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Privately-owned Geely’s plan has been to expand Volvo's presence in China, now the world's largest car market. Geely has been in the business of selling cars, motorcycles and scooters with little government support. This deal could give it an edge in China, which is the world’s biggest auto market and one in which foreign brands often dominate. Volvo will also allow it to gain its first major foothold in Europe.

The Chinese government has finally approved the proposal to acquire Volvo cars from Ford Motor Co..

This is China's biggest foreign acquisition in the auto industry and would give one of China's small but ambitious auto makers access to a prestigious brand and top-tier technology. European Union regulators approved the deal in early July.

Ford, which acquired Volvo in 1999 for $6.45 billion, has wanted to unload it since 2008 to raise cash and focus its efforts on its two remaining core brands: Ford and Lincoln. It sold its Jaguar and Land Rover brands to India’s Tata Motors Ltd. in June 2008 for $1.7 billion, and it sold Aston Martin to a private equity group in 2007 for $931 million. Ford also plans to stop producing its Mercury brand by the end of this year.

Beijing has been encouraging Chinese companies to expand abroad, taking advantage of the global financial crisis to acquire assets at lower prices.

Industry analysts say doubt hangs over whether 13-year-old Geely can make a success of Volvo, a perennially money-losing manufacturer on another continent. The uncertainty also lies on the differences of the two companies and Geely’s lack of experience according to one industry insider.

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