Where's the Chinese Toyota?

bengalraider

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If China is going to build on its growth, it's will need an industrial policy that doesn't hold it back - By Alexandra Harney | Foreign Policy

BY ALEXANDRA HARNEY | DECEMBER 8, 2009
The common perception of China relying on industrial policies to make its economy successful is just an illusion," says Fan He, assistant director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. "If industrial policy works, it's mainly at the local level."

Industrial policy is sometimes shorthanded by its critics as "picking winners" -- essentially, it's government intervention to build certain industries by offering incentives and shielding them from foreign competition. Japan's industrial policy of the 1970s and 1980s, which was later copied by South Korea and Taiwan, is among the most studied recent examples. But if the goal of traditional industrial policy is to invest in companies and turn them into global dynamos, China has a long way to go. More than half of Chinese exports are made by companies with significant foreign investment. Although Lenovo and Haier have made laudable strides overseas, Beijing has yet to produce a truly international brand along the lines of Japan's Sony or Toyota. And it has struggled to consolidate its automotive, steel, aluminum, and coal-mining industries.

Take cars, for instance. Although the government has been guiding the development of the automotive sector for at least two decades, more than 80 percent of industry revenues still come from joint ventures where the management expertise and technology is provided by foreign companies such as Shanghai Volkswagen, FAW-Volkswagen, and Shanghai GM, according to Arthur Kroeber, managing director of the consultancy Dragonomics. Despite government support for state-owned enterprises, the most-aggressive, fastest-growing automotive companies in China are the independents -- companies with entrepreneurial leaders like Chery, Geely, Great Wall, and BYD, says Bill Russo, senior advisor at Booz & Co.

It's not that Beijing has done everything wrong. For one, its tight management of the currency has enhanced its global competitiveness, to put it mildly. The government has also managed to keep costs down for manufacturers by offering cheap capital through the banks and allowing state-run companies to dominate key sectors such as telecommunications and electrical-power generation.

But currency control and cheap capital do not a winning industrial policy make. Since the 1980s, the overarching goal of Chinese industrial policy has been rapid economic growth through industrialization -- a strategy that mirrors those of South Korea and Japan in earlier years. Like its neighbors once did, China singles out strategic industries, including the automotive, semiconductor, aerospace, oil, and petrochemicals sectors, sets goals for their development, encourages banks to provide financing, and introduces policies to encourage their growth, including those on foreign investment. These policies essentially send a message to industry: Here's what we want to promote.

"China's industrial policies are mainly trying to balance between different sectors," explains He of the Chinese Academy of Social Sciences. But what sets China apart is the way it has implemented this policy. Where South Korea and Japan ruled from the top, in China, industrial policy is decentralized and sometimes even chaotic.
 

bengalraider

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part 2

Jack Perkowski, a former Yale University offensive lineman who founded an automotive components company in China in 1994, compares traditional industrial policy with football: The coach drafts plays, and the players execute them. Chinese industrial policy is more like soccer: free-flowing. "It's kind of the players on the field that are making up the rules, that are making up how the game is played, not the coach," he says. "The coach is staying on the sidelines hoping his team will win."

China's official coaches do more than hope. The problem for everyone else is, it's not always clear who they are. Unlike with Japan in the 1960s and 1970s, where the leadership of the Ministry of International Trade and Industry was well established and industrial-policy watchers had a good sense of who was pulling the strings, Beijing-watchers are still debating who actually makes Chinese industrial policy, in part because of a lack of transparency in the policymaking process, but also because people in so many parts of the government seem to have a say. The National Development and Reform Commission, a government agency that is part of the State Council and oversees economic development, obviously plays a role, but other government departments weigh in as well.

What is clear is that foreign direct investment, private entrepreneurs, and local government initiatives, rather than traditional industrial policy, are key drivers of economic growth. Southern China's Pearl River Delta is one good example. Starting in the 1980s, regional authorities used incentives like preferential tax rates and discounts on land to lure foreign investors, many of them from Hong Kong and Taiwan, to the region, which was then farmland. Beijing did establish special economic zones to serve as incubators of capitalism, but it also loosened the reins by giving the region more freedom to set its own wages and prices.

