Faces of Reform and Opening Up: Li Shufu leads China's largest private auto company to go global

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Now it's time for our special series - Faces of Reform and Opening Up. In the 40 years since the landmark policy was launched, China's auto market has made some of the biggest strides of any industry. Li Shufu, Chairman of the country's largest private auto company Geely, played a major role. Let's meet him and find out how he built the company from the ground up.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "Competition is basically to fight on stage. Everyone can come to fight. Those who fight well will win, those who play poorly will lose.

The auto market is no place for tears. As Chairman of China's largest private carmaker, Li Shufu says a man must keep fighting in order to survive this ultra-competitive world.

Li lived the rural life of a cowboy when he was young. After graduating from high school, he borrowed hundreds of yuan from his father to buy a camera and opened a photo studio which lasted almost 2 years.

He later put the earnings from that business into an operation salvaging gold from discarded appliances before moving into the refrigerator parts business in 1984. After ten years of ups and downs, in 1994, he made the bold decision to create a brand of privately-owned cars.

In the early going, things didn't go as Li planned. Obstacle Number One: Getting a production permit from the government, over those who doubted his dream of making cars.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "A government official expressed deep concern. He said a car was a product that can reflect a nation's overall capabilities. And it was too risky and fragile for a private enterprise to survive the competition."

In the mid-1990s, he took over an ailing state-run motorcycle firm. In two years, he successfully turned it into one of the biggest motorcycle production bases in China.

Li raked in huge profits as a result. He thought it was the right sign to take a second shot at his original dream of creating his own brand of cars.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "When Geely first entered the auto sector, the first thing I did was recruit and cultivate the right talent. This has always been our long term strategy. At that time I built a school and a research center to train professionals, which is not easy."

In 1998, Li Shufu's company Geely, which means "lucky and auspicious" in Chinese produced its first car.

But without an official permit, mass production was not allowed. However, in 2001, China had legally become a member of the World Trade Organization.

The move brought Li the good news he had waited years for: he was now permitted to create his own auto brand.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "Our first mass production vehicle was called the free cruiser. We introduced South Korea's production lines, moulds, and brought on foreign professionals to start producing cars."

Over 90 percent of the companies in Li's hometown of Taizhou city are private ones. So, competition there in eastern China's Zhejiang province was quite severe.

Geely and other automakers relied on their low-priced cars, which set off a price war in the domestic auto market.

Back in the early 2000s, China was amid a transformation age. The nation was shifting its focus from low-end manufacturing to added value products. After years of a rat race, Li decided to transform the strategy.

He reached an agreement with other domestic car-makers in 2007, called the Ningbo Declaration.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "In that agreement, we clearly stated that no more price wars, all of us will put more emphasis on competition of technology, brand, after-sales service as well as the company's social responsibility."

From then on, Geely put more investment into research and development, as well as quality and branding. Even the global financial crisis of the late 2000s didn't dampen Geely's development.

On the contrary, Li began to think bigger, aiming to expand onto the international stage. In March of 2010 in Volvo's hometown of Gothenburg, Sweden, Geely signed a definitive stock purchase agreement with Ford Motors to acquire 100 percent of the Volvo Car Corporation. Geely related Volvo's assets for nearly 1.8 billion U.S. dollars.

Millions were shocked by the acquisition, which caused concerns about whether China's domestic brand could handle a world-renowned name like Volvo.

LARS DANIELSON, FORMER SENIOR VP VOLVO CAR ASIA PACIFIC"We had some questions at that time about how this should develop. This is the question that I received many many many times, what could really Li Shufu offered to Volvo, what could Li Shufu offer to Volvo that the former owner Ford Moto company could not."

Facing these concerns and Geely's uncertain future, Li said he was very optimistic and determined.

He felt Volvo was like a tiger; one that he would let return to the wilderness and live its own familiar way.

With the adjusted strategy, Volvo's sales broke records year after year. In early 2010, its sales volume in China was only 30 thousand, but by early November 2018, the number had exceeded 100 thousand.

LARS DANIELSON, FORMER SENIOR VP VOLVO CAR ASIA PACIFIC "Back to 2010, that time of financial crisis, we had 20 thousand global employees, but today we are 40 thousand global employees. So everyone has been on the winning side."

In Li Shufu's eyes, Geely and Volvo are like brothers, not father and son. The two companies learned from each other and moved forward together.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "Geely helped Volvo lower costs in some aspects because Geely has certain experience in this. Volvo has helped Geely improve its R&D capabilities and accelerate technological progress, and we have jointly set up a research institute to jointly develop infrastructure and share the achievement together."

What was once a trend of Chinese companies getting bought out by foreign counterparts has reversed in the past decade.

China's economy has flourished. As a result, more Chinese companies have gone global through mergers and acquisitions, eight of which have involved Geely since 2006.

Some of the latest are Malaysian automaker Proton, British Sports Brand Lotus, and London Taxi company and American flying car company Terrafugia.

MICHAEL HAWES, CHIEF EXECUTIVE, THE SOCIETY OF MOTOR MANUFACTURERS & TRADERS, UK "Geely is a very good example, you look at what they've done with Volvo, very strong brand. London taxis invested in new state of the art production facility, invested in R&D, invested in new products, which are selling very well in London, yet it still keeps that traditional British values, British styling, that is that is synonymous with the London taxi, we hope that a similar investment will be seen in lotus, because that is a sports car brand with a very long and industrial history."

Li says he hopes to combine these companies' technological advantages together to develop some fundamental and primary car models. He says all will benefit from it.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "By sharing these primary techniques and models, these companies will develop different cars for different markets. We hope to improve our competitiveness through this kind of coordination."

Four decades of reform and opening up have featured the dawn of a new era for China's auto market. China says it will continue to open up its market for foreign companies.

In April, 2018, Chinese President Xi Jinping announced that China will remove the auto industry's foreign capital cap, which will allow more foreign automakers to invest in the Chinese car market.

And Li Shufu says his company welcomes the competition.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "First of all, Chinese consumers will benefit from the nation further opening up. They will have more options and lower prices on cars. Secondly, because of growing foreign investment and increasing competition, domestic car makers will have greater reach, which is good for the whole automobile industry."

Li Shufu once said building a car was not difficult, just a matter of putting two sofas on four wheels.

But nowadays, cars are becoming much smarter, cleaner and more complicated, so Li has also refreshed his insight on the future of mobility.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "The competition of future automobiles focuses mainly on human-computer interaction, autonomous driving. The car will be a smart mobile space, an intelligent mobile terminal, it will never be just a combination of traditional plastic, steel and rubber."

From a cowboy to an auto sector business tycoon, Li Shufu says he seized every potential opportunity to make it big over the past 40 years. He said most Chinese people are used to driving foreign brand cars, but he hopes more global consumers will enjoy cars made by Chinese companies.

LI SHUFU, CHAIRMAN ZHEJIANG GEELY HOLDING GROUP "We will produce the best quality cars for each customer. That means each consumer will feel the advanced technology, branding and service once they drive our cars."

While today's globalization constantly faces new challenges, Li reiterates that more reform and opening up will be key for cross-cultural and cross-sector collaboration in the global auto sector.