Content area
Full Text
This case is a follow up to a previous case on the Chinese company BYD which had hoped in 2008 to soon become the world's largest car company. With the support of American Warren Buffett, the company which had only been in existence for a few years at that time caught the attention of not only Mr. Buffett, but also many in the auto industry. This case re-examines the Company, explains the progress made by the Company since the original case was written, and explores its current strategic position. From rather humble beginnings not long ago BYD has become a major player in the Chinese auto industry and a global leader in electric vehicles.
BYD COMPANY LIMITED
BYD Company Limited (BYD) is a Chinese company primarily involved in the manufacturing of automobiles, rechargeable batteries, solar panels, and mobile phone components. The Company which employs over 180,000 people worldwide is a publically traded firm listed on the Hong Kong and Shenzhen stock exchanges. While automobile manufacturing makes up about half of BYD's sales, auto manufacturing contributes much more profitable for the Company, especially the manufacturing of electric vehicles (EVS). BYD in 2015 sold more electric cars than Tesla and General Motors and has branched out into other electric vehicles including buses, taxis, and forklifts. The Company started in 1995 by making batteries. Although Chinese-made batteries were already available, they were of poor quality. Imports of higher quality batteries were available in China mostly from Japan, but they were expensive for Chinese consumers. To satisfy the need for high quality and low cost batteries, Wang Chuan-fu started BYD, which stands for "Build Your Dreams." Wang, who was a graduate of the Beijing Non-Ferrous Institute, found his competitive advantage by studying Japanese batteries and finding creative ways of making similar batteries at a lower cost. Wang had been fascinated with batteries as a graduate student at the Institute and capitalized on that interest.
While most Americans had never heard of the Company, BYD captured international attention when Berkshire Hathaway bought a 10% interest in the Company. Warren Buffett wanted to buy 25% of the company, but BYD refused the offer. A company known for being cost-conscious and frugal, BYD has consistently been profitable. Located in Shenzhen, a...