Foreign investors provided jobs and technology to local firms through joint ventures. Other times, local firms illegally copied or reverse-engineered foreign technology. Wages stayed low because workers were coming in constantly from the countryside and local officials didn't enforce labor laws consistently. Private entrepreneurs poured into the region, creating a competitive frenzy that produced prices so unbeatably low they became known simply as "the China price."

Today, the delta is the world's largest consumer electronics production hub, an agglomeration of factory towns to end all other factory towns. Home to the world's largest plant with some 270,000 workers, a prominent electric car producer, and the country's largest telecommunications equipment company, it produces a third of China's exports.

But the delta's success is just one element of China's industrial policy. Elsewhere, China has used foreign investment as a shield to protect domestic companies. By limiting ownership in car assembly operations to 50 percent, China allowed its companies access to foreign technology while guarding them from the full force of international competition -- a strategy Eric Thun, a lecturer at Oxford University, calls "industrial policy on the cheap." According to the Chinese government's road map, however, the foreign joint-venture partners should have provided their Chinese counterparts the technology and management savvy to produce best-selling cars under their own brands. So far, that hasn't happened.

But the problem runs even deeper than that: Current industrial policy isn't making the Chinese economy more balanced, which is precisely what Beijing and the rest of the world want to see happen. China's industrial policy, like Japan's over the past three decades, favors people who make things over those who consume them. The People's Bank of China keeps interest rates low to provide financing for producers, at the expense of households, whose effective return on deposits over the past decade has been a measly 0 to 2 percent, according to Daniel Rosen, principal of New York-based consultancy Rhodium Group. China's industrial policy "takes care of borrowers, but what about the people whose money it is in the first place?" Rosen asks. This adds to the imbalances in both the Chinese and global economies by making Chinese consumers worse off, so they're more likely to save their money instead of spending it. By the same token, limited wage growth in areas like the Pearl River Delta enhances China's competitive advantage as an exporter, but it, too, hinders growth in consumer spending. Low interest rates also exacerbate many industries' overcapacity problem by making it cheap for manufacturers to borrow.

As Beijing tries to redirect its economy away from labor-intensive exports toward one that relies more on high technology and domestic consumption, it will have to find good answers to questions like Rosen's. Going forward, it will be crucial for China to relax its grip over sectors such as health care, education, and telecommunications and channel more loans to private companies. And perhaps, as Massachusetts Institute of Technology's Yasheng Huang and others argue, China needs to allow its currency to appreciate not only to stop distorting its economy and global trade balances, but also to encourage innovation.

As for all those Beijing-watchers falling sway to the current fascination with all things China and contemplating making a little industrial policy of their own, the relevant lesson is clear: Better look under the hood first.
 

Koji

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This is a ridiculous article.


Fortune Global 500 - Wikipedia, the free encyclopedia
Rank Country Companies
1 United States 140
2 Japan 68
3 France 40
4 Germany 39
5 China 37
6 United Kingdom 26
7 Switzerland 15
8 Canada 14
8 South Korea 14
10 Netherlands 12
10 Spain 12


There are many recognized (indigenous) Chinese firms that are large and profitable. While they are more so in the heavy industrial realm (thus less recognizable to you), it doesn't mean that they aren't there.

Global 500 2008: Countries - China

Ever heard of Lenovo?
 

Martian

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"Beijing has yet to produce a truly international brand along the lines of Japan's Sony or Toyota." (Posted by Bengalraider)

Let's apply the "Sony or Toyota" test to Britain, France, and Canada.

Let me see...are there any British, French, or Canadian consumer-electronics firms like Sony in the United States? I can't think of a single one.

Let me see again...are there any British, French, or Canadian cars like Toyota that is being sold in the United States? Nope; also nothing there.

What's the deal with the Chinese-bashing? Most OECD countries couldn't pass the "Sony or Toyota" test.

However, offhand, if you're interested in knowing the names of some growing Chinese companies, I can mention some of them.

