Zhejiang Geely Holding Co is likely to set up its Chinese headquarters and a Volvo vehicle factory in Shanghai, according to a city district official.

"Geely has already signed a framework agreement with the related department in Jiading District about a proposed headquarters and plant," he said yesterday.

The Jiading Industrial Zone official requested anonymity during a telephone interview.

"It's still under discussion and no final decision has been made yet," he said.

Zhejiang Province-based Geely, which acquired Volvo from Ford for US$1.8 billion at the end of March, wants to localize Volvo production in China to help revive the brand domestically and globally.

Geely has reportedly also sounded out Beijing, Chengdu and Tianjin for the headquarters-Volvo initiative.

Industry analysts said Jiading, China's major vehicle industrial hub and home to many of the world's leading auto parts companies, had advantages in sourcing and management expertise.

A Geely spokesman declined to comment yesterday.

Geely already has factories in Shanghai, which produce its Maple brand cars and London black cabs.

According to a report by the Economic Observer, Geely's plans in Shanghai include the formation of a company named Shanghai Geely Zhaoyuan International Investment, with a registered capital of 20 million yuan (US$2.92 million).

The investment would eventually be lifted to 8.1 billion yuan, the report said.

The Jiading Industrial Zone and Asset Management Committee would jointly hold 12.35 percent in the company, while another Geely affiliate and a state-asset management firm of Daqing City would hold the remaining 87.65 percent, it said.

Li Shufu, chairman of Geely, admitted the establishment of the investment company in Jiading during a media interview on Sunday.

But he said it did not necessarily mean the headquarters and plant would be set up in the Shanghai district.

"Volvo will certainly have its production facilities in China but we will make the formal announcement only after all documents are signed," Li said.