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Driving Towards  the Sustainable Green Future —— Proposed Strategies for SK to Enter China’s Car Battery Market Li Yuen, Guanghua School of Management Hu Yunzhi, College of Engineering  He Yu, Guanghua School of Management
Outline Competitor Analysis Customer Analysis The Li-ion battery represents the future trend of car battery industry. SK’s Status in the Market SK should exploit China’s car battery and after-sales service market by providing Li-ion batteries to HEV. SWOT for Entering China External Environment Market Analysis SWOT Analysis Proposed Strategy Goal Exploit China’s car battery market and driving service business by cooperation with HEV (hybrid electric vehicle) manufacturers. HEV Demand in China Overview of New Energy Vehicles HEV Policies in China The bright future of HEV brings opportunities to car battery market. S1:Pure Supplier S2: Strategic Partner of Chery S3: Cooperation with 3 Bus Companies S2: Basic Car Strategy Partner S3:Bus Producer  Cooperator √ Criteria & Evaluation Proposed Strategies Optional Strategies
1 WTI Crude Oil Posted Price in Last 12 Months Source: World Oil Outlook 2007, Monthly Oil Market Report Apr 2008, Wikipedia Outlook of Oil Shortfall in China Low Energy Engine Efficiency of  Traditional Energy Vehicles 3 Environmental Pollution of Traditional Energy Vehicles 1.1 Threats to Traditional Energy Vehicles Threats bring opportunities to new energy vehicles. External 2 45% Diesel 30% Gasoline Energy Efficiency Engine Increasing Shortfall Photo-Chemical Smog Others ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
HEV demand Car demand million 1 The Comparison of Different New Energy Vehicles 1.2 Overview of New Energy Vehicles and HEV Demand in China Source: China Automobile Industry Yearbook 2001-2007, Auto Manufacturing and Production 2 HEV Demand Prediction in China ,[object Object],External 1.12 2.04 3.79 Worst Best Key Features ,[object Object],[object Object],[object Object],A vehicle that uses hydrogen as its on-board fuel for motive power.  Such as highly efficient energy accumulator and dimethyl enther (DME), etc. Descriptions A vehicle that combines a conventional propulsion system with an on-board rechargeable energy storage system. A vehicle that utilizes chemical energy stored in rechargeable battery packs, and electric motors and motor controllers.  Vehicles with other energy sources   Hydrogen Engine Vehicle Battery Electric Vehicle   (BEV) Hybrid Electric Vehicle (HEV) Uncertainty/ Risk Technology Realization Level of Marketization Production Cost Energy Efficiency
Source: Chinese Automobile Industry Year Book(2007), Wikipedia, ,www.qiche.com.cn ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2000 1.3 HEV Policies in China ,[object Object],[object Object],2004 2004 2005 2007.8 2007.11 2007.12 External 3 Chinese Policy of HEV and Related Industries  ,[object Object],[object Object],[object Object],[object Object],[object Object]
Outline External Environment Market Analysis SWOT Analysis Competitor Analysis Customer Analysis The Li-ion battery represents the future trend of car battery industry. Proposed Strategy Market Analysis
