The man who dared to buy Proton a savvy dealmaker

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BEIJING • Mr Li Shufu is the man who dared to buy Malaysia's loss-making national carmaker Proton.

And with his track record of turning around ailing automakers, it is hoped that Mr Li, the Chinese founder of Geely Group, can work his magic on Proton and revive its fortunes.

Mr Li is the rare entrepreneur who has found success in car manufacturing, a sector usually dominated by state-owned enterprises and multinationals. He founded Geely in 1986 to build refrigerators and became a carmaker in 1997 when he wanted to produce a cheap car for the masses. Geely, China's biggest privately owned carmaker, sold 1.3 million cars in 2016.

Meanwhile, Mr Li is reportedly worth a staggering US$7 billion (S$9.7 billion).

No wonder he is sometimes referred to as the "Henry Ford of China". He cemented his reputation as a savvy dealmaker after he revived Sweden's Volvo Cars in the face of widespread industry scepticism, following its acquisition from Ford Motor Company in 2010.

 
 

Mr Li also owns the iconic London Taxi Company.

Last Wednesday, Mr Li's Zhejiang Geely announced it would buy 49.9 per cent of Proton and a 51 per cent stake in Lotus Cars, which Proton owns. The two parties are still in talks about the transaction price for the stake in Proton.

Analysts said his Proton buy gives him access to 600 million consumers in South-east Asia and the brand cachet of Lotus Cars.

Lotus Cars could complete Mr Li's ambition to create a portfolio of international brands at different price points. For Geely, Lotus would be a prestigious addition, "like Volkswagen has Porsche and Toyota has its Lexus," said Mr Tian Yongqiu, an independent auto consultant who tracks Chinese carmaker acquisitions.

Under Proton, the British marque lacked the scale or investment needed to make it into a global sports brand, something that could change as part of a broader Volvo-Geely group.

Still, there's a major difference between buying Volvo Cars and Proton, said Hong Kong-based consultancy Dunne Automotive president Michael Dunne.

"With Volvo he inherited a talented corps of automotive executives and strong leaders. At Proton, Geely-Volvo will need to bring fresh energy and capabilities."

Mr Li will also need to wring cost savings and integrate Proton into his Geely-Volvo set-up.

"No matter the odds, (it's) best to never ever bet against Li Shufu," said Mr Dunne. "He has that golden touch, bundles of charm and incomparable tenacity."

Said state-backed China Association of Automobile Manufacturers vice-chairman Dong Yang two weeks ago after touring Geely's facilities in Ningbo, China: "Geely has evolved from an ugly duckling to a white swan."

BLOOMBERG, THE STAR/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Sunday Times on May 28, 2017, with the headline 'The man who dared to buy Proton a savvy dealmaker'. Print Edition | Subscribe