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Brief of diving:
- Volvo’s construction teams are selling their 70% participation In China of the Shandong Lingong Co construction machinery as part of a strategic renewal to reduce their exposure to the country.
- The multinational company said on Tuesday that its actions, valued at 8 billion Swedish Krona (about $ 839 million), will be largely owned by a Lingong Group, which owns the SDLG minorities.
- The agreement would allow Volvo CE, a subsidiary of the Volvo Group, to redo their commercial strategy and have a more directed approach to attending the China’s construction team market with Premium products. The sale is expected to be closed at the end of this year if it is approved by the regulators.
Divide vision:
Since 2006, Volvo CE has maintained a majority participation in SDLG as a way to access the China National Construction Teams Market.
The company said that its investment and collaboration with LGG has been successful over the years, but with the change in market dynamics, the two have agreed to separate and pursue commercial strategies that would be “mutually beneficial”.
)[W]With growing competition and the need to transform into new technologies and also strengthen interaction with customers, we must focus again, “said Malker Jernberg, head of Volvo CE, in a statement.
The sale of Volvo’s majority participation would be SDLG, formerly a joint company, a mainly Chinese property company. SdLG is one of the largest China building equipment manufacturers to produce excavators, wheel loaders and road rollers. The country’s market size is worth $ 223.7 billion last year and has grown at an average rate of 12.5% in the last five years, according to Ibisworld.
The decision to sell Volvo CE ownership is that many north -American companies move Supply chains outside China in nearby countriesIn part due to the increase in labor costs and recent fare pressures.
Last year, about 20% of North -American companies in China said they would reduce investments about the growth growth of the country, according to a survey carried out by the American Chamber of Commerce of Shanghai. In the meantime, 40% of respondents said that they redirected investments, with southern -East Asian and India as popular options.
“China is still an important market for us and we intend to take advantage of our opportunities by focusing on sustainable solutions on directed segments,” added Jernberg.
Volvo CE has operated its excavator factory in Shanghai since 2002 and has recently announced the plans to update the installation with new production lines. The company also advances with plans to transform a research and development center in Jinan, China, into the Volvo CE global technology system, for innovation and extensive collaboration worldwide.
As Volvo CE again presents its presence in China, the company is also expanding to other countries. Recently agreed to acquire Sweecon European Business Business From Lantmännen to reinforcement operations in Germany, Sweden, Estonia, Latvia and Lithuania. Volvo CE also said that it will begin to produce tracker excavators and large wheeled loaders at its Shippensburg installation, Pennsylvania Global investment of $ 261 million aimed at mitigating the risks of the supply chain related to rates.
Volvo CE has 16 manufacturing sites in all the United States, Canada and Mexico, according to their website. The north -American headquarters of the subsidiary is in Shippensburg.
