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BYD Speed​;​;: dense fog of the future lead to uncontrolled expansion

Whether traditional fuel vehicles, or new energy vehicles, BYD's future are dense fog.

    Local time on October 24, 2011, BYD North American headquarters in Los Angeles, Warren Buffett's gold partner Richard Munger attended the ceremony said: "Los Angeles and BYD are working great things in this world , BYD has 20,000, perhaps now more engineers, really trying to change the world. "

    But now, BYD eager to change their own. BYD three quarterly, the first three quarters of profit 352 million yuan, down 85%. However, the company's third quarter operating income increased by 10.95%, net profit of 77.37 million yuan, up 582 percent surge.

    This seems to be a Warrington signal. November 1, BYD (002594) A unit accidentally entered a limit. However, BYD's head shrouded in the haze is not this dispersed.

    On this day, as BYD's 1,000 employees being laid off, one of Xu is for the next job to run around, a BYD Xuzhou dealer has not yet back Antun's more than three hundred thousand yuan BYD arrears, BYD's neighbors - Shenzhen Zhenye Crest Valley area of ​​the owners, still BYD Baolong Industrial Park for excessive emissions of fear.

    "A company of his employees well, the dealer is not good, not good for the neighbors, you say he can be good to go?" Who is in bankruptcy liquidation distributors for BYD Xuzhou Antun Southern Weekend reporter.

    The magic of vertical integration

    China's abundant labor resources, once the cornerstone of the success of BYD. To work down into a few moves, less demanding on the skills of employees, almost anyone can do.

    According to BYD's initial public offering of A shares prospectus, as of December 31, 2010, in the book for the 183 317 full-time staff person. Each employee into the BYD will get a job number, the Southern Weekend reporter obtained a copy of incomplete version of the August 2011 internal BYD before optimization contact form on the employee's work has come to be up to No. 1212072 .

    In other words, since its establishment in 1995, BYD, recruited 100 employees in the loss of every 85 people. An insider said BYD, which the vast majority of general public - in the production line of ordinary workers.

    It can be said that China's abundant labor resources, once the cornerstone of the success of BYD. To work down into a few moves, less demanding on the skills of employees, almost anyone can do. Staff turnover, you can easily re-hire new people. July 2009 - 2010 February, BYD and even tried to dispatch the recruitment of more than 65,000 front-line production workers.

    From the battery to the electronic contract, then automobile manufacturing, BYD has been widely talked about recipe for success is this vertical integration model - by a high degree of vertical integration of upstream raw material cost control and synergies of the process, minimize production costs and improve efficiency.

    The rules have to BYD invincible. In 1995, 301 former Beijing Nonferrous Metal Research Institute, Deputy Director Wang set up BYD 2.5 million yuan loan company. More than one million yuan into nickel-cadmium battery production line, self-made production equipment, the production line can be broken down into a manual to complete the process, make full use of Chinese labor resources to low-cost high-quality win the market.

    1997 production of nickel-metal hydride batteries, lithium battery production since 2000. In 2001, BYD second among the world's nickel-cadmium batteries, nickel metal hydride batteries third, fourth place in lithium batteries.

    BYD Nickel batteries the best results are accounted for around 70% market share. However, the nickel battery also has its life cycle and market limitations. For example, in December 2004, the EU banned the use of cadmium batteries in the civilian, to prevent the toxic heavy metals into water and air. Cadmium battery range of applications, mainly in power tools, medical equipment, emergency lighting and warning systems.

    With the development of lithium batteries, the nickel battery began to reflect the substitution effect, which has weakened the market position of BYD battery.

    Mobile is the world's largest rechargeable battery application market, currently the vast majority of uses lithium batteries. BYD prospectus quoted from the Japanese Institute of Information Technology (IIT) statistics, in 2010 BYD Li-ion cell phone battery is about 8.75% global market share, ranking fifth. The top three of Samsung SDI, LG Chemical, Sanyo combined, accounted for 55% market share.

    BYD Li-ion battery market share achieved in large part relying on their OEM business.

    A supplier of machine tools from Japan told the Southern Weekend reporter, in their Chinese customers, only two never to buy the entire product, but the spare parts procurement. Them is Foxconn, BYD one.

    November 27, 2002, based Foxconn Group to invite the mainland visited BYD chairman Wang's phone Foxconn factory production line, the two sides failed to reach cooperation. I did not expect to go back Houbiyadi set up a third division, cell phone parts products begin processing agent.

    In 2003, BYD entered the mobile phone manufacturing business. In 2006, the turnover of its mobile parts 3 billion yuan in its total turnover accounted for 40%, more than the battery as its largest business segment. In December 2007, BYD phone business was split into BYD precision electronic components, on the HKEx.

