Warren Buffett and China's BYD corporation....

[Ovaltine]

Here's an important read about a company that you've probabably NEVER heard of: China's BYD. Warren Buffett just stuck $230 million into it.

 

The bigger story is the tenacity of the chairman and workers of this BYD company. Take the time to click on the link below and read the entire article to see what this company has accomplished in such a short time in the realms of cellphone, battery, and other electronic manufacturing. They're now entering the car manufacturing business, with their sights set on building an electric cars. Their current car offering is ALREADY the best selling car in China! Keep in mind that with the recent decline in U.S. sales, China recently just sold more vehicles in a particular month than was sold in the U.S.

 

If this is the "face" of the economic "enemy", then the U.S. (and rest of the western world for that matter) has its work cut out for it!

 

( It's a long article, so I did include some key highlights below )

 

-Ovaltine

 

 

 

http://money.cnn.com/2009/04/13/technology...ectric.fortune/

 

...Buffett, who is 78, was intrigued by Munger's description of the entrepreneur behind BYD, a man named Wang Chuan-Fu, whom he had met through a mutual friend. "This guy," Munger tells Fortune, "is a combination of Thomas Edison and Jack Welch - something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it."

 

<snip>

 

 

Last fall Berkshire Hathaway bought 10% of BYD for $230 million. The deal, which is awaiting final approval from the Chinese government, didn't get much notice at the time. It was announced in late September, as the global financial markets teetered on the abyss. But Buffett and Munger and Sokol think it is a very big deal indeed. They think BYD has a shot at becoming the world's largest automaker, primarily by selling electric cars, as well as a leader in the fast-growing solar power industry.

 

Wang Chuan-Fu started BYD (the letters are the initials of the company's Chinese name) in 1995 in Shenzhen, China. A chemist and government researcher, Wang raised some $300,000 from relatives, rented about 2,000 square meters of space, and set out to manufacture rechargeable batteries to compete with imports from Sony and Sanyo. By about 2000, BYD had become one of the world's largest manufacturers of cellphone batteries. The company went on to design and manufacture mobile-phone handsets and parts for Motorola (MOT, Fortune 500), Nokia (NOK), Sony Ericsson, and Samsung.

 

 

<snip>

 

Wang entered the automobile business in 2003 by buying a Chinese state-owned car company that was all but defunct. He knew very little about making cars but proved to be a quick study. In October a BYD sedan called the F3 became the bestselling sedan in China, topping well-known brands like the Volkswagen Jetta and Toyota (TM) Corolla. BYD has also begun selling a plug-in electric car with a backup gasoline engine, a move putting it ahead of GM, Nissan, and Toyota. BYD's plug-in, called the F3DM (for "dual mode"), goes farther on a single charge - 62 miles - than other electric vehicles and sells for about $22,000, less than the plug-in Prius and much-hyped Chevy Volt are expected to cost when they hit the market in late 2010. Put simply, this little-known upstart has accelerated ahead of its much bigger rivals in the race to build an affordable electric car. Today BYD employs 130,000 people in 11 factories, eight in China and one each in India,

Hungary, and Romania.

 

<snip>

 

Deploying the armies of laborers at BYD is an officer corps of managers and engineers who invent and design the products. Today the company employs about 10,000 engineers who have graduated from the company's training programs - some 40% of those who enter either drop out or are dismissed - and another 7,000 new college graduates are being trained. Wang says the engineers come from China's best schools. "They are the top of the top," he says. "They are very hard-working, and they can compete with anyone." BYD can afford to hire lots of them because their salaries are only about $600 to $700 a month; they also get subsidized housing in company-owned apartment complexes and low-cost meals in BYD canteens. "They're basically breathing, eating, thinking, and working at the company 24/7," says a U.S. executive who has studied BYD.

 

Wang typically works until 11 p.m. or midnight, five or six days a week. "In China, people of my generation put work first and life second," says the CEO, whose wife takes responsibility for raising their two children.

 

<snip>

 

"How did BYD get so far ahead?" Warren Buffett asked Wang, speaking through a translator. "Our company is built on technological know-how," Wang answered. Wary as always of a technology play, Buffett asked how BYD would sustain its lead. "We'll never, never rest," Wang replied.

 

<snip>

 

The company itself is frugal. Until recently, BYD executives always flew coach. One told me he was appalled when he learned that Ford, which lost billions last year, had staged a gala at the Hotel George V during the Paris auto show. By contrast, the last time BYD executives traveled to the Detroit auto show they rented a suburban house to save the cost of hotel rooms.

Edited May 7, 2009 by Ovaltine

[battyr]

Very impressive. They started as a major Chinese electronics company that bought a Chinese car company. Think of it like Sony buying Chrysler and using their technology to make hybrids. They have 20,000 engineers and are training an additional 7,000. The Chinese advantage is not cheap labour; it is cheap engineers.

 

For what Buffett has invested, it was very, very cheap. Ford should buy into BYD. Ford could design the cars and BYD could develop the hybrid system. BYD looks like they have already beat GM at developing a Volt type hybrid.

[TStag]

Well done Guy's your finally cottoning on. I mentioned this months ago. Just do a bit of research on the Chinese auto giants. Once you get past their early models which had safety issues you quickly learn the are fast learners and improving very fast.

 

Some like Geely and SAIC are looking to buy Western brands to grow (Geely linked with Volvo and SAAB) and SAIC already own MG and have a large UK R&D presence.

 

SAIC already have about 15 new models in development in the UK for launch as MG's and Roewe's in Europe and the USA. They are coming and these models will not have safety issues, because they are designed in the West!

 

Think Ford will emerge super strong following this recession? Maybe, maybe not. The Chinese are coming very fast, the Europeans are growing and the Japanese are going nowhere fast. It's going to be very tough...

[battyr]

Did anyone notice. If you look at their video, they have an animation of their hybrid 3 cylinder engine. The engine is upside-down. The pistons are on the bottom of the engine and crank on the top. Note that this vehicle has no transaxle. The engine only powers a generator like the Volt. I don't even know if it has a conventional crank shaft?

 

Anyone knows what's up with this engine?

[silvrsvt]

Well done Guy's your finally cottoning on. I mentioned this months ago. Just do a bit of research on the Chinese auto giants. Once you get past their early models which had safety issues you quickly learn the are fast learners and improving very fast.

 

I've seen this in other industries, but they still have a ways to go to even come close with what the Japanese or Europeans are doing. You can only learn so much by copying things

[AngeloD]

""How did BYD get so far ahead?" Warren Buffett asked Wang, speaking through a translator. "Our company is built on technological know-how," Wang answered."

 

 

Whose technological know-how would that be?

 

Whose Patents will they be infringing on this week?

[156n3rd]

Determination, guts and no fear of work. Sounds like I've heard a story like this before. Maybe Henry Ford?