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Chinese ownership of Volvo a milestone for car industry

Geely's purchase of Volvo is being described as a major milestone for the automobile industry.

The acquisition, signed off yesterday by Geely and Volvo's parent Ford for £1.2billion, was seen by analysts as the first successful purchase of a major brand by a Chinese carmaker.

Anil Valsan, global director of automotive research at Frost & Sullivan, said: "As it has been structured and conceived, there are significant opportunities for Volvo as well as Geely in this alliance.

"While penetrating China will be a major opportunity for Volvo, Geely has the opportunity to gain engineering and process know-how to improve quality, safety and reliability of its models, thereby boosting the export potential of its vehicles."

The deal will take until the Q3 of 2010 to complete, so the actual benefits will really be reaped from 2011 onwards.

In terms of manufacturing locations, Geely has made a commitment to keeping Volvo as a separate division from its Chinese operations.

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