    Despite the newcomers on the body mass is less than BYD Electronics Foxconn, but with two companies of Shenzhen's evolving pattern of mountain tigers, poaching, fight alone, fierce infighting, the "King of OEM," said Foxconn, starting from August 2006 to prosecute violations of several commercial technology secrets BYD and Foxconn leaving the original staff.

    In June 2007, Foxconn High Court of Hong Kong to China: BYD knowingly use confidential business data from Foxconn, and Foxconn to establish a production system is extremely similar to the phone, the company lost contracts worth 5.13 billion yuan.

    Ups in this case the most part, comes March 20, 2008 police detained BYD founder of Xia Zuo all. Later, BYD announced that all have been in detention, Xia Zuo fourth day after being released because of insufficient evidence, it is worth pondering is that BYD board Xia Zuo all arrested the same day (March 20) approved the resignation of Xia Zuo all , and was released April 7, all of the transfer notice Xia Zuo, said it had been due to "personal matters" resigned as vice president, was named by the executive director of non-executive directors.

    Wang Xiang-Yang L cousin has not meddle practical matters, corporate vice president, executive director of the Xia Zuo nearly six years after the departure of all, the three co-founder of BYD Wang in only one person, only the company helm. Since then BYD development, more than twenty general manager reporting directly to Wang, he closed everything needed. This centralized architecture of this Houbiyadi far-reaching strategic decisions.

    Where automotive business lost

    BYD car business is the first time directly to consumers rather than business users. Although R & D and vertical integration through the reverse, BYD can quickly create low-cost car, but the core technology R & D is still difficult to keep up with rivals.

    The success of the battery and the OEM, it seems to the BYD omnipotent confidence. In 2003, the acquisition of the former Xi'an Qinchuan BYD Auto Co., Ltd., to enter the automotive industry.

    In 2008, a passion for "the development of fast Chery Geely, BYD did not expect much faster," the curious, Li Gang, general manager of the former China National Automotive Industry Corporation, Strategic Research Institute researcher Jin Lvzhong Science and Technology, Chinese Academy of Engineering, Hui Guo hole together, to Shakespeare Di research, back to Beijing after the submission of "emancipating the mind and a walk in the forefront of innovation typical" of the report, and Chinese Premier Wen Jiabao also proposed to look at BYD.

    Li Gang, the Southern Weekend reporter recalled that research is actually a day, morning Wang do report about the company's history, the afternoon visit the factory. In the meantime, Gang made to see BYD battery production line, Wang said, is the demolition, can not see. Gang still feel sorry, just listening to verbal descriptions, that very advanced production lines, can be used as hand by hand.

    In private exchanges, Li Gang, China FAW remember in the 1950s have also made similar vertical integration, but because there was no coordination unit, not five or six years down the found, must be collaborative division of labor.

    19th-century Europe and America, also prevalent mode of vertical integration applications, steel, petroleum, aviation industry, including Ford, have tried the path of vertical integration. But with the information and communication technology development, market transactions between different subjects, significantly reducing communication costs, lower transaction costs between companies, so there is a non-vertically integrated. "Coase rule" (Coase'sLaw) that a manufacturer of sustainable development, until each additional transaction will increase the internal cost is equal to the cost of outsourcing this transaction to terminate. As the market transaction costs, the company does not need to do everything yourself.

    Jin Lvzhong touches agree BYD vertical integration of the characteristics of the developed countries more and more automated, BYD was replaced with artificial machines, which contrary to the trend, but was in accordance with China's national conditions.

    Guo Kong Hui admits that she's not quite understand BYD vertical integration approach. He told the Southern Weekend reporter, Wang and his team can get good control of many sectors, many parts can the quality and cost control than other suppliers, cheaper, more effective, it must be said that their ability.

    Early August 2011, general manager of BYD Auto Sales of ice in the summer before leaving to accept cars Netease interview revealed that vertical integration is forced, and it is voluntary. BYD entered the automotive industry since the first time, nobody believed him from the batteries into the automotive sector to survive, supporting the first commercial domestic prices high, with the vehicle with the efficiency is not high, and each into factions, it has capacity When will supply its own brand, not (capacity) when you have to step aside and so on.

    Vertical integration model, to help create an affordable BYD's automotive products, so BYD's public relations managers relish, in addition to glass and tires, almost all other components of BYD Auto own R & D production.

