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November 06, 2006

Rags to Riches Story of the Henry Ford of China

posted by MR WAVETHEORY at 11/06/2006 11:05:00 PM
The Chinese have learned fast that selling s about selling babes.

Geely is producing 180,000 cars this year up from 5,000 cars in its first year of production in 2000. In just six years, the company has grown 30 times! Geely Automobile Holdings Ltd. (0175.HK) is what Ford Motor Company (NYSE F) was 100 years ago. Its founder Li Shufu started the company 6 years ago by dissecting US cars. Today, the company he built is worth $3.5 billion HK dollars or roughly $400 million.The Geely CD is a nifty looking sports coupe. The "CD" name stands for "Chinese Dragon" in English.

The first cars to roll off the line at Geely Group's sprawling plant here six years ago were crudely built hatchbacks, powered by Toyota Motor Corp.-designed engines. Annual production was less than 5,000.

Today, Geely makes 180,000 cars a year, with models including sedans and a sports car. It has engineered its own six-cylinder engines and is selling cars not just in China, but in Latin America, the Middle East and Russia as well. Geely even signed a joint-venture deal recently to build London's iconic black taxicabs for sale in England.

[L S]

"How to make cars is no longer a big secret," says Li Shufu, Geely's chairman. "The technologies are widely used and shared."

Li Shufu is the Henry Ford of China.

Geely's Mr. Li, a 43-year-old engineer, wants to be China's Henry Ford, making affordable autos for the Chinese masses and exporting them around the world. The son of poor farmers, he has created an empire of auto plants in four cities, and expects to make two million cars annually by 2015.

Mr. Li also has built a university -- with a library modeled on the U.S. Capitol -- and a chain of technical schools that teach young Chinese how to make cars.

Geely buys fuel-injection systems from Robert Bosch GmbH of Germany. Interior parts come from a Chinese company that also supplies Volkswagen AG and General Motors Corp. Its steel plate comes from the same mill that sells to Ford, GM and Volkswagen. Dies and other manufacturing equipment come from a Taiwanese company.

It's an amazing rags to riches story.

Mr. Li was born on a farm in rural China in 1963 and grew up amid the upheaval of the Cultural Revolution. He alternated years in school with work in the fields, depending on the state of his family's precarious finances. When he finished middle school at age 17 in 1980, he used his graduation gift of 100 yuan, worth about $12 today, to buy a camera.

Launching a Career

The camera launched his career as an entrepreneur. He used it to take pictures of villagers for a fee. In time, he opened a studio and raised enough money to go into a totally new line of business: stripping precious metals out of discarded appliances and machinery. That led to an enterprise making refrigerator parts.

Then, in June 1989, the Chinese military cracked down on pro-democracy protestors in Tiananmen Square. "We felt very insecure," Mr. Li says now. It wasn't clear whether the government's market-friendly policies were going to be rolled back, he says. "For the sake of safety, I gave up everything."

He turned over his factory and his savings to the local government. Mr. Li finally went back into business a few years later. He started a company making building supplies. In the early 1990s, he decided his real ambition was to build cars. "Chinese people were starting to have money. Families would be able to afford cars," he says.

But the Chinese government -- which at the time barred private companies from the auto business -- wouldn't give him a license. So Mr. Li made motorcycles. But he also built a pilot automobile plant, and he and his engineers began experimenting with car production.

Mr. Li and his cohorts bought a series of cars then available in China and started dissecting them to learn how they were built. Then they started trying to assemble their own. They finished the first prototypes for their own cars in 1998, based -- loosely, Geely says -- on competitors' models. Geely finally got government approval to sell cars in 2001.

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