Geely-owned Volvo Car, shut out of lucrative government fleet business in China under local law which deems it a foreign company, is being given a Chinese face – 23-year-old New York Knicks basketball sensation Jeremy Lin – who will promote the brand in both China and the United States, the world’s two biggest car markets.
Lin has signed a two-year contract to appear in advertisements and act as brand ambassador for Volvo in an endorsement deal the company said was “another milestone of Volvo’s revival”, Reuters reported. China Daily said the 23-year-old was the US-born son of Taiwanese immigrants.
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Volvo, expected to announce a car making venture with majority shareholder Zhejiang Geely next month, wants to more than quadruple its sales in China over the next three years and analysts told Reuters Lin’s branding appeal would help accelerate sales among younger Chinese drivers.
“For our region, Jeremy Lin is the pride of the whole Chinese population,” Freeman Shen, chairman of Volvo Car China operations said in a statement.
China is Volvo’s third-largest market after the United States and Sweden, and the company wants to sell up to 200,000 cars there by 2015, up from 47,140 last year. It is targeting global sales of 800,000 cars by 2020.
Despite a strong start – Volvo’s China sales jumped 54.4% last year – it faces an uphill climb, the news agency report said.
“Having Lin on board is Volvo’s latest attempt to appeal to a younger generation, especially in China and Asia. Lin is the next Asian basketball superstar after Yao Ming,” said John Zeng, Asia Pacific chief at industry consultancy LMC Automotive.
Yao became one of China’s most popular public figures on the back of his exploits as a trailblazer in the National Basketball Association, topping the Forbes China celebrity list for six years for both his influence and earnings, which included lucrative deals with Pepsi, Visa, Apple, McDonalds and Reebok.
Lin hit international headlines last month when, in the absence of two star players, he led the Knicks to a string of victories that spawned a glossary of terms such as Linsanity, Lincredible and Linvincible.
The fame of the clean-cut Harvard graduate, born to Taiwanese parents and raised in California, spread swiftly to China, the NBA’s biggest market outside North America.
Though majority Chinese-owned, Volvo Car, under Chinese law, is classified as a foreign company and excluded from a Beijing plan to have government agencies buy locally branded fleets, leaving that US$15bn market to domestic rivals such as FAW and SAIC Motors, Reuters noted.
The brand – sold by Ford in August 2010 in a $1.8bn deal – can’t even build its own plant in China due to rules requiring foreign makers to have local partners.
Hence Volvo was told to find a local partner to build cars under a shared roof and plans that 50-50 joint venture with its Chinese parent Geely.
“To regard Volvo as a pure foreign brand is a bit of head twister,” William Russo, an industry veteran who runs auto consultancy Synergistics in Beijing, told Reuters.
“Technically, you could see that logic. But there’s industrial logic and then there’s practical reality, and the practical reality is Volvo is owned by a Chinese company.”
Under Chinese law, Volvo, which also has the city governments of Shanghai and Daqing among its shareholders, gets the same treatment as foreign-registered companies. Where the firm is incorporated, rather than where its majority shareholders are based is the guiding factor.
It’s a problem that MG, the British sports car brand now owned by SAIC, doesn’t have, as MG is completely integrated into its Chinese owner, which, analysts say, dims the brand’s lustre among status-conscious customers.
“Volvo is indeed a foreign company as it is registered and incorporated in Sweden according to the law, so it doesn’t matter who the owner is,” said Zhengyu Tang, partner and chief representative of Sidley Austin LLP in Shanghai.
“It would be a Chinese company only if Geely absorbed Volvo’s assets and shut down the overseas registered company.”
It’s a legal nicety that doesn’t sit well with Li Shufu, Volvo’s outspoken chairman and the mastermind of the Geely-Volvo takeover.
“It’s unfair that Volvo didn’t make it to the government car catalogue,” he told Reuters in Beijing, making little effort to hide his disappointment.