2.1 Competitor Analysis - Segmentation of HEV Battery Market Participants Ni-Cd Ni-MH Source: Nomura Research Institute ,[object Object],2 Performance Comparison of HEV batteries Main HEV Battery Producers in China 1 ,[object Object],[object Object],Market Analysis Li-ion ,[object Object],[object Object],2003 HEV bus research by Wuhan government Li/MnO 2 , Li/SOCI 2  and Li-ion Batteries  Wuhan LIXUN Power Co., Ltd. Supported by China Green Material Developing Centre 2003 863 Project----HEV battery industrialization  N i-MH  &  Ni-Cd  Cylindrical Batteries FOREVER BATTERY Co., Ltd Subsidiary of Johnson Controls, Inc 2005 Supply Ni-MH batteries to Chery & Shanghai Automotive Plug-in  Ni-MH Batteries Shanghai Johnson Controls International Battery Co., Ltd. The biggest producer of Lithium cobaltate. 2002 Li-Ion battery supplier of Beijing Olympic Project  C/LiMn 2 O 4  Li-ion Batteries CITIC Guoan MGL New Technology Institute Holds 80% market share in Ni-MH battery market 2007 863 Project Ni-MH Batteries JIANGSU CHUNLAN Co., Ltd N/A Explanatory Note Products Company  Name HEV Projects Start time Worldwide Market Share prediction of Li-ion batteries (for HEV)  Highest Green Product Capacity Cycle Count Output Density Weight Energy Density Lowest 1 2 3 4 5
Source: news.sina.com.cn; www.autoinfo.gov.cno; MNC ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],2.2.1 Customer Analysis -  Major HEV Producers in China (Basic Car) Market Analysis 1 Major HEV Producers in China (Basic Car) Domestic Battery & Producer Price Milestones on HEV SHELL BP EXXON-Mobil TOTAL TOTAL TOTAL 1997  Came out in Japan 2006.1  First sales in China HEV in China Prius 1.5AT ¥ 269,800 6.5Ah ,274V Ni-MH Panasonic (Japan) 2003  Came out in Japan 2007.11 First sales in China CIVIC Hybrid  ¥ 269,800 6Ah ,120V Ni-MH Panasonic (Japan) 2008.3  Showed on China Auto Show (Beijing) Buick LaCrosse Eco-Hybrid ¥ 260,000 E-Flex Fuel Cell & Ni-MH General Mobile (U.S.A) 2007.6  Exhibited in Korea 2009.  Plan on mass production Avante LPG Hybrid N/A 6,5AhNi-MH N/A 2008  Plan on small-scale production in China Touran  N/A NI-MH N/A 2007.10  Exhibited and would come out soon Jiexun HEV  ¥ 150000 144V 6Ah Ni-MH Hunan Shenzhou TOTAL 2008.3  Gained approval by NDRC 2008.3  Received an order of 50 vehicles for Olympic Games SQR7130  ¥ 84,800 144V 6Ah Ni-MH Hunan Shenzhou TOTAL 2008  Ready for small-scale production Hysoul 305 N/A 288V Ni-MH N/A TOTAL 2007.10  Launched in Chinese market F6DM/F3DM  ¥ 180,000 3.3V 60Ah ET Power BYD DOMESTIC  PLAYERS MNC  PLAYER MNC   PLAYERS
Source: news.sina.com.cn; www.chinabus.info; 2.2.2 Customer Analysis -  Major HEV Producers in China (Bus) Market Analysis 2 Major HEV Producers in China (Bus) Battery & producer Milestones on HEV SHELL BP EXXON-Mobil TOTAL TOTAL 2007.3  Started a production line. 2007.8  Won a 50-bus bid for Beijing HEV Bus Demonstration Project. HEV in China LCK6110G ZHONGTONG 40Ah Ni/MH Taizhou CHUNLAN Institute 2005.1  Won a 25-bus bid of Shenzhen Bus. 2006.4  Expanded the American market FDG6120HEVG WUZHOULONG 12V VRLA gelled-electrolyte Shenzhen QIANWANG Technology 2007.10 Began mass production. 2008.1  30 buses came to use in Guangzhou.  BJ6123C7B4D  AUV Li-ion battery Eaton (U.S.A) 40Ah Ni/MH Hunan SHENZHOU Science &Technology 2005.11 20 buses came to use in Wuhan. 2007.7  Won the bid for Beijing Olympic Project. 2007.8  Got a 100-bus bid for Wuhan Bus Co. EQ6110HEV DONFENG 2007.1  ANKAI HEV was put into production. HFF6110GZ-3 ANKAI TOTAL 2006.4  Showed a HEV sample in Shanghai. 2007.4  Began to cooperate with DONGFENG for HEV development SQR7130  N/A TOTAL 36V 40Ah Ni/MH  Taizhou CHUNLAN Institute 2005.12 Showed a HEV sample in Changchun CA6110HEV JIEFANG MNC  PLAYER MARKET   PLAYERS N/A ,[object Object],[object Object],Implications to car battery market Key Features ,[object Object],[object Object],[object Object],[object Object]
Source: Wikipedia, www.autoinfo.gov.cno 2.3 International Cases of Cooperation between HEV and Li-ion battery producers Market Analysis Toyota will sell plug-in Li-ion Prius before 2010 Acclaimed to produce Li-ion batteries in large-scale in 2009 Japan Mercedes Benz will produce  s400 bluehubrid HEV in 2009 BMW X6 Active HEV----cooperates with Benz & GM Germany Chevy---Volt series plug-in Li-ion HEV Johnson Controls-Saft Advanced Power Solutions US ,[object Object],[object Object]
