Twelve years ago, Li Shufu's company, Zhejiang Geely, built its first car; now he has snapped up Volvo from Ford, vowing to "uncage the sleeping tiger". Now some, including The Economist, are even billing him as the Chinese Henry Ford.
The pair certainly have a good deal in common, says the FT: from a childhood on a farm to a determination to build a car-making behemoth from nothing. But Li seems a more likeable character. "He is a man of great humanity very charming, strong on relationships," says John Russell, head of Manganese Bronze, the London cab-maker in which Li also has a controlling stake. And it is hard to imagine even the famously polymathic Ford writing verse one of Li's favourite pastimes. The vast reception room of his firm's headquarters features a carpet woven with a poem he wrote himself. His personal website bears 21 more, including one entitled, Who could choose a clearer way than Geely?
Who indeed? Li, 47, first decided he wanted to buy Volvo way back in 2002, shortly after gaining a licence to produce cars. And he has pursued the firm like "a swain courting a princess" ever since, says Chinadaily.com. When Li made his first formal approach to Ford just before the credit crisis, he was sent packing. But he was philosophical. "Volvo is like a mysterious, beautiful woman," he told The Wall Street Journal. "We just look at her from far away, amazed. We don't dare get close."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, two years on, the stricken Detroit car-maker has had to swallow its pride at some cost. Ford paid $6.65bn to acquire Volvo in 1999; it has now handed the keys to Li for $1.8bn. So, despite his decidedly low-grade blue suit and slightly scuffed slip-ons, it would be a mistake to underestimate Li, notes the FT. Business partners describe him as "wily", "crafty" and "brilliant" and admit they "expect to be outwitted in any negotiation".
Geely is by no means the biggest car-maker in China (see below). Yet, within the country, Li is seen as an "iconoclast", says The South China Morning Post. Born in 1963 in Zhejiang province home of many Chinese entrepreneurs he used a Rmb100 school graduation present to buy an old camera and a bike and started photographing tourists at beauty spots. By the late 1980s he had moved on to making refrigerator parts. Scuppered by the government ruling that only designated factories could operate in that industry, Li switched to motorcycles in 1994. He transformed a bankrupt state-owned manufacturer in Hangzhou into China's fourth-largest private company. From there it was a short step to fulfilling his dream making "cars the poor can afford".
Now worth $1.8bn, Li has dabbled in property speculation and even football, notes the LA Times. But the Chinese "car maniac" has since concluded that glamour projects are not his forte. He prefers "industrial investment" and still sleeps above the shop in the car-maker's Hangzhou headquarters. Easy come, easy go seems to be the motto of this blithest of Chinese bosses, concludes the FT. If things don't work out at Geely, Li tells visitors, "he can always go back to the land".
Has Li stretched his luck with Volvo?
Geely might mean "good luck" in Chinese, but the motor analysts think Li may be stretching his luck a little too far with Volvo, says the LA Times. On paper, his outfit looks none too impressive. Geely is only the 12th-largest manufacturer in China, trailing behind local rivals BYD and Chery; and its biggest export markets are Venezuela, Iran and Algeria. But the biggest problem for Volvo fans is Geely's safety record. Li is a talented plagiarist: recent offerings include a blatant knock-off of a Rolls-Royce Phantom. In short, he's always gone for quantity not quality, notes Newsweek.
But that's precisely why Li is so keen to grab Volvo: he views the arch-doyen of motor safety as his ticket to Western markets. The "real prize" of the deal is Volvo's safety technology, says John Foley on Breakingviews. But if Li sticks to his promise of keeping alive Volvo's expensive European headquarters and production plants, it could prove a costly purchase. Indeed so, says The Economist. Swallowing a car-maker with revenues five times larger than Geely's "will be a big challenge". Most cross-border takeovers of car-makers fail. "It will be remarkable if Geely bucks that trend."
Still, Li has some influential backers on his side, says The Birmingham Post. It was Rothschild who recommended him to Ford; and Goldman Sachs has recently invested heavily. But it is Li's "determination" that convinces old hands in the industry that he could lead "a new age of car-making", says the FT. "He says 'why not' when the rest of the world asks 'why'."
-
General election: do business leaders back Labour?Historically, critics have cast Labour as being bad for business. But shadow chancellor Rachel Reeves says that’s no longer true.
-
Top India funds to invest inAre you thinking about investing in India funds? Tracker funds have earned excellent returns, but trusts that backed small-cap growth stocks did even better
