Volvo to establish joint venture with Geely, aims to produce vehicles in China
Volvo Car Corp. will set up a joint venture in China with its Chinese parent Zhejiang Geely Holding Group Co. to win government approval to build vehicles in China, said Li Shufu, chairman of both companies.
Although Volvo is Chinese-owned, it is regarded as a foreign company, Li told reporters last week at a press briefing on Hainan Island in southern China.
Under China's investment rules, a foreign automaker must establish a joint venture with a Chinese automaker. The foreign automaker's stake in the venture is limited to 50 percent.
The joint venture will be equally owned by Volvo and Geely, Li said.
Volvo also will follow China's requirement that foreign automakers help their Chinese partners create brands and develop electric cars, he said.
Details about the joint venture will be released in about two months, Li said.
Volvo plans to build two assembly plants, in Chengdu of southwest China's Sichuan province and in Daqing of northeast China's Heilongjiang province. It also plans to build an r&d center in Shanghai.
Geely acquired Swedish automaker Volvo in 2010 from Ford Motor Co.
Ford's China joint venture, Changan Ford Mazda Automobile Co., still builds the Volvo S40 and the stretched Volvo S80 under a contract it signed with Volvo.
Last year, Volvo sold 40,873 locally produced and imported vehicles in China, up 35 percent from a year earlier, according to LMC Automotive.