Outline External Environment Market Analysis SWOT Analysis SK’s Status in the Market SK should exploit China’s car battery and after-sales service market by providing Li-ion batteries to HEV. SWOT for Entering China Proposed Strategy SWOT
SK Korea’s Schedule in Car Battery Market Performance of SK’s Li-Polymer Battery (included in Li-ion Battery) Source: www.skenergy.com, Nikkei Electronics Asia -- July 2007, SK Prius Evaluation Test(2007) ,[object Object],SK in Total Driving Service 1 3.1 SK’s Status in Car Battery and Driving Service Market 2 3 SWOT 2007.5 2010 2005 2008  2009 Launched HEV Battery Project  , focusing on R&D of rechargeable automobile battery. Tested the newly-developed  Li-Polymer rechargeable battery in Prius.   2007.12 Completed a prototype line capable of manufacturing 3000 cells/month.  Evaluate batteries and negotiate with vehicle manufacturers. Start full-scale volume production. Capacity Weight Energy Density Output Density Safety High Heat Resistance Ni-MH Battery Li-Polymer Battery 1.6kWh  110Wh/kg  4000W/kg Polymer design offers improved safety, especially in cases of overcharging. 1.3kWh   55Wh/kg   3000W/kg In abrupt start/stop trials, the temperature of Li-polymer  keeps under 40*C, while Ni-MH exceeds 50*C. SK’s Entrac  uses telematics to provide total service to drivers, including directions, safety services, and traffic information. SK Cartizen  is a practical pay-as-you-go automobile service that allows users to avoid the maintenance and repair costs involved in owning a vehicle.
3.1 SWOT Analysis——SK’ Strengths and Weaknesses in China’s Car Battery Market Strengths Weaknesses SWOT SWOT Financing Strength ,[object Object],[object Object],3 ,[object Object],[object Object],[object Object],1 Operating Strength Productivity Strength ,[object Object],[object Object],[object Object],2 Network  Weakness ,[object Object],[object Object],Entry Difficulties ,[object Object],[object Object],Sales & Distribution Weakness ,[object Object],[object Object],3 1 2
Opportunities Threats 3.1 SWOT Analysis——SK’ Opportunities and Threats in China’s Car Battery Market SWOT SWOT ,[object Object],[object Object],1 Booming Market ,[object Object],[object Object],Policy Support 2 ,[object Object],[object Object],Potential New Energy Market 3 ,[object Object],[object Object],1 Fierce Competition Limits & Regulations  ,[object Object],[object Object],3 Development of Other New Energy Vehicles 2 ,[object Object]
Outline External Environment Market Analysis SWOT Analysis S1:Pure Supplier S2: Strategic Partner of Chery S3: Cooperation with 3 Bus Companies S2: Basic Car Strategy Partner S3:Bus Producer Cooperator √ Criteria & Evaluation Proposed Strategies Proposed Strategy Optional Strategies Proposed Strategy
Profitability Brand Market Strategic Goal and Decompositions of SK in C ar Battery Market   Short-term :  Supply Li-Ion batteries  Long-term :  Merger & Acquisition  Short-term :  Extensive cooperation in all aspects Long-term :  Further cooperation in other new energy automobiles Short-term :  Refit existing buses into HEV buses (mainly in major cities) Long-term :  Expand to small and medium-sized cities in China  Strategy Options 1 2 4.1 Strategic Goal and Strategy Options Proposed Strategy Goal Goal Exploit China’s car battery market and driving service business by cooperation with HEV  (hybrid electric vehicle) manufacturers. S1: Pure Battery Supplier S2: Strategy Partner of HEV Basic Car Producers  S3:Cooperator of HEV Bus Producers S1: Pure Battery Supplier S2: Strategy Partner of HEV Basic Car Producers  S3:Cooperator of HEV Bus Producers
