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Geely's Li to go global with Volvo deal

Updated: 2010-03-27 16:28
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Geely's Li to go global with Volvo deal
A file photo of Li Shufu. []


HONG KONG - Geely founder Li Shufu, China's Henry Ford, looks set to rewrite the automotive history books this weekend with the purchase of Ford's Volvo car unit, which would be China's largest offshore auto deal.

Li, very much a plain-folks character, shares many traits with Ford, from a childhood on the farm to a scrappy determination to build a car-making behemoth from nothing.

Li's Geely, which means auspicious or lucky in Chinese, captured the imagination of car buffs worldwide with its dark-horse bid for the well-known but loss-making Swedish brand being sold by Ford, which is expected to be sealed on Sunday.

Born in 1963, Li comes from eastern China's Zhejiang province just south of Shanghai, known for producing some of China's best and brightest entrepreneurs.

A mechanical engineer by training, Li lives in a modest apartment in Beijing, said Lawrence Ang, executive director of Zhejiang Geely Holdings' publicly traded arm, Geely Automobile.

Now one of China's richest men, Li began modestly. After graduating from high school, he used a small graduation gift to buy a camera and open a photo studio in his village.

He put earnings from that business into an operation salvaging gold from discarded appliances before moving into the refrigerator parts business in 1984.

Motorcycles were next, as he took over an ailing state-run firm in the mid-1990s and turned it into China's best-known domestic brand. He later moved into cars, and built his company into China's largest privately held automaker, aiming to sell 400,000 vehicles this year.

Like Henry Ford, to whom the Economist magazine compared him, Li's focus is on the mass market, with models such as the Free Cruiser and Geely Kingkong, which sell for as little as 40,000 yuan ($5,859). In contrast, Volvo's top of the line XC 90 sells for up to $205,000 in China.

Surging stock

Hong Kong-listed Geely Automobile has seen its stock soar more than 12-fold since 2006, including a more than six-fold jump in 2009 alone on high hopes for the Volvo bid, strong sales in the world's largest car market and a major investment by Goldman Sachs.

Li, increasingly setting his sights on expanding onto the global stage, is also nearing a deal to increase Geely's hold on lossmaking London black cab taxi maker Manganese Bronze by taking a controlling stake and moving more of the production of the TX4 cab to China.

Related readings:
Geely's Li to go global with Volvo deal Geely says to sign Volvo deal with Ford soon
Geely's Li to go global with Volvo deal Geely tightens grip on London cab maker
Geely's Li to go global with Volvo deal Geely set for control of London taxi maker
Geely's Li to go global with Volvo deal Geely faces hurdles in quest for Volvo

His bid for Volvo was publicly endorsed by Beijing, in contrast to General Motors' efforts to sell its gas-guzzling Hummer brand to Tengzhong, a little known Chinese machinery maker, which foundered after failing to get state backing.

"Li is indeed a man with vision. He is someone that shouldn't be underestimated," said a senior executive with a major Chinese state auto group who asked not to be identified as he is not authorised to talk to the media.

"I think he has a big chance to make it because he has the Chinese government and, most of all, the huge China market behind him."