At 14:00 pm Gothenburg time on March 28, 2010, Zhejiang Geely Holding Group and Ford Motor officially signed an agreement for Geely to acquire 100% of Volvo Car Company's equity and related assets (including intellectual property rights). The transaction is expected to be completed in the second quarter of this year, subject to approval from relevant regulatory authorities. This is the most significant acquisition in the history of China's automobile industry. Geely Automobile, an automobile company that has only been developed in China for more than ten years, acquired Volvo Cars, a world-renowned high-end automobile brand with a history of more than 80 years. Of course, this is also a high-risk acquisition investment with an uncertain future. The industry has been discussing and worrying about it. History will eventually tell whether it is good or bad. Now we might as well analyze the turmoil in the global automobile industry in the past decade and think about the future prospects of Geely's acquisition of Volvo. Dilemma: Currently, the relatively mature car brands in the Bureau come from relatively strong countries. Each of these brands has a mature corporate culture and management mechanism adapted to the country. After the acquisition, how the car companies can effectively understand and communicate is a difficulty. Acquired companies often have problems such as declining brand status and failing to keep up with the latest technology trends, which are hard to come back from. Chinese car companies, firstly, do not have advanced management experience, and secondly, they do not have advanced technical strength. Communication barriers are difficult to break through, and technology cannot help. It is difficult for these companies to turn around their losses. In addition, in the face of the self-protection consciousness of foreign car companies, acquiring overseas car companies cannot absorb and learn from overseas car companies' R&D capabilities and brand building capabilities. Instead, it will increase the company's management and operation costs, easily lead to low corporate efficiency, and drag down the parent company. development. Dilemma 1: Foreign acquisitions have few successes and many losers. Mergers and alliances among automobile companies are nothing new, but there are few successful cases and many failed cases. Successful cases such as Volkswagen's merger with Audi and Peugeot's merger with Citro?n are all cases of domestic acquisitions, while the failure cases are BMW's acquisition of Rover; Ford's acquisition of Land Rover, Jaguar, Aston Martin, and Volvo; Mercedes-Benz's merger with Chrysler; and GM's acquisition of Saab are all foreign acquisitions. Only exotic mergers such as the Renault-Nissan alliance, Volkswagen's acquisition of Skoda, and Seat are considered a few successful cases. Geely's acquisition of Volvo is precisely a foreign acquisition and is destined to be extremely risky. Dilemma 2: Cases of mergers of high-end and low-end brands. Few successful people have detailed cases of mergers and unions of global high-end brands and low-end brands. BMW acquired Rover; Ford acquired Land Rover, Jaguar, Aston Martin, and Volvo; Mercedes Mercedes-Benz merged with Chrysler; GM's acquisition of Saab both ended in failure. The two successful cases of Peugeot-Citroen and Renault-Nissan alliances are the combination of civilian brands and civilian brands. Only Volkswagen's acquisition of Audi is the only successful case of low-end acquisition of high-end brands. Of course, BMW's acquisition of Rolls-Royce and Fiat's acquisition of Ferrari can also be considered successful, but because both Rolls-Royce and Ferrari are ultra-luxury and supercar brands, their annual output is less than 10,000 vehicles. It has no actual reference value. In fact, from the perspective of global automobile development, successful cases of harmony between high-end brands and low-end brands are almost without exception tied to domestic countries, such as Audi and Volkswagen, Lexus and Toyota, Acura and Honda, Infiniti and Nissan, Even Ferrari and Fiat. However, Volkswagen's Lamborghini, Bentley, and Bugatti brands actually have a closer relationship with the Audi brand and cannot be successful cases of acquisitions of high-end and low-end brands. Therefore, the prospect of Geely acquiring Volvo as a low-end and high-end brand cannot be called clear. Dilemma 3: SAIC acquires Ssangyong. Failed marriage: Chinese culture and management level are difficult to control overseas enterprises. SAIC once acquired the Korean high-end car brand Ssangyong Motors with great ambitions, and eventually controlled 51.3% of the shares. This used to be positive news for Chinese automobile companies to go out and become bigger and stronger. However, the original intention of SAIC's acquisition was to reach a technical cooperation intention with Ssangyong. Unfortunately, cross-border cultures were difficult to be compatible with, and technical cooperation was ultimately difficult to achieve. Due to strong cultural differences and resistance from Korean labor unions, China, as the major shareholder, has never had a say. In the end, Ssangyong's operations failed to improve. As a result, Ssangyong went bankrupt and SAIC lost more than 4 billion yuan. Geely's acquisition of Volvo is facing the same dilemma as SAIC's acquisition of Ssangyong. First of all, Volvo comes from Sweden, which is a strong country. Volvo and Ssangyong also have a mature corporate culture and management mechanism adapted to their own countries. After the merger, how will Chinese car companies deal with Volvo? Effective understanding and communication will be a difficult problem for Geely and Volvo.