Huawei (world number two in manufacturing telecom equipment; also a fierce competitor to Cisco in the computer server market; search for my other posts for links on Huawei)

ZTE (big manufacturer of cellphones; set up a joint-venture with 49% ownership in Russia; ZTE's new high-technology manufacturing plant in Russia was profiled on "Russia Today" a few months ago)

Lenovo (world's fourth-largest computer manufacturer after HP, Acer, and Dell)

Haier (one of the world's largest manufacturers of "white goods;" I've seen Haier products at Walmart and BJ's; Haier manufactures refrigerators, air conditioners, and other household appliances)

Here are useful links to large Chinese companies with revenues comparable to Sony or Toyota.

IndustryWeek : The World's 1000 Largest Manufacturers 2008: The Chinese Influence
IndustryWeek: IW 1000 -- Company List By Rank -- 2008 Industry Sort 10
 

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I have so far not been able to witness a pervasive spirit of innovation nor enterprise in China which is a hallmark of some of the world's top leading companies.

Most of the top Chinese companies are

1. owned by the Govt.
2. thrive in an environment micromanaged by the Govt.
3. cater to the domestic market
4. core industries(banks, oil and gas, mining etc)

Even companies like Haier, Lenovo are partly owned by the Govt.

------------

Chinese companies which do compete internationally are able to do so because of the tremendous support of the govt.

China Development Bank (CDB) signed a cooperation agreement worth USD 30 billion with the Chinese telecoms equipment provider Huawei Technologies on September 22, 2009, citing a report.

In fact, CDB has long been financing strong Chinese companies’ internationalization in line with the local government’s policies. By the end of this August, it had lent outstanding loans of USD 80.1 billion in foreign currencies with a low non-performing loan ratio and high yields.

The bank agreed in 1998 to fund Huawei’s establishment of domestic development and production bases, started cooperation with the company on overseas markets in 2004, and offered a credit line of USD 10 billion to the latter in 2005.

By far, Huawei has become a world-class telecoms equipment provider, with its products utilized by telecoms operators in more than 100 countries. In spite of the global financial storm, Huawei sees growth in its business, partly thanks to CDB’s various services."
China Development Bank Enhances Support to Huawei | VisitCHN

^^ This is one of creating future white elephants imho.

Notice how most of the great companies came into being because of their ability to overcome challenges as opposed to being spoon fed.
 

Martian

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"Chinese companies which do compete internationally are able to do so because of the tremendous support of the govt." (Posted by Singh)

You see government support of Chinese companies as a weakness. I have a different opinion. The Chinese are wisely copying the US playbook. Companies, such as Boeing, received substantial support from the US government. Depending on your view, the continuous stream of military contracts by the US government to Boeing and other large US corporations is a form of government support.

Indeed, in the Airbus lawsuit against Boeing over unfair government subsidies at the UN, Airbus contends that current US military government contracts to Boeing represent a hidden subsidy.

To take another example, Perot's EDS did not succeed because Ross Perot is a genius and he outworked everyone else. Perot received his "big break" when he won government contracts to manage government airports in Texas.

The Chinese study the incubation, emergence, and growth of US companies. The Chinese are not copying American methods completely, but the government support of national champions is based on the American and French blueprints.

If you're interested in the successful execution of government support of large multinational corporations, you might want to read about the Korean government's support of Hyundai. A few years ago, there was a very good television episode about Hyundai and the Korean government's support over decades on the History Channel.
 

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Martian,

Pardon my French but you have given the most stupid arguments.

1. US is a free market capitalist economy.
2. “Perot was refused 77 times before he got his first contract.”
3. Are we forgetting the Asian Financial crisis of 1998 and its impact on Korea.
4. State owned companies without any competition in state controlled markets are not “champions”.
 

Martian

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Okay Singh, here's the counter-volley.

"Chinese companies which do compete internationally are able to do so because of the tremendous support of the govt."

You don't find the government support of Chinese companies logical? Under your fundamentalist free-market mentality, you would prefer to throw an embryonic Huawei against the world number one monster Cisco Systems? Does a ten-year old really stand a chance in a fight against the heavyweight champion of the world?

"Are we forgetting the Asian Financial crisis of 1998 and its impact on Korea."

As a nation, South Korea had too much debt. If they had stopped buying all those excessive weapons and developing their own super-expensive domestic tank (at 8 million dollars per unit), South Korea could have emerged virtually unscathed like Taiwan.

