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Chen, Y. Y., Chan, A. K. K., Young, M. N. "Geely Automotive: To Survive in Local and Global Market" |
This case illustrates Geely Automotive, China's largest privately owned automaker, with a focus on its localization and globalization strategies. Geely's success was rooted in its focus on effective corporate sustainability strategies to maintain competitiveness in domestic market. Specifically, Geely emphasized greatly on Research and Development (R&D), corporate social responsibility (CSR), and local market development. For instance, Geely had been putting more than 10% of its annual sales revenue into R&D. In 2009, over RMB1.2 billion (US$179.4 million) was invested in R&D to back up its independent development path. Additionally, Geely had opened several educational establishments and started charitable foundations to assist in educating the needy. In terms of domestic market expansion, Geely had been on the fast track for expansion. By 2010, there were more than 8 million Geely cars on the road and the company's trademark was well recognized throughout China. Geely also showed its ambition in global market expansion. In 2009, Geely made a big step toward international expansion by acquiring Volvo Car Corporation. This US$1.8 billion acquisition was at that time, the largest cross-border acquisition by Chinese private-owned enterprise. However, to realize its globalization, Geely encountered great challenges, such as 1) quality and safety, 2) post-acquisition integration of Volvo acquisition, 3) the shrinking US automotive market, 4) lack of innovation and pirating of designs, 5) meeting environmental protection agency (EPA) standards, 6) distribution problems, and 7) RMB revaluation. Therefore, despite its success in domestic market, Geely still had a long way to go to realize its dream on the global stage. |
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