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Beijing car maker may seek to buy Volvo

BEIJING Automotive Industry Holdings yesterday didn't deny media reports that it is keen to buy Ford Motor Co's Volvo Cars unit.

But its spokesman didn't give further details.

The Wall Street Journal and Bloomberg News yesterday reported a team of executives from the Chinese auto firm is likely to visit Volvo's headquarters in Sweden to meet with its executives and tour its research and development and manufacturing facilities.

Rumors also have been circulating that Geely Holding Group Co, one of China's biggest private auto makers, was also keen to bid for Volvo. Industry sources have confirmed with Shanghai Daily that Geely has already made a similar tour but has yet to decide whether to make a formal offer. Geely's officials were not available for comment yesterday.

But industry experts expressed caution over the expansion plans.

"China does not need big companies for now, but should focus on competitive enterprises," said John Zeng, a senior analyst at Global Insight. "Merger and acquisition decisions should be based on the corporation's market strategy, otherwise the acquired assets could be a burden to the firm."

He obviously had in mind plans by Sichuan Tengzhong Heavy Industrial Machinery Co, to acquire General Motor Corp's Hummer brand that has aroused wide attention and stirred criticism over blind expansion.

"The key question to ask is if an overseas investment can fit into the original business rather than if the price is affordable," said Zhang Xin, an analyst at Guotai Jun'an Securities Co.

The National Development and Reform Commission, China's top economic planner, has also pointed out to Chinese companies that it takes more than just money to make an overseas acquisition successful.

"There are great challenges to confront to keep a business afloat and enhancing it after the purchase," Chen Bin, head of the commission's industrial coordination department.

Beijing Auto, a Chinese partner of Hyundai Motor, was also reported to be keen to buy GM's Opel unit.


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