Volvo deal connects China, Sweden

Premier Wen Jiabao on Tuesday urged Swedish automaker Volvo Cars, now owned by China's Zhejiang Geely Holding Group, to rely on modern management, advanced technologies and the friendship between China and Sweden during his visit to the corporation's headquarters in Gothenburg.

Geely bought Volvo Cars from Ford in 2010 in what Wen called a marriage that marks cooperation "of not just capital, but also technology, managerial expertise and markets" as well as a bond connecting the Chinese and Swedish people.

The auto giant's business is "in very good shape" two years after the merger, Wen said. Volvo sold 100,881 vehicles in China in the first quarter, an increase of 24.2 percent year on year.

The acquisition has benefited the company's staff, created jobs and contributed to taxation, he said, echoing a remark by Volvo CEO Stefan Jacoby at the start of his 90-minute special tour.

Calling Volvo "part of the Swedish soul," Sweden's Minister for Enterprise Annie Loof said the automaker now has two home countries, responsible ownership from the world's largest car market, and a skillful workforce.

On Monday night, Wen said Geely's cooperation with the Swedish nameplate is a fine example of the two countries' efforts to "successively cope with the financial crisis and realize mutual benefits and a win-win situation."

With advanced technology and managerial experience from the Swedish side and enormous market potential in China, cooperation can be totally better, he told Lars Backstrom, governor of Sweden's Vastra Gotaland county.

Wen, who is on a four-nation tour to Europe that has already taken him to Iceland and Germany, flew to Stockholm and met King Carl XVI Gustaf on Tuesday after wrapping up his visit to the Volvo plant.

He was also scheduled to talk to Fredrik Reinfeldt, his Swedish counterpart, later on Tuesday and attend the signing ceremony of a series of deals on environmental protection and energy conservation.

The premier will address a key conference on sustainable development in Stockholm on Wednesday before leaving for Poland.

Wen has placed a focus on the real economy, innovation and cooperation, which he said would drive the global economic recovery, in the eight-day European trip.

So far, Volvo Cars and Volkswagen, the Wolfsburg headquarters of which Wen and his German counterpart Angela Merkel visited on Monday, appeared to be doing just that.

Volkswagen, with its Chinese partner SAIC Motor, agreed to open a plant in China's northwestern Xinjiang Uygur Autonomous Region. It also vowed to extend its joint venture with China First Automobile Works for another 25 years.

The group's executives say the proposed plant in Xinjiang followed recommendations of the Chinese government to develop its remote, relatively impoverished northwest.

Volvo CEO Jacoby on Tuesday told Wen that his company is doing the same by opening assembly plants in the country's northwestern regions. Volvo is also helping revive industrial bases in Northeast China another decade-long effort by Beijing according to Jacoby.

In addition, the company is "ready to play an important role in traffic safety cooperation that is about to be initiated by the Chinese and Swedish governments", he said.

Wen's visit to the Volvo plant showed that China wants to enhance its manufacturing industry through deals with famous world brands, said Ding Yifan, deputy head of the institute of world development under the Development Research Center of the State Council.

"Intensive visits to automobile companies revealed Wen pays close attention to this industry, and confirmed his advice to promote the real economy to cope with the European debt crisis in an earlier speech," he said.

China enjoys a vast market and abundant labor, while Europe has advanced technology and management experience, he said. "China and Europe can realize a win-win situation if they fully cooperate and improve the competitiveness of both sides."