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Volvo prepares to send
'Made in China' cars to
US

Joe McDonald, Associated Press, Chengdu, China | Business | Thu, April 23 2015, 9:27 PM

Made in China: Hakan Samuelsson, president and CEO of Volvo car group, talks near an XC90 Volvo car unveiled at the Shanghai auto show on Monday. Volvo is determined to show they are as good as vehicles it produces in Europe. (AP/Ng Han Guan)

On the verge of exporting the first "Made in China" cars to the United States, Volvo is determined to show they are as good as vehicles it produces in Europe.

In contrast to its European factories that check a few completed cars from each batch, every vehicle that rolls off Volvo's 3-year-old assembly line in this city in China's southwest goes through a five-hour battery of tests on a driving track. Once a month, or three times as often as in Europe, Volvo tears apart a finished car in Chengdu to examine the quality of welds and other work.

The effort to persuade Americans to buy a premium car from China is a new step up in Volvo Car Corp.'s campaign to establish itself as a global luxury brand following its 2010 acquisition by Chinese automaker Geely.

"I have heard no customer ask me where his car is built. It is built by Volvo and is Volvo quality, and of course Chengdu will be exactly the same," said CEO Hakan Samuelsson. "I am quite confident that we will demonstrate that."

The sedan due to be exported from Chengdu is the S60 Inscription, based on Volvo's S60L, a version of the S60 sedan designed for China with an extra eight centimeters of rear seat legroom for buyers who have a driver and ride in back. Volvo follows automakers including Cadillac and Mercedes Benz that sell extended sedans for the distinctively Chinese market of "rear seat customers."

In June, the first US-bound S60 Inscriptions are to be shipped down the Yangtze River to Shanghai, then across the Pacific to the United States. Volvo expects to send about 5,000 per year to the United States, according to Samuelsson. He said Volvo has no plans to "massively export" but, since that model will be produced only in China, will send a few to add to its US lineup.

The decision follows a string of product quality scandals in the US over faulty or tainted Chinese goods ranging from tires to toothpaste.

Still, Americans are comfortable enough buying Chinese-made products that the location of Volvo's factory is unlikely to matter so long as the company maintains its quality standards, said industry analyst Yale Zhang of Auto Foresight, a Shanghai research firm.

"Many things are selling in America that are made in China," said Zhang. "Now it's just another one, a foreign brand that is a car."

Exports of Chinese-produced cars to the United States, even under a European brand, are a milestone for the ruling Communist Party, which wants to see its auto industry expand into global markets.

A handful of China's young but ambitious auto brands have announced plans to export to the United States or Western Europe only to find they could not meet emissions and safety standards.

For its part, Volvo has been exporting to the United States since the 1960s from its European factories in Gothenburg, Sweden, and Ghent, Belgium.

The company wants its Chinese auto factories in Chengdu and in Daqing in the northeast and its engine plant in Zhangjiakou near Beijing to be seen as an equal part of that network with the same technology, components suppliers and quality standards. The company says the Chengdu factory's air emissions will be cleaner than the average auto plant in Europe.

Volvo is planning a US assembly plant and says the location will be announced in the next few weeks.

"We have to explore the global market," the founder and chairman of Geely, Li Shufu, told reporters during the Shanghai auto show this month.

Other foreign brands including GM export some Chinese-made vehicles to other developing markets but most say they need all their production capacity to supply China, the biggest auto market by the number of vehicles sold.

Spacious inside: A test driver prepares to drive a Volvo S60 Inscription outside a Volvo factory in Chengdu in southwestern China's Sichuan province on Tuesday. On the verge of exporting the first “Made in China” cars to the United States, Volvo is determined to show they are as good as vehicles it produces in Europe. (AP/Ng Han Guan)

Instead of being absorbed into Geely, which also sells cars under its own name, executives say the 2010 acquisition liberated Volvo, which had been a unit of Ford Motor Co. and shared vehicle platforms and components with Ford brands. Following the acquisition, Volvo launched an US$11 billion campaign to create its own technology and models and to expand its factory and sales networks.

"Everyone tells me that we are now more independent than we have ever been," said Samuelsson.

2014 was Volvo's best year to date, with sales up 9 percent to 465,866 vehicles. Profits were 2.2 billion kronor ($252 million) on revenue of 130 billion kronor. China was its biggest market, accounting for 17 percent of sales, followed by Sweden at 13 percent and the United States at 12 percent. This year, the company says it aims to exceed sales of 500,000 vehicles for the first time.

Volvo is working with Geely on developing shared vehicle platforms. Li, the Geely chairman, said the Chinese brand wants to draw on its Swedish sibling's know-how in safety and in cleaning the air inside the vehicle — an important feature in China's smog-choked cities. Geely has just launched its first vehicle made with Volvo technology, the Borui sedan.

With that partnership, "Geely's products can develop much faster than other competitors," said Zhang, the analyst.

Li says he has avoided telling Volvo's Swedish managers what to do, because he wants to protect the special qualities of a brand he admires. When asked whether Volvo might cut prices in response to a slowdown in the Chinese auto market, Li said a reporter would have to ask the Swedes.

