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Chinese car maker Geely buys Swedish Volvo for 1.8 billion dollars

China’s Zhejiang Geely Holding Group will pay the U.S. auto giant $1.8 billion for the Swedish car brand, which will give the company cachet in the domestic market and a foothold in Europe.

China surpassed the United States last year as the top auto market, but its domestic car manufacturers faced an uphill battle acquiring brand awareness and technology overseas.

The privately owned Geely was ranked 11th in total sales last year in China and will benefit from Volvo’s research center and reputation for high safety standards.

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Troubled Volvo Cars on Sunday confirmed that Chinese carmaker Zhejiang Geely Holding sealed a deal to buy the Swedish car maker from US auto giant Ford for 1.8 billion dollars. China’s Zhejiang Geely Holding Group will pay the U.S. auto giant $1.8 billion for the Swedish car brand, which will give the company cachet in the domestic market and a foothold in Europe.
The privately owned Geely was ranked 11th in total sales last year in China and will benefit from Volvo’s research center and reputation for high safety standards.

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Chinese car maker buys Volvo for $1.8bn

Although private investment has joined the rebound in Thai economy, the outlook remains weak relative to other demand

Key risks to the outlook are political uncertainty and the timing of the withdrawal of fiscal and monetary stimulus. Increased political tensions may have a long-lasting impact on investment, and withdrawal of stimulus (in Thailand and the advanced economies) must be precisely timed to avoid macroeconomic imbalances (including new asset bubbles) while also ensuring that the recovery is on a sufficiently solid footing.

China surpassed the United States last year as the top auto market, but its domestic car manufacturers faced an uphill battle acquiring brand awareness and technology overseas.

The domestic content of automotive output in Thailand varies between 50 and 90 percent and averaged about 62%. For Isuzu (the largest pickup producer), domestic value-added is probably closer to 90 percent. Electronic and computer components are largely imported (from Japan), as are most transmissions (from the Philippines and India). Electronic components are of high value added and are used globally by the producers. Moreover, their development requires substantial R&D expenditures. Car manufacturers, as a result, prefer to concentrate the production of these electronic components in their home country – notably Japan – limiting technological spillovers. Only Toyota has a local transmission plant, with the remainder imported from India and the Philippines.

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Thailand’s (Baa1 stable) total dependency ratio is set to jump nine percentage points to 51% by 2030 – a faster increase than China’s – which will pressure public and private savings through higher taxes and social spending, reducing innovation and productivity gains.

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China

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Compounding the fallout of the US–China trade war, the global pandemic and recession have caused considerable speculation on the future of foreign investment and global value chains (GVCs). But though there is likely to be some permanent change, it will probably not be as great as politicians expect.

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