The Merger of Geely Automobile and Volvo Car Corporation as an Example of the Expansion of Chinese Capital in the Automotive Sector

Abstract

One of the crucial forms of the expansion of Chinese companies into new markets over the last decade has been the increasing pace and scale of conducted mergers and acquisitions, as well as inter-regional agreements, such as joint ventures. The value of agreements such as mergers and acquisitions, established by Chinese companies worldwide in the year of 2015 reached a record level of $477.2 billion, far exceeding the results of the previous year, what demonstrates the growing openness of the Chinese investors to cooperation with foreign partners. The fields in which Chinese companies have invested the most in recent years are: energy, real estate, finances, automotive, metals, agriculture and technology. The article presents the effects of the merger concluded in 2010 by a Chinese passenger car manufacturer Geely Automobile with the Swedish company Volvo. The presented example of the expansion of Chinese capital in the automotive sector has been one of the most important investments ever made by the Chinese company on the foreign market. The basis of the analysis made by the author were the results obtained from annual financial reports, published by the mentioned companies. They allowed the assessment of changes in the position of the examined Chinese corporation by using such financial and marketing measures as: market share, market value of the company, value of companys revenues, the popularity of the brand and its image. Comparative analysis of the development of these indicators before and after the merger shows that the actions of Geely Automobile, effectively led to the strengthening of the company’s potential, as well as to the increase of its competitiveness on both the domestic and international markets, while its strategic aspirations allow to expect further dynamic growth and development of the company on the international arena.