Geely Holding Group
Overview: China's biggest private Automobile Manufacturer
Geely Holding Group is a Chinese automotive manufacturing company headquartered in Hangzhou, China. It was founded in 1986 by Li Shufu. Geely is a manufacturer of automobiles, motorcycles, engines and transmissions. It sells passenger cars under five different brand names. One of these brands is Geely Automobile Holdings, which is listed on the Hong Kong Stock Exchange since 2005.
Geely is China's 10th biggest car manufacturer
In the first years, the company produced refrigerators and entered the motorcycle industry in 1992. Five years later, Geely began with the production of automobiles and became the first private automobile manufacturing enterprise in China.
The company was able to increase its sales volume constantly over the last years. Next to the sales volume, the number of produced cars increased, too. In 2004, Geely produced 200,000 cars and eight years later, in 2012, 483,000 cars were produced. This is an increase of 141 percent. The biggest market for Geely is still China with more than 300,000 sold cars in 2012. Geely is China's 10th biggest car manufacturer with a market share of nearly four percent. The company's aim is a production volume of two million cars until 2015. The main competitors of Geely are other Chinese car manufacturers like Brilliance or Cherry.
Internationalization Strategy: "Going out" since 2005
The first step towards internationalization was made in 2005, when Geely presented its first cars on the German Frankfurt Auto Show and one year later on the Detroit Auto Show.
Geely first tried to establish on the UK market, by acquiring the British car manufacturer Manganese Bronze Holdings (MBH) in 2006. MBH is well-known for the production of taxicabs and Geely holds a 51.68 percent stake of it.
In 2009, Geely acquired the company Drivetrain Systems International for a total of USD 32.8 mn. This acquisition had the main goal to access technology for automatic gearboxes and to help Geely with the production of larger and more sophisticated cars. Drivetrain Systems is the world's second-largest producer of automatic gearboxes. It was supplier for Ford and Chrysler and began bankruptcy proceedings one month before the takeover.
The acquisition of Volvo was the biggest in the history of Geely with a buying price of USD 1.8 bn
To establish themselves on the European market, Geely acquired the Swedish car manufacturer Volvo in 2010 for a total cost of USD 1.8 bn. At that time, Volvo was part of the American company General Motors. With the acquisition of Volvo, Geely also wanted to strengthen its image as producer of eco-friendly and safe cars. Therefore, the two companies signed a Technology Transfer Agreement, which included the building of a research R&D center in Gothenburg. This center will employ 200 people and shall help Geely, to improve its product quality in the next years.
R&D and Intellectual Property: Eco-friendly and save Cars
In the development of new cars Geely focuses on eco-friendliness and safety. The model Emgrand EC7 was the first Chinese car that got a four star rating from Euro-NCAP and the engine 4G18CVVT is one of the most efficient engines worldwide with a power output of 57.2kw per liter.
Furthermore, Geely invests a lot of money in the education of young people. In the last years, it supported for example the Beijing Geely University, Hanna University Sanya College and Zhejiang Automotive Technician School. Geely employs more than 2,300 engineers and technicians, working in its R&D department.
The following graphics represent Geely's patent and utility model applications. While the first two graphs depict the distribution over years and across countries, the last two graphs show the distribution across technology areas.
The main difference between a patent and an utility model is the durability and the strength of protection. Patents are protected for twenty years, while utility models are only protected for ten years. Thus, an utility model can be described as a weaker form of patent.
The first chart shows the development of intellectual property rights from 2000 to 2010. From 2000 to 2004, Geely had no patent or utility model applications. From 2005 on, Geely started to apply for its first patents and in the following years there was a constant increase in the number of applications. In 2010, Geely filed for more than 1,400 intellectual property applications. The chart also indicates that the utility models outweigh patent applications.
The following chart depicts the geographical distribution of patent and utility model applications. As in the chart before, the applications increased rapidly in the last years. It is also visible that the geographical distribution of Geely's intellectual property rights is centered around China. This indicates that China is still the most important market for Geely. There were only a small number of applications in other countries or areas.
The next two charts illustrate that the R&D division of Geely focuses on the transportation sector, where the company filed most of its patent and utility model applications. The other sectors like mechanical elements, analysis, measurement and control technology are almost evenly distributed with around 200 applications. There is also a high number of applications in the sector "others". This reflects the fact that Geely operates in multiple sectors.