In addition, Volvo's own management and operation direction have been unreasonable for many years during the deep crisis. China lacks experience in controlling large enterprises, not to mention the sharing of resources. Even turning losses into profits will be a big problem. Turnaround: Change in change The reason why no other company dares to take over Volvo itself shows that the risk of acquiring Volvo is huge. Although Geely's acquisition of Volvo does face many difficulties that need to be resolved urgently, the global industry has experienced 12 years of turmoil in the merger of automobile companies. Luxury brands have changed from domineering to approachable. In addition, China has become the world's largest automobile market. This has brought Geely an advantage. Come to life. Change 1: The acquired high-end brands no longer have the confidence and capital to make no compromises with the new owner. Volvo has been in the ranks of losses since the 1990s, but since 1998, global companies have begun to believe in economies of scale under cost pressure. After the merger, it became Large groups with a production capacity of 3 million vehicles became the trend at that time. Under this model, high-end brands began to form alliances with civilian car brands, thus forming a global 6+3 pattern. The Ford Group took over the high-end brands Land Rover and Volvo at this time. It should be said that when luxury brands encountered crises in the 1980s, they caught up with a good period of global mergers and acquisitions. At this time, luxury brands still had strong brand status and strong technical capital. Both the acquirer and the acquiree attribute the losses and failures of high-end brands to short-term capital problems. However, judging from nearly 20 years of operating experience, it is clear that the difficulties and losses of these second-rate luxury brands are not just a matter of shortage of funds, but a problem of shortage of funds. It is a question of its own development strategy and business direction. The world-famous 6+3 automobile group collapsed in the following ten years; General Motors went bankrupt and was reborn, and Hummer and Saab were on the verge of closing their brands; Ford sold off the four major high-end automobile brands it acquired, and Land Rover and Jaguar were sold at low prices. To India's Tata Group, Aston Martin was also sold to an unknown company at a low price, and Volvo became a hot potato; DaimlerChrysler officially separated a few years ago, and now Daimler is more interested. Close the Maybach brand. In 1999, when Volvo suffered losses, it still became a hot commodity and was sold to Ford for US$6.45 billion. Now, years of operating difficulties have put Volvo into an embarrassing situation that no one dares to sell for US$1.8 billion. In the end, it was acquired by Geely Automobile, a young Chinese automobile company, at great risk. Saab, a high-end brand in Sweden with Volvo, was forced to close the brand because no one took over. It should be said that after entering the 21st century, with a new round of mergers and acquisitions of automobile companies, luxury brands have become a stage where they are begging for buyers. Since then, luxury brands have gone from being arrogant and arrogant to being pitied by the world. It should be said that from a mental point of view, these brands (including the Volvo brand, of course) no longer have enough confidence to resist the changes of the new owner. Judging from the case of Geely's acquisition of Volvo, from the early strength of Volvo's union to its final compromise, it can be seen that the operational difficulties caused by cross-border mergers such as strong unions, corporate culture and institutional problems are gradually being alleviated. This has brought vitality to Geely's revitalization of Volvo. Change 2: China has become the world's largest automobile market, and Volvo will rely on the Chinese market for revival. In 2009, China became the world's largest automobile market with sales of more than 13 million vehicles. The Chinese market has also become the hope for the revival of global automobile companies. The rapid development of the Audi brand is inseparable from its good development in the Chinese market. Before the Audi A6 was officially produced in China in 1999, Audi's global high-end automotive brand market image was in a relatively weak position like Volvo. It is simply not directly comparable to