Volvo is Swedish? Volvo is Chinese? The Chinese government cant make up its mind, the same for Taiwanese Yulong motors who recently set up a joint venture with Dongfeng, surely if Taiwan is forever an inseparable part of China then Taiwanese auto companies do not need to set up a JV in the mainland Chinese market, the government thinks otherwise.
Caixin is reporting on Volvo’s China conundrum, initially it was thought that Volvo would be able to open factories as an independent operator and avoid the Chinese system of having to have a JV partner in the car making business, the Chinese government are saying a JV is a must.
But behind the diamond-studded presentation was confusion over the legal status of Sweden-based Volvo Car Corp., it’s business operations in China, and the company’s owner China Zhejiang Geely Holding Group Co. Ltd.
Geely bought Volvo from Ford Motor Co. in August 2010 and soon unveiled a five-year plan that called for new factories in Chengdu and Daqing, as well as a Shanghai headquarters. The company said it would ramp up domestic sales to 200,000 vehicles annually by 2015, grabbing about 20 percent of China’s luxury car market.
So far, though, the plans have stalled over legal complications. The company’s request to build factories, for example, has yet to be answered by government market planners.
The company is also caught between very different legal systems: While Volvo is officially a foreign company operating in Sweden under Swedish law, it’s treated as a foreign company in China under Chinese law.
Geely officials are trying to iron out the confusion â€“ and keep the business plan on track.
For example, under a proposed modification to the five-year plan announced recently by Shen Hui, chairman of Volvo’s China operations, Geely and Volvo would form a new joint venture for all operations in China. The venture would be foreign-financed but domestically controlled.