Profitability Criteria: To quantify expected revenue and cost of strategy options Feasibility Criteria: To measure the risk and potential blocks of strategy options  4.2 Criteria and Explanations for Strategy Options Evaluation Proposed Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Sub-Criteria Explanation Evaluation Criteria Competitiveness Risk Criteria Expected Profit Potential Market Brand Building Sub-Criteria Explanation Evaluation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Quantitative Strategic Planning Matrix S1 S3 S2 Pure battery supplier Strategy partner of HEV producer (basic car)  Cooperator of HEV producer (bus) *The weighted score reflects the attractiveness of the optional strategies.  *The matrix takes relative external and internal factors that affect strategic decision into consideration, dividing them into profitability and feasibility.  Strategy Options Positioning Profitability Feasibility Source: Data analysis and strategically analysis 4.3 Evaluation for strategy options and recommendation 1 2 * HEV in mass transportation is gaining more and more attention all over the world.  * The segmented market is less competitive.  * Good opportunity to raise public awareness.  S1 The least profitable and feasible * The strategy is easy to be imitated.  * S1 cannot bring added value to other businesses. S2 The most profitable and feasible * SK can easily participate in the market by strategy cooperation with 1 or 2 HEV producers.  * By influencing partner’s strategy, SK can integrate its automobile service chain. S3 Inevitable trend, but relatively less feasible  √ √ Proposed Strategy × S1 S3 S2
Cooperation Analysis: Strengths and Benefits 2 Market Performance ,[object Object],Products Positioning ,[object Object],[object Object],[object Object],HEV Plans ,[object Object],[object Object],2007China’s Total Basic Car Market Share Source: http://money.163.com/, http://auto.sina.com.cn, www.sk.com, www.chery.cn 4.4.1  Proposed Strategy 1: Strategic Partner of HEV Producer (Basic Car)  Proposed Strategy 1 Selected Strategy Partner: Chery ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Strengths Benefits  Strength & Benefits of   Chery ,[object Object],[object Object],[object Object],Strengths Benefits ,[object Object],[object Object],[object Object],Strength & Benefits of   SK
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],3 Strategy Consistency between Chery & SK 5 Cooperative Scope 4 Potential Risk 4.4.2  Proposed Strategy 1: Cooperative Scope and Goal Source: SK’s Annual report 2006, www.chery.cn Proposed Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Auto Related Products  Telematics Service Auto Maintenance Service
PROCESS 2008.6 2009.1 2009.6 2010.1 Long term Timeline b) Team Construction   Cooperation ,[object Object],b) Marketing & Sales Promotion of Cartizen c)   After-Sales Service d) Effectiveness Review of the Strategy ,[object Object],Preparation Plug-in research team to Chery Conduct regular road-test for HEV cooperate with 4.4.3  Proposed Strategy 1: Execution Timeline Proposed Strategy Chinese market experts R&D core experts Management   team from Korea and China ,[object Object],[object Object],Marketing SK Cartizen through sales process Implement Cartizen to Chery 4S as a support team Provide SK Entrac's telematics service Provide other SK car relative service & products for Chery HEV :e.g. GPS, ERS, phone charger
