Brief Analysis of BYD's successful global stragety

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 | 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 | 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 | 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 | 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>