BYD's successful global stragety

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Brief Analysis of BYD's successful global stragety

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BYD's successful global stragety

  1. 1. 1 | P a g e COMMENTRY OF BYD’S STRAGETY Fortune_Cover_Buffet.jpg The Success of BYD and the Dream will Come True Build Your Dream (比亞迪股份有限 公司) was founded in Feb, 1995 by a chemical engineer who worked in Beijing Non-Ferrous Research Institute after graduated from Central South University in China. In the end of twentieth century, Chinese central government practically demolished the traditional communist philosophy. The Government (I was a member of finance management in Central Treasure Bureau Shanghai Branch) started some practices which we were not even be able to dream of several years ago. The government allowed individual to register private business with limited funds. It even allowed bank to loan funds to individual without government interference. Chinese opportunists realized it is time to leverage their knowledge and to make their dream become true. Computer Science Researcher Liu Chuanzhi (柳传志) founded Lenovo in 1984, and military technology researcher Ren Zhengfei (任正非) founded Huawei in 1988.Encouraged by the successes of these early pioneers more and more Chinese entered the private business sectors.
  2. 2. 2 | P a g e BYD’s Internal and external Competitive Advantages Chinese Government Policy (China State Council, 2012)  Direct Government funding into hybrid electric vehicles research  Subsidies of US8,800 per electronic or hybrid  Vehicle purchased by bus companies, taxi operators and state agencies. China’s Economic Growth and its Massive Middle Class I witnessed the middle class booming when I were in China 2 years ago. With the government policy to boost power of consuming goods and services of China middle class in order to combat with export decline during and after GFC, its middle class population •World 1st mass - produced plug-in hybird passenger car •World 1st pure EV Taxi •World 1st pure electric bus •Support from Chinese local business •Suplies electric bus as part of LA clean Air Bus Project •Similer apporaches across Poland,Finland, Denmark, Spain, Uruguay, Israel and Canada •JV with Daimler AG •Warren Buffett invested US$230 millon •10th largest saling brand in China •Supplies electric buses to airport transfer fleet •Support from Chinese Government •Green Technology reduce carben pollutions •Utilize National Rich Resource: China Rare Earth industry makes 97% of rare mineral trade Political Economic TechnologicalSociological
  3. 3. 3 | P a g e dramatically increased last 8 years. According to Mckinsey analysts estimate China upper middle class will have population of 52 million people with a combined disposable income of over 13 trillion renminbi (RMB) annually (Farrell et al, 2006). By then, over 45% Chinese population should afford BYD EV car even it sales at current price range from300,000 RMB to 600,000 RMB (BYDAUTO 2015). China consumer segments purchasing power Driven by government tax incentives passenger car sales rose 6.7% YoY to 12.6 million vehicles in 2012. Potentially vehicle demand will exceed as much as 35% in 2015 (Russo, 2012). In 2009, China supplanted US as the world largest automobile market (Bloomberg 2010). New Rich China Middle Class lower income Class
  4. 4. 4 | P a g e China’s Car-Sharing Business Model There will be huge demands in the Car-Share Program in China, when the Vice Chair of the National Committee of the Chinese People's Political Consultative Conference & Minister of China’s Science and Technology Ministry refer the value proposition of the Car-Share business model in China (Kandi 2015). There are more and more cities in China adopt this environmental friendly approach and EV passenger cars are favorite vehicles for this business model. We can envision that BYD Auto’s EV cars will soon tap in to this potential market. Wang’s Simple and Effective Strategy and Organizational Approach “The manufacturing of cars starts with manufacturing of talents, then tools and then cars.” Wang’s famous organization philosophy (Cheung et al.2013). "Our company is built on technological know-how," Wang’s answer to Warren Buffett question "How did BYD get so far ahead?”. "We'll never, never rest," when Buffett asked Wang about his strategy of business sustainability (Gunther, 2009). We all know what were happened when car manufacture rest on their existing products as Holden and Ford Australia.
  5. 5. 5 | P a g e References: BYDAUTO 2015, News, viewed 24 January, 2015, < http://www.bydauto.com.cn/news-id- 2705.html>. Circular of the State Council on Printing and Issuing the National Plan for Fostering Capacities of Innovation during the Twelfth Five-Year Period (《國務院關於印發「十二 五」國家自主創新能力建設規劃的通知》)” ‘China’s Science and Technology Minister Wan Gang Reinforces the Value and Importance of Kandi’s Innovative Micro Public EV Time-Sharing Business Model’, Kandivehicle.com, viewed 24 January 2015, <http://en.kandivehicle.com/NewsDetail.aspx?newsid=185> Cheung, C., Ching H., Yeung, J., Man, J., Allen, J., Tam, M., and Chan W. ‘Technology and Innovation management, BYD Auto’ 2013, viewed 24 January 2015, <http://www.slideshare.net/josephman1/byd-auto-the-innovation-of-the-electronic- vehical-business>, pp. 3. Gunther, M., 2009, ‘Warren Buffett takes charge’, forture.com, viewed 24 January 2015, <http://archive.fortune.com/2009/04/13/technology/gunther_electric.fortune/index.htm> Farrell, D., Gersh, U. A. & Stephenson, E. 2006, ‘The Value of China’s emerging middle class’, The Mckinsey Quarterly, 2006 Special Edition: Serving the new Chinese consumer, PP.62-64. Kandi 2014, News, viewed 24 January 2015, China’s Science and Technology Minister Wan Gang Reinforces the Value and Importance of Kandi’s Innovative Micro Public EV Time- Sharing Business Model,< http://en.kandivehicle.com/NewsDetail.aspx?newsid=185>. Lasserre, P., 2012, ‘Global Strategic Management’, Palgrave macmillan, New York, USA. Russo, B., 2012, ‘China’s Automobile Sector: Strategies for a Changing industry’, J.P. Morgan’s Hands-On China Report, November 12, 2012, PP. 1-3. Ying, T. 2010, China Ends U.S.’s Reign as Largest Auto Market (Update2), Bloomberg News January 11, 2010, < http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aE.x_r_l9NZE>

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