center is a sign that the synergistic results of Geely Automobile and Volvo have shifted from the concept stage to the implementation stage,” comments Li Shufu.    

Authentic Localization

Geely Automobile started exports in 2003. Now, the company has entered overseas markets in nearly 40 countries and regions, including the Commonwealth of Independent States, and countries in the Middle East, North Africa, South America, and Southeast Asia. The estimated figure of Geely’s 2013 exports was beyond 120,000. Its market share in the Ukraine has exceeded 10 percent, surpassing some international brands. Emgrand, one of Geely’s marques introduced to Egypt in 2012, has become one of the top 10 best-selling automobiles there.   

In fact, Geely’s largest overseas market is Russia, with annual sales of around 30,000 vehicles, according to Shanghai Geely Meijiafeng International Trade Co., Ltd. (Geely International for short), the exclusive export subsidiary of Geely Holding Group. Figures for countries like Egypt and Saudi Arabia also exceeded 10,000 in sales. More importantly, Geely’s overall overseas sales are growing rapidly.

In addition to favorable influence due to purchasing Volvo and a fine reputation for quality, another significant reason for Geely’s popularity in the overseas market is its high performance-cost ratios. According to Chen Peng, marketing director of Geely International, when it comes to quality, Geely’s mid-size cars are as good as those of any large multinational manufacturer, while its price is 20 percent lower than such competitors. Based on customer response, the cost of Geely’s maintenance and parts is more economical than Japanese cars.