15 March, 2013

Volvo and China - Culture Disconnect?

I read an article a few days in Svenska Dagbladet by Jonas Fröberg about the main owner, Li Shufu’s comment about the new Volvo’s only have one problem and that’s the Scandinavian design. I won’t go into the debate whether or not Scandinavian design sells or not or whether Chinese consumer might buy it or not, instead I want to highlight the issues with Chinese management and Swedish organization.
Here, we have a proud Swedish organization expecting their boss to pay attention to what they do, their experience and wealth of knowledge. On the other hand, we have Mr Li, a self-made billionaire who can afford to buy one of best car companies in the world, Volvo, and he is obviously very proud owner. Volvo was acquired and to be run in parallell with Geely, which has been the case, and the focus, at least for Mr Li, was also to increase the sales in China for Volvo.
Mr Li has apparently not attended board meetings and here is, in my opinion, the real issue. He expects to be consulted anyway as he is the main owner and the big boss. He do not understand, not relate to international (Swedish?) way of doing business and running organizations.
The Swedish management (despite not only being swedes there) continues to work as before and it’s based upon autonomy, respect and consensus (am generalizing here) and as a world-class organization well-recognized internationally, Volvo probably thought they could continue to operate in the same manner. However, as painful it might be for us swedes, everyone do not understand our mode of operations, nor acknowledge it as an excellent way of working. Volvo has also been a company operating at loss for quite some time with different owners as well.
Instead, and here I do not know the full story, but keeping the Chinese boss fully informed, able to comment and inspect and influence, is incredibly important if Volvo is going to deliver successfully. Without that support, the management will quickly be replaced if numbers do not improve, particularly sales in China.
Furthermore, Mr Li should really handle this internally but the media situation is totally different in China vs Sweden and I am pretty sure that Mr Li do not fully grasp that situation so for him being honest is not meant to be harmful but may also believe that media do not have a strong impact or can be controlled.
Some serious work is needed internally in improving the sino-Volvo communications and understanding. Just a simple example, a Chinese person saying “yes” does not necessarily mean yes unless the person is used and fairly fluent in english language. There is no “yes” in Chinese; instead there is acknowledging or negations. If you are asked if you are hungry, you respond hungry or not hungry. Not yes or no.
I think the Volvo PV management naively have underestimated the issues with having Chinese owners.

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