    In 2009, BYD F3 become the best-selling model year, BYD high overall car sales increased 161.3 percent year on year to 446,500 (growth rate much higher than the average passenger growth rate of 48.1%); operating income increased 158.1 High % to 22.365 billion yuan, accounting for 53.6% of total revenue, as its largest business segment, but also to push ever BYD peak performance.

    But What's different is that BYD car business is the first time directly to consumers rather than business users. Although R & D and vertical integration through the reverse, BYD can quickly create low-cost car, but the core technology R & D is still difficult to keep up with rivals. With the rise of China's auto market, short-lived victory also began to expand early BYD, BYD groundbreaking "a brand four sales network," the sub-network sales initiatives, intensive distribution network, leading to the dealer competition, the pressure is too large.

    Bottlenecks in the market soon. China's auto market in 2010 34.5% growth rate continues, the world's largest market, BYD's car sales can be increased only with 16.4% to 519,800, did not meet the adjusted annual target of 600,000, not to mention envisaged 800,000 a year.

    August 8, 2011, following the resignation of summer ice in the micro-Bo wrote, "As my personal quick success, and misleading the company and sales team, I set the strategy for the business demanding and I expect too much, too much pressure after the management team channel too much force. hurt the dealer friends. "

    In the vertical integration model, the downstream market slowdown, the same feedback to the product upstream, which dragged down the overall efficiency, but also it can not avoid an important reason.

    Uncontrolled expansion

    BYD also sowing, sowing in the end but no one knows how long. And the news from across the Atlantic to make this prospect even more dull.

    A middle to the Southern Weekend reporter lamented BYD, when the market situation is excellent, can not tell the difference. Fertilization were seedlings can grow, pulling seedlings are seedlings can also be long.

    Excellent situation in 2009, so BYD products in the second year of the car seemed to be somewhat casual, introduced several new vehicles in 2010 did not give too many surprises, but no similar F3 over a million on sales of such products.

    Rapid decline of the auto business, BYD has more imminent expansion plans, which exacerbated the BYD's condition.

    Following the battery, OEM and automotive business, the BYD continues to try to replicate in other areas, the vertical integration model, flow from the auto parts business to build a group of people turn to home appliances division, and finally nothing.

    June 2010, the Chinese government opened up for private consumers to buy new energy vehicles subsidy policy, just a start of electric cars, BYD has the vision to invest in the energy storage power plants, photovoltaic cells and LED.

    2011 third quarterly show, BYD recently delivered to the Shenzhen bus system 200 electric buses and 250 electric taxi, which is its biggest success of new energy vehicles. The March 2010 market F3DM, has sold only 50 months hovering around.

    BYD new energy R & D investment in the number of known, public figures, to the layout of new energy vehicle market, BYD in the October 2008 acquisition of nearly 200 million yuan in semiconductor manufacturing, Ningbo Wei, upstream integration of electric vehicles chain; July 2009 to 60 million yuan acquisition of Hunan's Midea Coach Manufacturing Co., Ltd. Sunshine Bus, with its Changsha factory as BYD new energy passenger car production base, plans to invest 2 billion to 3 billion yuan; 2010 In September, they spend 200 million yuan in Tibet purchase 18% stake Zabuye lithium industry.

    The Chinese government's new energy car line once again swing, new energy vehicles policy delay childbirth. The earliest name of the new energy vehicles to enter the market under the banner of BYD riding a tiger.

    Originally planned to open in late 2010 North American headquarters of BYD, the actual delay of 10 months; the end of 2011 it plans to hire 150 employees in Los Angeles, there are only 20. BYD also delayed the sale to U.S. private consumers, the time of electric vehicles, currently its main business is concentrated in solar panels, batteries, LED lights and electric buses.

    Los Angeles welcomed with great enthusiasm the arrival of Chinese companies, including a $ 2 million in government subsidies to renovate the old building where the office BYD.

    "It's like planting." Former Los Angeles deputy mayor Aositingbo within (AustinBeutner) said that there are some grow slowly grow faster, but you have to sow them.


    BYD also sowing, sowing in the end but no one knows how long. And the news from across the Atlantic to make this prospect even more dull.

    According to "Washington Post" reported on October 31, the U.S. Energy storage company BeaconPowerCorp. Officially filed for bankruptcy protection a year ago, the company has received a U.S. Department of Energy's $ 43 million loan guarantee. Two months ago, the U.S. solar company Solyndra green energy giant filed for bankruptcy protection, the company has received a U.S. Department of Energy of up to $ 535 million in loan guarantees.

    Both cases, means that the U.S. government to save the company millions of dollars in energy tax is likely this came to nothing. The semi-annual report, according to BYD said the company in the next one to three years will receive government subsidies of about 10 million.

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