How Volvo found the road to success – economy

The name of the man who is successfully striving across the world from China may sound a little embarrassing to Western ears. That’s why Li Shufu got himself a new one some time ago: his name is now Eric Li. It suits him very well, because the 58-year-old billionaire has just taken a remarkable step in the Western world – once again.

His kingdom includes Volvo, the popular brand from Sweden, and he will list it on the Stockholm Stock Exchange later this year. What a career.

When China was reconnected to the global economy after the Cultural Revolution ended, Li first dabbled in photography. He then founded a company that made components for refrigerators. He called her Geely. In Chinese: “auspicious”. By which Li has always skilfully contributed to professional happiness. When the state started regulating the refrigerator industry in 1989, Li bought an old motorcycle factory and wanted to build cars. A daring plan, because in the 1990s, only state-owned companies were allowed to manufacture cars in China. Li used a trick. At the time, a car in China was defined as: at least four wheels and three cylinders. So the company Geely built cars with two-cylinder engines. In 2001, Li finally obtained a license to build real cars. What he, well, overstimulated: At first there was a Rolls-Royce clone with a built-in throne.

Four years later, Geely exhibited at the Frankfurt Motor Show. The industry laughed. In 2007 he was at the Detroit show and people were smiling again. Accompanied by an interpreter, he walked to the Ford booth: “My name is Li Shufu and I am from Geely, a car manufacturer in China, he introduces himself, I would be interested in buying a car. Volvo. At that time, the Swedish company was still part of Ford and no one in the United States knew this man from China. The Americans politely informed him that Volvo was not for sale. Three years later, they changed their minds due to the miserable situation in Sweden at the time. Geely paid Ford $ 1.8 billion.

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As successful as he is stubborn: Volvo boss Hakan Samuelsson in a 2019 photo.

(Photo: Nicolas Maeterlinck / imago images / Belga)

After that, his company took over LEVC, the London taxi maker, and invested in Volvo trucks. In 2018, Li personally bought himself for 7.5 billion euros from Daimler: he is now the largest shareholder and after a long struggle, Swabian-Chinese internal combustion engines are being built or the small Smart in electric version in a joint venture. After all, there is first and foremost: Volvo. Li made the headstrong Swede Hakan Samuelsson the head of Volvo and well or maybe because of this Volvo became the heart of Li’s conglomerate. A subsidiary brand with electric sports cars is developed from here. It’s called Polestar and is expected to be released to the public in New York – along with Samuelsson’s assured warning: without the connection to Volvo, to Sweden, it wouldn’t be a success.

Li established the Volvo brand in China soon after the purchase, where it flourished very quickly: people believed it was Chinese-made, developed in Sweden, and built in China. In any case, the sales figures have recovered since Li from China and Samuelsson from Sweden determined the fate: this year Volvo is expected to sell around 750,000 cars, by 2025 it is expected to be 1.2 million. This is less than direct German competition from BMW, Audi or Mercedes, all of which currently have around two million vehicles. But there is the Geely conglomerate that is helping with the scale-up. And the fresh money: In Sweden and China, you assume the brand is expected to be worth around 17 billion euros in total. Ten times more than Li paid Ford once.

However, Geely should keep the majority in Volvo in the future, explains Li. And that also explains Samulesson, who says his first goal is to raise around two and a half billion euros on the stock market: for software, for research with cells and possibly its own production of batteries – Volvo plans to build electric cars only from 2030. Presumably some of this will be found in other areas of Li Shufu’s automotive wealth , although Samuelsson has just reiterated that Volvo will continue to stay away from all other partners and will not seek to change.

However, anyone who has listened closely to owner Li in recent years also knows his point: he believes the industry is facing consolidation, that like smartphone vendors, there will soon be only a few companies. profitable with their products – and, according to Li, they must offer an “ecosystem” to users, like Tesla and Apple do somewhat in the West. Mobility and communication in one piece, so to speak, complemented by another announcement from the Chinese entrepreneur: the Geely group has just started the construction of satellites and is also preparing the production of smartphones.

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