Mercedes-Benz and BMW. Through its own efforts and its great success in the Chinese market, the Audi brand is now as famous as the German double-B Mercedes-Benz and BMW brands. Volvo currently appears to be relatively weak in the global high-end automotive brand market just like Audi's brand image before 1999. If it leverages its success in the Chinese market, Volvo is likely to replicate Audi's successful experience. In particular, Volvo Cars has a dignified and low-key brand image that meets the needs of China's official market. In addition, as a company wholly owned by a Chinese company, Volvo has a superior political advantage, so it is bound to successfully seize the official car market that Audi has long dominated. , and due to the price advantage of large-volume domestically produced cars and the "official car effect", which has opened up the business and family car markets, Volvo is entirely likely to sit on the throne of China's number one luxury car brand. Through the sales of nearly 200,000 cars in the Chinese market, Volvo Cars' global costs will also be shared, so that the problem of cost reduction will be easily solved.

Change 3: The new owner has the advantage of being light-weighted. Although there have been many failed mergers among automobile companies in the past two decades, such as General Motors and Ford, etc., due to mixed brand positioning and large enterprises, have led to low management efficiency and inflexible decision-making. In addition, century-old cars If an enterprise itself has many retired workers and heavy burdens, it will eventually fail in the market competition. The acquisition of Volvo by Geely is different. After the acquisition, the Geely Group only has two major brands, Volvo and Geely, one high and one low, so there is no confusion in brand positioning. The communication and decision-making process between enterprises is relatively simple. In addition, Geely Automobile itself is relatively young and has no baggage left over from history, so it can easily carry out operations and make flexible decisions. The reason why international mergers ultimately fail is often due to inertia in technological development. A typical failure is that GM and Ford own many technical and luxury brands, but in the end due to poor management, not only the original ordinary brands did not absorb much new technology, but also luxury brands such as SAAB, Jaguar, Aston Martin and other high-end brands. It also gradually lost its technical advantages, causing the brand's prestige to decline. Since Geely and Volvo have one strong and one weak technology, there is no problem of mutual absorption and technology development shirk, and they can avoid the inertia of technology development. This time, Geely not only acquired all the shares of Volvo, but also purchased Volvo’s core technologies, patents and other intellectual property rights and manufacturing facilities, and also gained Volvo’s global distribution channels. According to the agreement, if the transaction is completed, Geely will obtain a large number of highly valuable intellectual property rights, such as trademarks, patents, non-patented technologies and registered designs from Volvo's own intellectual property rights; they will be transferred or licensed to Ford for free. Volvo has thousands of patents and related rights on engines, platforms, molds, safety technology, and hybrid technology, as well as more than 260 websites and more than 1,200 design rights. As long as Geely relies on Volvo as the leader in technology development, continuously improves its technology research and development capabilities, and then realizes the sharing of technology, it can form a pulling effect between Audi and Volkswagen. Editor's comment: Looking at the acquisition cases of automobile companies, Geely still faces many inherent difficulties in acquiring Volvo. However, in the era of turmoil in the global automobile industry, General Motors, the world's largest automobile company, will go bankrupt but can also be reborn. Toyota, which is known for its quality, will also have product quality problems. Strengths and weaknesses may transform in an instant. Geely's acquisition of Volvo also brings a lot of vitality to the changes in the global automobile industry structure. However, the future is still unpredictable, and success or failure may not be important. This kind of enterprise's bold spirit of going global should be applauded. .