After acquiring Volvo in 2010, Geely successfully acquired Proton stake for RM 460 Million in 2017. To date, it is the top automaker in Southeast Asia. According to Forbes, Geely Group Chairman Li Shufu has a net worth 15 Billion USD. He started his entrepreneurship at the age of 19. He failed countless of times before becoming a legend with Geely. He has dwelled on businesses involving photography, refrigerators and motorcycles. But it was carmaking that really put him onto the world’s stage.
Li’s childhood
Born in 1963, Li failed to further his studies when he was 19 years old. His father lent him 120 RMB to buy a camera so that he can be a photographer. He earned 1000 RMB within 6 months and opened his own photography shop. From there, he took his first step to become a businessman.
Forced to shut down his refrigerators factory
Two years later, he went into the refrigerator manufacturing business because it was very profitable. He saw great potentials in the market and opened his own factory. And he was right. When the demand for home appliances suddenly spiked up in 1985, the refrigerator productions increased from 250,000 units to 7 million units a year. At that time, Li’s factory was valued at 40 Million RMB. Unfortunately, in the year 1989, the government began controlling the quantity of fridge manufacturer. Only 41 factories in the country were allowed to produce refrigerators. Li was forced to shut down his factory.
Starting an aluminium magnesium plate business
His next venture came in 1990. After some market research, Li realised that the aluminium magnesium plate can be a potential business with very profitable returns. As it was a popular item in China, he decided to develop his own product and sell it at a lower price. His plan managed to help him achieve 70 Million RMB in 1992. He broke even within 3 years when he reached 150 Million RMB in sales. From there Li earned his first 10 Million RMB.
It took 8 months to develop his own motorcycles
After visiting a motorcycle factory, Li quickly concluded that it is not complicated to build a motorbike. He bought 8 bikes and took them apart so that he can study them in depth. After 8 months, he developed his own motorcycle. In order to introduce his brand of motorcycles into the market, he sold them at an affordable price. At that time, Taiwan’s motorcycles were selling at 17,000 RMB per unit but he only sold his creations at 8,800 RMB per unit. Due to the huge price gap, people were buying Li’s motorcycles. By the year 1995, he sold over 60,000 units. Four years later, the amount skyrocketed to 430,000 units. From there, his company has net value worth 1.5 Billion RMB.
An automotive legend is born
In 1995, Li was looking to step into the automaking industry. However, his dream was delayed as he couldn’t get the car developing license from the Chinese government. As soon as the opportunity came, he spent 14 Million RMB to acquire a Sze-Chuan-based company which was almost bankrupt. Again, he used the same technique he used for his motorbikes and sold his line of luxury cars below market price. Despite that, the outcome from his first production in August 1998 was not satisfactory. That year, Li lost 3 Million RMB.
Geely listed in Hong Kong
Not one to give up when challenges arise, he went seeking for talents who can help him improve his car production quality. Meanwhile, he also set up a university (currently named Beijing Geely University) which can increase the number of skilled technitians to assist him in his car production. The year 1999 saw the new launch of Li’s creation, priced at approximately 30,000 RMB. 2,000 cars were sold. Affordability is the way to go. Even though Li’s car manufacturing company was doing well, it never stopped him from growing his business. He continued to spend more than 100 Million RMB to develop the industry and used more than 110 cars for research purposes. Soon, he developed his own auto-gear car and was rank as the top 10 bestselling automotive in the country. In early 2005, Geely was listed in Hong Kong Stock Exchange.
Li buys Volvo & Proton
When the steel and car accessories price escalated in 2006, the low-priced strategy no longer work as an advantage for Geely. To counter that, Li began providing his customers with more comprehensive, better quality and service products. Initially, he wanted to take over Ford’s luxury car. He failed. Then came the United States economy crisis in 2007. Ford’s biggest shares holder, Volvo lost up to 12 Billion USD. Geely jumped into the opportunity and acquired it with 1.8 Billion USD.
In the year 2012, Geely’s annual sales have surpassed 700,000 cars and the company is worth more than 34 Billion USD. Last year, Geely Holding Group successfully acquired 49.99% of Malaysia’s national car manufacturer Proton. No matter how many times you failed, never give up. You might be the next Li.
Source: Business Focus
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