"Li Shufu is a very smart guy," said Zhang. "He understands the gap between the two brands and he purposely tried not to interfere."

One area where Li played an active role with Volvo was in developing the extended sedan, according to Samuelsson. He said Volvo needed a Chinese-style vehicle but, with its roots in Scandinavia, where most buyers drive themselves, lacked the right experience.

"His opinions have influenced this as a very experienced 'rear seat customer'," said Samuelsson.

Volvo also has gained from its Chinese ownership, a status that exempts it from regulatory handicaps faced by foreign-owned automakers in China.

"We can move much, much faster," said Lars Danielsson, a Volvo senior vice president in charge of China.

RI to push more green investment
in energy sector

Grace D. Amianti, The Jakarta Post, Jakarta | Business | Fri, April 24 2015, 9:05 AM

The government expects to attract more environmentally friendly investment in the energy sector with the 35,000-megawatt (MW) expansion program currently being promoted to investors.

The expectation will be put forward at an international conference titled the “Tropical Landscape Summit: A Global Investment Opportunity”, which will facilitate the country’s transition into a green economy to ensure a sustainable future.

The summit is expected to draw around 500 top business executives from national as well as international companies on April 27 and 28 in Jakarta.

President Joko “Jokowi” Widodo is slated to officially open the event with multi-stakeholder engagement hosted by the Indonesian government in collaboration with the UN Office for REDD+ Coordination in Indonesia (UNORCID).

Investment Coordinating Board (BKPM) head Franky Sibarani said among many sectors, energy had the greatest potential to be explored for environmentally friendly, or “green”, investment.

“The government has announced its target of 35,000 MW electricity supply nationwide, which opens up more investment, including green plans,” Franky said at a press conference on Wednesday.

The Jokowi administration has laid out its plan to realize the ambitious 35,000 MW expansion project in five years as part of its efforts to boost Indonesia’s economic growth.

Franky added that green energy could support other sectors that would be essential for the economy, citing Teluk Lamong Port in Surabaya, East Java as a green port that used gas and solar power for its energy supplies.

According to Franky, the energy sector is currently growing in attraction for foreign direct investment as BKPM data reveals that between October last year and April 20 this year at least 24 new investors showed interest in investing in electricity projects.

“Of the 24 investors, three are European investors, six and seven come from Japan and China respectively and the rest from other countries,” Franky said.
During the last five years, BKPM data shows, total realized investment in the green sector stood at Rp 486 trillion (US$37.5 billion), of that 30 percent went to the energy sector.

In order to become a role model for sustainable green development, the investment board was aiming for 20 percent potential growth in green investment annually, Franky said.

Separately, Energy and Mineral Resources Minister Sudirman Said confirmed the government had prioritized green investment in the fields of renewable energy, which needs funds 10 times higher than the current Rp 1.03 trillion stated in the revised 2015 state budget.

“We will propose additional funds in the period of discussion in the 2016 state budget plan with the House of Representatives in August. We will see whether the House will respond positively,” Sudirman said.

Sudirman added that the Tropical Landscape Summit was expected to help attract more investment in the renewable energy field, which currently only stands at around 6 to 7 percent, to around 12 to 15 percent by the end of 2019, and 25 percent in 2025.

“I have to admit that currently most renewable energy projects have not been maintained well, so that we need to create market demand through better investment. We need to invite solar cell and wind turbine investors, for example,” he said.

Despite having massive reserves of geothermal energy, Indonesia faced stagnant growth in that sector, Sudirman said, adding that “we will review again who the right investors for geothermal power plants are.”

Rupiah strengthens to 12,944
per dollar

The Jakarta Post, Jakarta | Business | Thu, April 23 2015, 1:19 PM

The rupiah exchange rate traded among banks in Jakarta on Thursday morning strengthened by 11 points to Rp 12,944 per US dollar from Rp 12,955.

Bank Himpunan Saudara financial market analyst Rully Nova said the presence of positive expectations that Indonesia’s gross domestic product (GDP), soon to be released by the Central Statistics Agency (BPS), would not be far from achievements in the first quarter of 2014 became one of the supports for the rupiah to appreciate.

“There is a potential that the country’s GDP for the first quarter in 2015 will be higher than that in the same period of last year, supported by people’s consumption that remains high,” said Rully as quoted by Antara news agency in Jakarta on Thursday.

The analyst said such positive expectations toward Indonesia’s GDP became one of the protectors of fluctuations against the rupiah so it could remain within a stable range.

“Apart from people’s high level of consumption, it is also predicted that growth sources will come from the government’s side, namely infrastructure capital spending and state capital injections into state-owned enterprises,” said Rully.

Externally, the analyst said, Japan recorded a surplus in its trade balance, pushing its yen exchange rate to strengthen against the US dollar, which brought positive impacts to currencies in the Asian region.

Samuel Sekuritas economist Rangga Cipta added that the rupiah had strengthened again in the domestic foreign currency market, in line with a strengthening in the government bond market.

“But, external factors will still be shadowing the rupiah strengthening if Chinese manufacturing data announced is worse than expected,” he said.