"SWEDISH" CARS SOON CHINESE?

UNCLAS STOCKHOLM 000572

SIPDIS

E.O. 12958:N/A
TAGS: ECON EFIN PGOV SW
SUBJECT: "SWEDISH" CARS SOON CHINESE?


1. (U) Summary. Chinese car manufacturer Geely Automobile
announced on September 8 that it is still interested in purchasing
Volvo, now all of it. The news hit Sweden as Koenigsegg's Saab deal
receives Chinese funding, creating fear among Swedish employees and
workers unions that Swedish car manufacturer jobs will be lost. End
Summary.


2. (U) During a press conference in Hong Kong on September 8, the
Geely Automobile CEO Gui Shengyue announced that the corporation
would prefer a full ownership of Ford's subsidiary Volvo Cars,
something that has been met with great unease and concern by Swedish
workers unions and employees. Geely Automobile (China's largest
privately owned auto maker) has been a previous contender for an
acquisition of Volvo and now appears to be resurfacing.


3. (U) The growing concern not only includes employees but also
Saab suppliers, as they are not keen on delivering technology to
Chinese manufacturers given Chinese legislation on IPR and trademark
issues. Even Ford itself has been rumored to be hesitant to release
its technology to a Chinese company.

4. (U) Geely's announcement comes as Chinese manufacturer Beijing
Automotive Industry Corporation (BAIC) invests in Saab Automobile.
Although the Chinese company provides the salvation that Koenigsegg
so desperately needs to finance its Saab acquisition, not all Swedes
are impressed with Chinese investors. "If you ask what the
employees at Volvo think I believe that the majority believes
Swedish investors to be a better choice," Richard Nodesjo employee
at Volvo told conservative morning daily Svenska Dagbladet.

5. (U) Not all are worried, however; Sweden's leading business
daily Dagens Industri reports that Hans-Olov Olsson, former CEO of
Volvo Cars who is rumored to be involved in the deal, is expected to
receive a position on the board of directors if the deal comes
through. Moreover, auto industry experts at Svenska Dagbladet
believe that a Chinese owner of both Volvo and Saab would be less
likely to move production away from Sweden than a European
counterpart. Anette Hellgren, the local leader for the Unionen
labor union chapter at Saab Automobile, is not worried. "What's
important is that BAIC is a minority owner in Koenigsegg Group.
It's still Koenigsegg Group that is buying Saab. There won't be any
direct Chinese ownership, which feels safe. There is a lot of
apprehension when it comes to Chinese companies, but I have faith in
this case," she told Swedish media.
BARZUN