The Asian financial crisis is completely unrelated to the careful nurturing of Hyundai and the other chaebols like Samsung by the South Korean government. Even today, the South Korean government is trying to help Hyundai. South Korea restricts American access to its car market, while it freely exports Hyundais and KIAs to the U.S.

"State owned companies without any competition in state controlled markets are not “champions”."

I fail to see the difference between the socialist French-controlled market and the market with Chinese-characteristics. It simply means that there is a significant government presence in the economy. To some degree, the U.S. is also a mixed economy that is highly regulated.

Do you want me to go look for statistics to show that there is less red-tape in the Chinese economy than in the Indian economy?
 

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Let me see again...are there any British, French, or Canadian cars like Toyota that is being sold in the United States? Nope; also nothing there.
British cars - Jaguar, Land Rover, Aston Martin, Mini cooper
French Cars - Renault, Bugatti, Citroen

All world famous cars.

Canada for obvious reasons didn't produce cars because of overwhelming presence of American cars and technology.
 

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Martian,

1. Govt baby sitting doesn't produce world class globally competitive companies. You are yet to prove otherwise.

2. Korean debt issue, financial crisis was largely as a result of state support.

3. You are mistaking state bankrolling with protectionist measures. All countries from time to time put up protectionist measures.

4. The topic is about China, China is perhaps the world's largest exporter and yet it has no internationally well known brand.
 

Martian

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"Cisco in Computer server? It's in nascent stage for them compare it with HP/DELL/IBM" (Posted by nitesh)

"Can you post link for computer servers by Huawei.Cisco are specialists in networking." (Posted by Sridhar)

Cisco's New Structure Key to Success, Chambers Says - PC World Business Center

"Chambers downplayed the growing field of competitors Cisco is facing as it expands, especially with its UCS (Unified Computing System) architecture that includes its first servers, introduced earlier this year.

"I know you want me to talk about HP, or you want me to talk about Huawei," Chambers said. "We don't react to what a competitor does. We react to market transitions."

Reacting to them quickly will have a big payoff for Cisco, he said."

Force10 embraces MPLS within carrier core switches - Network World

"Force10 will face significant challenges in the core router market, however. Cisco, Juniper and Huawei had a combined 98% share of the $569 million market in the second quarter, according to Dell'Oro Group."
 

Martian

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British cars - Jaguar, Land Rover, Aston Martin, Mini cooper
French Cars - Renault, Bugatti, Citroen

All world famous cars.

Canada for obvious reasons didn't produce cars because of overwhelming presence of American cars and technology.
Ford to Buy Jaguar for $2.38 Billion - NYTimes.com

Those British cars have been owned by Ford, an American company, for twenty years. I will reassert my position that no mass-produced British-owned cars are currently being sold in the US. Now, some of the brands have been purchased by Tata (they're Indian now), which "contributed to a credit-rating downgrade." See Tata: Still Reeling from Its Jaguar-Land Rover Buy - BusinessWeek

I've never seen a "Renault, Bugatti, Citroen" or any other French car on a U.S. road. I am certain that the French cars are widely sold in France, but I have not seen a single one in the US.

The bottom line is that many car manufacturers make a nice living selling cars in their home markets or nearby markets. Very few car makers can survive in the ultra-competitive US market. Considering that Renault, Citroen, and Toyota, have been in existence for many decades, it seems unfair and unrealistic to expect a significant Chinese presence in the US car market. After all these years, Renault and Citroen haven't been able to establish a toe-hold.
 

Martian

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Martian,

1. Govt baby sitting doesn't produce world class globally competitive companies. You are yet to prove otherwise.

2. Korean debt issue, financial crisis was largely as a result of state support.

3. You are mistaking state bankrolling with protectionist measures. All countries from time to time put up protectionist measures.

4. The topic is about China, China is perhaps the world's largest exporter and yet it has no internationally well known brand.
I'm going to take another shot at this.

If I understand you correctly, you're saying that companies should compete on their own merits without government support. In general, I would agree with you. However, there is the complication of the stage of development of the market that a company is trying to compete in.

If it's a new market like nanotechnology then it makes sense to let the venture-capital market perform its function with minimal government interference.

