Review article
THE PROSPECTS OF INTERNATIONAL ACQUISITIONS IN CAR INDUSTRY DURING THE GLOBAL ECONOMIC CRISIS - THE CASE OF GEELY VOLVO
Branko Rakita
Dusan Markovic
Abstract
Significant technological, social and economic changes on the global level marked the beginning of the
21st century. Growing importance of Chinese economy stands out as one of the most important among
these changes. Accelerated economic development of China was first based on FDI inflow and the
export of low-cost less technology intensive products. However, a gradual alternation to Chinese
economic policy and the growth of outward FDI followed by a global breakthrough of some Chinese
companies operating in technology intensive industries (Huawei, Lenovo, Mindrey, Haier etc.) has been
marked in the past few years. Further economic development of China will to a large depend on the
positioning of Chinese car manufacturers. In this paper the stress will be put on high technology
intensity in car industry, on its global character, high concentration within the industry and on market
saturation in developed countries due to global economic crises. Basic characteristics of automotive
industry and its development will be considered regarding prolonged economic crisis. Current local
character of Chinese car manufacturers and its going global prospects will be observed. In order to
become global players Chinese car manufacturers could implement the acquisition strategy of some key
competitor from developed countries. Chinese car companies aimed at relatively small targets in the
previous period because they were inexperienced in acquisitions and restructuring management and
tended to decrease risks. The last and the most important is the acquisition of Swedish Volvo by Chinese
Geely. These are the companies significantly differing in the level of technology, corporate and national
culture, brand perception and geographic orientation of business operations. Potential risks that follow
these differences as well as potential synergetic effects, supposing that the acquisition process is
properly managed, will be considered in the paper.
Keywords
Acquisitions; Auto industry; China; Synergy
Hrčak ID:
128540
URI
Publication date:
1.3.2014.
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