THE PROSPECTS OF INTERNATIONAL ACQUISITIONS IN CAR INDUSTRY DURING THE GLOBAL ECONOMIC CRISIS - THE CASE OF GEELY VOLVO 159 Branko Rakita 1 Dusan Markovic 2 THE PROSPECTS OF INTERNATIONAL ACQUISITIONS IN CAR INDUSTRY DURING THE GLOBAL ECONOMIC CRISIS - THE CASE OF GEELY VOLVO Abstract Significant technological, social and economic changes on the global level marked the beginning of the 21st century. Growing importance of Chinese economy stands out as one of the most important among these changes. Accelerated economic development of China was first based on FDI inflow and the export of low-cost less technology intensive products. However, a gradual alternation to Chinese economic policy and the growth of outward FDI followed by a global breakthrough of some Chinese companies operating in technology intensive industries (Huawei, Lenovo, Mindrey, Haier etc.) has been marked in the past few years. Further economic development of China will to a large depend on the positioning of Chinese car manufacturers. In this paper the stress will be put on high technology intensity in car industry, on its global character, high concentration within the industry and on market saturation in developed countries due to global economic crises. Basic characteristics of automotive industry and its development will be considered regarding prolonged economic crisis. Current local character of Chinese car manufacturers and its going global prospects will be observed. In order to become global players Chinese car manufacturers could implement the acquisition strategy of some key competitor from developed countries. Chinese car companies aimed at relatively small targets in the previous period because they were inexperienced in acquisitions and restructuring management and tended to decrease risks. The last and the most important is the acquisition of Swedish Volvo by Chinese Geely. These are the companies significantly differing in the level of technology, corporate and national culture, brand perception and geographic orientation of business operations. Potential risks that follow these differences as well as potential synergetic effects, supposing that the acquisition process is properly managed, will be considered in the paper. Keywords Acquisitions, Auto industry, China, Synergy 1. Introduction The globalization process, having been intensified over the last two decades, has had profound impact on the international business environment. One of the most important results of this process is the integration of national economies into global economy. According to some research Chinese economy was the fastest globalized national economy between 1975 and 2000 (Dreher, 2006, pp. 1091−1110). Deregulation of Chinese economy and integration into global economy set the bases for its strong economic growth. Despite the poor starting point, China has become the second world economy for only two decades. China GDP has shot up in the past two decades and was multiplied more than eleven times. 1 National Research University, Higher School of Economics, Russia, e-mail: ivashkovskaya@yandex.ru 2 National Research University, Higher School of Economics, Russia, e-mail: Dm.shcherbakov@gmail.com