In a move that has shocked our industry to its very core, Geely Automotive chairman Li Shufu has purchased 9,69 percent of Daimler – meaning Shufu is the single largest shareholder in the giant German company. Wow, we sure didn’t see that coming…
Many South Africans haven’t even heard of Shufu – but he’s rapidly becoming The Big Boy in the global automotive industry. Forbes estimates his real time net worth at US$18,1 billion (R216 billion) – and he’s been on quite some shopping spree of late. The son of a farmer, he bought Volvo Cars in August 2010 for US$ 1,8 billion (R22 billion).
In the last 12 months, Reuters reports that he has bought a US$ 3,3 billion (R40 billion) stake in truck maker AB Volvo, a majority stake in sports car maker Lotus, a 49,9 percent stake in Malaysian automaker Proton and flying car start-up Terrafugia.
He already owns the London Electric Vehicle Company (LEVC), which is producing electric versions of London’s iconic black cabs. The Daimler deal – which set him back US$ 9 billion (R108 billion) – is his biggest purchase ever.
Shufu, who made homemade cars as a boy (because his family couldn’t afford to buy him toys), kicked off his career when his father gave him 100 yuan (R200) as a present. He used the money to buy a really cheap camera – and he photographed tourists. From there, he moved into camera accessories and then founded Zhejiang Geely Holding Group – Geely means “lucky” in Chinese – in 1986.
Initially, the company was a producer of refrigerators. In the early 1990s, Geely started manufacturing motorbikes and then, in 1997, it began producing cars (which, for a couple of years, were sold in South Africa).
The Daimler deal is indicative of the Chinese government’s intentions to dominate the global wheels game. I recall a meeting in China some years back. I was chatting to the then president of Dongfeng, who told me that the name of the company means “the wind that blows from the east”. He explained: “Mao Tse Tung gave our company its name – because he believed that the east wind would prevail over the west wind.”
Practically speaking, this meant that he was aiming for global automotive domination – and the Chinese are doing a great job of making his dream a reality. Some 24-million vehicles were sold in the country last year – versus 17 million in the United States and 15 million in the European Union.
Come 2020, and 35-million sales are expected in China, while other markets could remain stagnant. Very interestingly, the Chinese are also doing an exceptional job within the field of electric vehicles. And I’m not just referring to LEVC. Over 300 000 electric vehicles were sold in that country last year – more than the electric sales in the rest of the entire world.
It’s apparent, however, that the Chinese are clearly not happy to focus only on their domestic market, as the Daimler deal proves. We will watch this situation with great interest…