Target Regions:  on the map Changchun Shenyang Beijing Tianjin Shanghai Hangzhou Wuhan Changsha Guangzhou Shenzhen ,[object Object],[object Object],[object Object],Dongfeng Zhongtong Wuzhoulong Jinan ,[object Object],[object Object],[object Object],Start cooperation by chance of Beijing Olympic Game(2008) Shanghai World Expo(2010) & Guangzhou Asian games(2010) Expand the scope to other target regions.  ,[object Object],[object Object],[object Object],1 Cooperators Choosing 4.5  Proposed Strategy 2: Cooperators of HEV Producer (Bus) 2 Cooperative Scope 3 Executive Timeline 4 Exploit new market in small and medium-sized cities Source: www.chinabus.info;  Chinese Automobile Industry Yearbook 2007  Proposed Strategy Short-term  2008-2010 Mid-Term 2010-2015 Long-Term
Li-Polymer battery for HEV Cooperate with Chery Conclusion Cooperate with   Bus Producers  Now it's China Market Leader Sustainable Growth Wings of Happiness
Thank You! Li Yuen:  [email_address] Hu Yunzhi: hyz1292000@gmail.com  He Yu:  [email_address] Contact:

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080529 Sk Biz Competition Final Draft For Presentation 05.28

  • 1. Driving Towards the Sustainable Green Future —— Proposed Strategies for SK to Enter China’s Car Battery Market Li Yuen, Guanghua School of Management Hu Yunzhi, College of Engineering He Yu, Guanghua School of Management
  • 2. Outline Competitor Analysis Customer Analysis The Li-ion battery represents the future trend of car battery industry. SK’s Status in the Market SK should exploit China’s car battery and after-sales service market by providing Li-ion batteries to HEV. SWOT for Entering China External Environment Market Analysis SWOT Analysis Proposed Strategy Goal Exploit China’s car battery market and driving service business by cooperation with HEV (hybrid electric vehicle) manufacturers. HEV Demand in China Overview of New Energy Vehicles HEV Policies in China The bright future of HEV brings opportunities to car battery market. S1:Pure Supplier S2: Strategic Partner of Chery S3: Cooperation with 3 Bus Companies S2: Basic Car Strategy Partner S3:Bus Producer Cooperator √ Criteria & Evaluation Proposed Strategies Optional Strategies
  • 3.
  • 4.
  • 5.
  • 6. Outline External Environment Market Analysis SWOT Analysis Competitor Analysis Customer Analysis The Li-ion battery represents the future trend of car battery industry. Proposed Strategy Market Analysis
  • 7.
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  • 11. Outline External Environment Market Analysis SWOT Analysis SK’s Status in the Market SK should exploit China’s car battery and after-sales service market by providing Li-ion batteries to HEV. SWOT for Entering China Proposed Strategy SWOT
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  • 15. Outline External Environment Market Analysis SWOT Analysis S1:Pure Supplier S2: Strategic Partner of Chery S3: Cooperation with 3 Bus Companies S2: Basic Car Strategy Partner S3:Bus Producer Cooperator √ Criteria & Evaluation Proposed Strategies Proposed Strategy Optional Strategies Proposed Strategy
  • 16. Profitability Brand Market Strategic Goal and Decompositions of SK in C ar Battery Market Short-term : Supply Li-Ion batteries Long-term : Merger & Acquisition Short-term : Extensive cooperation in all aspects Long-term : Further cooperation in other new energy automobiles Short-term : Refit existing buses into HEV buses (mainly in major cities) Long-term : Expand to small and medium-sized cities in China Strategy Options 1 2 4.1 Strategic Goal and Strategy Options Proposed Strategy Goal Goal Exploit China’s car battery market and driving service business by cooperation with HEV (hybrid electric vehicle) manufacturers. S1: Pure Battery Supplier S2: Strategy Partner of HEV Basic Car Producers S3:Cooperator of HEV Bus Producers S1: Pure Battery Supplier S2: Strategy Partner of HEV Basic Car Producers S3:Cooperator of HEV Bus Producers
  • 17.
