Li Shufu, dubbed 'The Chinese Henry Ford' is the man responsible for the takeover of the renamed Volvo brand, by Zhejiang Geely Holding Group. Li Shufu is the chairman of the company that has just completed a $ 1.8 billion purchase of Volvo Cars from Ford Motor Co.
This transaction representations China's largest offshore auto deal and illustrates the growing influence of the country on the international market. Li Shufu seems to be intent on building a global brand with high prestige and profit margins.
Mr. Li Shufu is the son of a farmer from the Zhejiang province, in China. He started to make cars in 1997, despite that he had no experience or track record. Some of the habits of his personality are similar to Henry Ford's, beginning with their childhood spent on a farm and a determination to build cars from nothing. This is why he probably wanted to buy Volvo from Henry Ford's company.
The agreement to buy Volvo was first announced in December 2009, as Volvo has been on the market since 2008. Ford Motor Co. was hoping that Volvo sales could pay off the debts and allow focusing on Ford's core brands in this difficult time for the auto industry.
As Volvo has been struggling to increase sales and has not registered profits since 2005, this deal could mean a very profitable move for Volvo. China is the current the world's largest car market, with a rise of 50% compared to the previous year. The company also intends to benefit from the European market Volvo is associated with.
Volvo will remain a separate company with headquarters still in Sweden. The existing manufacturing facilities in Sweden and Belgium will be preserved. Car manufacturing will however, take place in China, catering for the Chinese consumers. The Chairman of Zhejiang Geely Holding Group wants China to become the second home market for Volvo.
Li Shufu was trained as a mechanical engineer, but after graduating high school he opened a photo studio in his native village. He moved into refrigerator parts business in 1984, then into motorcycles turning a state managed company into the best-known domestic brand in China. He moved into cars and his company became the largest privately owned car maker in the country.
He came to be one of the richest men in China by focusing on mass-marketing cars with prices around $ 6,000. By contrast, Volvo will sell cars for as much as $ 205,000. In 2009, Mr. Li was ranked number 44 richest man in mainland China by 'The 400 Richest Chinese' American Forbes. One other pursuit is to manufacture TX4 cabs after including a controlling stake with Manganese Bronze, a London based black cab taxi manufacturer.
Although Li had once dreamed of taking America by storm with the cheapest car, he changed his mind and decided to have a luxury brand as China's largest privately owned automaker. And he finally succeeded, but still he has to face other problems of a company with an expensive cost base and a safe but rather boring car. Will Li succeed where Ford failed?