Geely has chosen to move forward with a second Chinese plant for Volvo, this time in a northern city with many advantages to the automaker.
New Volvo owner Zhejiang Geely Holding Group isn't even building the Swedish automaker's cars in China yet, but the company now says it wants to open a second assembly plant in a region that helped finance its purchase of the European brand.
Daqing, a city in far northeastern China, is closer to the Russian border than to China, but the oil-rich city provided Geely with a "significant" portion of the $2.7 billion it used to purchase Volvo from Ford last year.
Although Geely Chairman Li Shufu expressed last year that he was interested in opening a plant in Daqing, the automaker later announced that it had chosen Chengdu as its first assembly site. Chengdu is near the location of a Ford plant that currently builds a small number of Volvo products for the Chinese market. No plant is located near Shanghai, where Volvo's Chinese research and development facility is located.
But now Geely has received approval from the Chinese government to build a second plant in China, which the automaker says will help it grow the Chinese-Swedish brand even further. In part, the decision was made to thank Daqing's government for helping to underwrite Geely's purchase of Volvo, but the company's chairman says that there are other reasons that might ring more true to Volvo's Swedish roots.
"Daqing and Gothenburg [Volvo's Swedish headquarters] are located more or less at the same latitude, so they share the same weather and temperatures, and air quality is also very good in Daqing," he told the Wall Street Journal. "Swedish people would very much like this place."
Geely isn't planning to downsize Volvo's operations in Sweden, which will continue to supply most global markets - including Europe and the Americas - with Volvo products, but the Chinese company says that localized production is essential to Chinese growth.
1.'Geely gets second...' view