Warren Shoulberg Blog: How Do You Say Car in Chinese? Volvo.
Posted on April 2, 2010 by
At the risk of sounding like the head of the Department of Redundancy Department, I think it's important that all of us in the home furnishings business take a moment to fully comprehend something that happened this week that is one of the most important developments in global economics ever.
It was the sale of Volvo by Ford to a Chinese automobile company, Geely Holding Group. Geely will continue to market the products under the Volvo name, building them both in Sweden where Volvo began and in an anticipated new facility in China. Presumably, at least some of the cars intended for the Chinese domestic market will be new models, not at all resembling the Volvos we've known for the past half-century.
The sale of a company from owners in one country to those in another is not exactly news. And an American automotive company getting rid of some of its operations isn't earth-shattering either, at least these days.
But what is fascinating -- and has to be understood -- is the transfer of one of the most iconic brands of the Western world to a Chinese-owned company. We saw it six years ago when Lenovo bought IBM's personal computer business and more recently we've seen it in the furniture business as former contract manufacturers bought American brands and began selling under those names in the U.S.
This is how global business changes and this is a very significant transitional time. All of those debates about trade barriers and tariffs and duties will become moot when Chinese companies own enough American brands to the point where you really can't tell who owns what and where they own it. How many people really know whether their Japanese-branded car was made in Japan or the U.S. -- or Malaysia for that matter?
I have no idea whether Geely can operate Volvo ... or whether they will drive it--literally--into the ground. I sure wouldn't underestimate any Chinese company these days.
It's a brave new world ... but one that is getting smaller and smaller with every deal.