Yesterday
Geely announced that it is bidding for Ford’s Volvo unit. There are several
question marks surrounding the deal.

Will the
production stay in Sweden? Geely has said so. Will Geely bring more Volvos to
the Chinese market? Probably. Will the competing bidder, Jakob, present a better
bid? Who knows.

Many seem
to worry about technology transfer to China. “Geely is just interested in
getting Volvo’s technology” say some commentators, as if they had just
discovered a new reason for corporate mergers.

Others say
subcontractors may refuse to deliver to Volvo for fear of losing their technology
to the Chinese. This would be brave given the sorry state of the auto parts industry.

All of
these question marks will be straightened out as the deal gets closer. In the
meantime, speculating is fun.

Few seem to
have any insight into what kind of company and brand Geely really is. I asked
some Chinese friends for their opinion on Geely and the deal.

The
prevailing opinion is that Geely is a low-end brand, the opposite of Volvo. It’s
the kind of car first-time car buyers on a budget would get. Others felt some pride
in the fact that it is one of China’s successful car companies.

“The Geely
buyer is practical and does not want something fancy. They don’t care about
face”, said one friend. A statement
that could have been about Volvo, with their block-shaped models, a few decades
ago.

Some had apparently
not seen the news at all, and were frankly surprised that Geely would be buying
Volvo. Perhaps that says something about the relative importance of this deal
in China. While Volvo may be one of our crown jewels, it’s just another company
here.

Patrik Lockne, consultant at Springtime’s
Beijing office