  • 18. Quantitative Strategic Planning Matrix S1 S3 S2 Pure battery supplier Strategy partner of HEV producer (basic car) Cooperator of HEV producer (bus) *The weighted score reflects the attractiveness of the optional strategies. *The matrix takes relative external and internal factors that affect strategic decision into consideration, dividing them into profitability and feasibility. Strategy Options Positioning Profitability Feasibility Source: Data analysis and strategically analysis 4.3 Evaluation for strategy options and recommendation 1 2 * HEV in mass transportation is gaining more and more attention all over the world. * The segmented market is less competitive. * Good opportunity to raise public awareness. S1 The least profitable and feasible * The strategy is easy to be imitated. * S1 cannot bring added value to other businesses. S2 The most profitable and feasible * SK can easily participate in the market by strategy cooperation with 1 or 2 HEV producers. * By influencing partner’s strategy, SK can integrate its automobile service chain. S3 Inevitable trend, but relatively less feasible √ √ Proposed Strategy × S1 S3 S2
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  • 23. Li-Polymer battery for HEV Cooperate with Chery Conclusion Cooperate with Bus Producers Now it's China Market Leader Sustainable Growth Wings of Happiness
  • 24. Thank You! Li Yuen: [email_address] Hu Yunzhi: hyz1292000@gmail.com He Yu: [email_address] Contact:

Editor's Notes

  1. 1 、 Crude oil price is expected a future growth China is facing an increasing oil shortfall by OPEC forecast Transportation demand could hardly be well satisfied. 2 、 Low energy engine efficiency further deteriorates the oil shortfall. The potential to improve traditional energy efficiency is limited.
  2. Chinese policy support~~ 从 00 年到 07 年, financial tech and consumption , 分不同颜色。最后结论溶解
  3. Main players are domestic private companies. 锂电池标志在中间,然后往左移,图在中间 Main products are Li-ion batteries and Ni-MH batteries. Li-ion batteries are less developed than Ni-MH batteries. Main players are domestic private companies. Main products are Li-ion batteries and Ni-MH batteries. Li-ion batteries are less developed than Ni-MH batteries. Low-end battery with low cost, small voltage and short battery life. Green battery with relative better performance and higher cost.
  4. 车外弄透明 , 价格打钩 演讲时要提 prius 与 sk 合作 价格打圈 Key features 从上到下擦除 改成关键词
  5. 开车 小标题加粗 别删了 Since mass transportation accounts for a large proportion of total air pollution, local governments give financial support to HEV bus development. Dongfeng, Zhongtong and Wuzhoulong develop faster than others. The early birds established close cooperation with local governments. Foreign companies haven’t entered the market.
  6. Fancy 下
  7. 结论顺序反了,车开过了 ~~~
  8. 内容擦除
  9. 内容擦除
  10. Profitability: To be the most profitable HEV battery producer in China To bring added value to other business (etc. auto service) Brand: To position as a high quality brand through innovative techniques and service To raise public awareness and build up an environmental friendly image Market: To be the leader in segmented market and strengthen the leading position in the whole market To broaden network for other business
  11. S2 S3 变成红色 1 , 2 分别出 2 中 S1,S2,S3 分别出
  12. Market Performance:No.1 among self-owned brand producers and No.4 among all players,400,000 capacity of complete vehicles per year. Strength of Chery: 1.High market share and brand awareness in Chinese vehicle market 2.Mature techniques in HEV: relatively low cost in refitting a common vehicle into a HEV 3.Policy support from government as a domestic brand Benefits to Chery: 1.Reduce R&D cost 2.Enhance the security and capacity of existing HEV by applying Li-Polymer battery 3.Improve brand image by SK’s Total Driving Service Strength of SK: SK 的优势可以一笔带过,就说在前面的 SWOT 中有详细的介绍了。 Benefits of SK: 1.Lower entry barrier to HEV market by utilizing Chery’s sales channels and logistic circulation 2.Raise brand awareness and set an environmental friendly image 3.Establish relationship with Chinese government
  13. 3 , 4 , 5 分别出 结论内部溶解
  14. 一块儿一块儿出,分成六块二出,一开始显示所有的黑色标题, 一开始灰色,然后上色
  15. 1 , 2 , 3 , 4 , 5 分别出 三个合作商一起出来,
  16. 铺开