China Seeking Mergers Abroad to Race Ahead of Competition at Home

Ford Motor's Volvo

The deal to purchase Ford Motor's Volvo division is just about to reach its closure, and once Li Shufu, head of China's Zhejiang Geely Holding Group, has closed the $2 Billion deal, the popular and safety conscious brand from Sweden might replace the Audi A6 as the Chinese state officials' preferred car.

"Li Shufu has made a huge bet and the stakes are extremely high. But he has a chance to win since he can count on the China market, rather than somewhere else, to turn Volvo around", said John Zeng, an analyst with IHS Global Insight.

During the past year, China has managed to take over the US to become the biggest and top-ranked automobiles market of the world and a key source of business and profits for both global and local parties.

For the past year, the Chinese Government predicted that car sales for the complete year would be up by 39% to 13 million vehicles, and the estimate was beaten by a large margin when in November alone, the car sales had shot up by 96%.