At present, Volvo's sales volumes are primarily based on the European and North American markets, and Shufu sees this as the brand's biggest problem. He's aiming to stabilize Volvo in its current markets, but wants to expand its presence in China. Although the automaker builds a limited number of long-wheelbase S80 sedans in the country, Shufu envisions building another Volvo factory in China that is capable of producing 300,000 vehicles annually -- roughly equal to the combined output of Volvo's factories in Sweden and Belgium.

"A tiger belongs to the forest. It belongs to the wild and not confided in a zoo. We need to liberate this tiger," Shufu remarked during the ceremony. "I see China as one of the markets where Volvo could show us it has the opportunity to liberate itself and show the potential that it has. That is the rationale for the deal."

While Shufu aims to intensify the brand's focus on China, he noted that any production facility opened in China would only support Volvo's existing plants -- not replace them. Building the new facilities is a way for Volvo to gain a foothold in the world's largest car market and bolster sales. Using China as a springboard, Shufu plans to launch Volvo into other emerging markets in an effort to turn the loss-making Swedish company around in two years.

Geely executives are brimming with confidence. "Chairman Li did not just scratch his head and come up with the idea to buy Volvo," an anonymous senior Geely executive told Automotive News. "He predicted the downturn of Detroit automakers years ago and has since been on the alert for opportunities. We wouldn't make a move if we did not see a big chance of success."

On the other side of the world, Ford is also happy with the agreement. Geely agreed to pay $1.8 billion for Volvo, less than a third of the $6.4 billion Ford paid for the Swedish brand in 1999. But despite the significant decrease in value, Ford still believes it's a good deal.

"We think it is a fair price for good business," said Lewis Booth, Ford's chief financial officer.

Ford and Geely aim to complete the transaction by the end of the third quarter.

Source: Automotive News (Subscription required), Reuters