The Chinese Henry Ford
Li Shufu, nicknamed ‘The Chinese Henry Ford’, is the man responsible for Zhejiang Geely Holding Group’s acquisition of the well-known Volvo brand. Li Shufu is the chairman of the company that just completed a $1.8 billion purchase of Volvo Cars from Ford Motor Co.
This transaction represents China’s largest offshore car deal and illustrates the country’s growing influence in the international market. Li Shufu seems intent on building a global brand with high prestige and profit margins.
Mr. Li Shufu is the son of a farmer from Zhejiang Province in China. He started making cars in 1997, despite criticism that he had no experience or background. Some of his personality traits are similar to Henry Ford’s, beginning with his childhood on a farm and his determination to build cars from scratch. That’s why he probably wanted to buy Volvo from Henry Ford’s company.
The deal to buy Volvo was first announced in December 2009, as Volvo has been in the market since 2008. Ford Motor Co. hoped sales of Volvo would pay down debt and allow Ford to focus on core brands in the future. this difficult time for the car. industries
Given that Volvo has been struggling to increase sales and hasn’t posted a profit since 2005, this deal could mean a very profitable move for Volvo. China is currently the world’s largest car market, with a 50% increase compared to the previous year. The company also intends to benefit from the European market with which Volvo is associated.
Volvo will remain a separate company still based in Sweden. Existing manufacturing facilities in Sweden and Belgium will be retained. However, car manufacturing will take place in China, catering to Chinese consumers. The chairman of Zhejiang Geely Holding Group wants China to become Volvo’s second local market.
Li Shufu trained as a mechanical engineer, but after graduating from high school he opened a photography studio in his hometown. He moved into the refrigerator parts business in 1984, then motorcycles, turning a state-run enterprise into the best-known national brand in China. He moved into automobiles and his company became the largest private automaker in the country.
He became one of the richest men in China by focusing on mass marketing cars priced around $6,000. By contrast, Volvo will sell cars for up to $205,000. In 2009, Mr. Li was ranked 44th among the richest men in mainland China according to the American magazine Forbes’ 400 Richest Chinese. Another target is to make TX4 taxis after securing a majority stake with Manganese Bronze, a London-based maker of black cabs.
Although Li once dreamed of conquering the United States with the cheapest car, he changed his mind and decided to own a luxury brand as China’s largest private automaker. And he finally got it, but he still has to deal with other problems of a company with an expensive cost base and a safe but somewhat boring car. Will Li succeed where Ford failed?