However, if you're a country like China that industrialized late, how do you compete against the established behemoths? There is simply no way that Chinese SMIC can compete against a world-leader like Taiwan Semiconductor (TSMC). Each modern semiconductor fab costs billions of dollars. How is SMIC supposed to obtain a bank loan for billions of dollars without government support? Without government support, SMIC could never establish a toe-hold in the semiconductor industry.
 

Daredevil

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Ford to Buy Jaguar for $2.38 Billion - NYTimes.com

Those British cars have been owned by Ford, an American company, for twenty years. I will reassert my position that no mass-produced British-owned cars are currently being sold in the US. Now, some of the brands have been purchased by Tata (they're Indian now), which "contributed to a credit-rating downgrade." See Tata: Still Reeling from Its Jaguar-Land Rover Buy - BusinessWeek

I've never seen a "Renault, Bugatti, Citroen" or any other French car on a U.S. road. I am certain that the French cars are widely sold in France, but I have not seen a single one in the US.

The bottom line is that many car manufacturers make a nice living selling cars in their home markets or nearby markets. Very few car makers can survive in the ultra-competitive US market. Considering that Renault, Citroen, and Toyota, have been in existence for many decades, it seems unfair and unrealistic to expect a significant Chinese presence in the US car market. After all these years, Renault and Citroen haven't been able to establish a toe-hold.
The point is Jaguar and LandRover are still made in Britain and it is a british technology. They might have changed hands as the previous owners wanted to make a profit by selling their brands which is quite common now a days. Similarly, Renault and Bugatti are high-end cars like Italina ferrari, you wont see then that commonly like a Toyota but their technology and design is much superior than any of the Japanese car companies and that is why they are expensive. Citroen is a very common car in Europe. Selling everything in US is not end all of everything.

On that note China has nothing in the league of a Toyota that would have reflected the chinese technology prowess. On the other hand Chinese companies instead of innovating are bluntly pirating cars/bikes from other countries. It shows the hollowness of Chinese technology, cannot make good stuff on their own but good at pirating.

The Hindu Business Line : Chinese checker

BBC NEWS | Business | GM sues Chinese firm for copying
 

Singh

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I am saying as per established research "only those" companies competing on their own "merit" become great. The research is unequivocal on this. You are yet to prove the researchers wrong.

Govt will setup protectionist barriers and disburse loans to protect weak ad ailing domestic "industries' but this not what is happening in China. And inspite of the above Chinese state support no world class globally competitive company has emerged from China, the largest exporter.

Obviously the Chinese policies have failed to promote competitiveness. And its the authoritarian Chinese govt which is the reason why China has emerged as a leading exporter and this factor is essentially unsustainable.
 

Martian

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I am saying as per established research "only those" companies competing on their own "merit" become great. The research is unequivocal on this. You are yet to prove the researchers wrong.

Govt will setup protectionist barriers and disburse loans to protect weak ad ailing domestic "industries' but this not what is happening in China. And inspite of the above Chinese state support no world class globally competitive company has emerged from China, the largest exporter.

Obviously the Chinese policies have failed to promote competitiveness. And its the authoritarian Chinese govt which is the reason why China has emerged as a leading exporter and this factor is essentially unsustainable.
With all due respect, I disagree. I believe initial government support can lead to world-class companies.

Huawei patent filings rank first in the world - news

"Huawei patent filings rank first in the world Huawei, a major Chinese telecommunications company, for the first time ranks No. 1 in the world among all the company and individual applicants for the Patent Cooperation Treaty (PCT), according to the latest statistics released from the World Intellectual Property Organization."

Nokia, NSN, Huawei sign patent cross-licensing deal | Reuters

"HELSINKI, Sept 29 (Reuters) - Nokia (NOK1V.HE) and its telecom equipment making venture Nokia Siemens Networks (NSN) have signed a cross-licensing agreement with China's Huawei [HWT.UL] covering essential patents for wireless standards, Nokia said on Monday."

Qualcomm leads the race for LTE patents; Huawei also among the top

"Qualcomm leads the race for LTE patents; Huawei also among the top
TT Bureau | | 17 Nov 2009

Chip maker, Qualcomm is leading the pack for most number of patents filed for Long Term Evolution (LTE) technology. ABI Research says that the company alone contributed 24 % of the total patents filed for LTE.

Others in the list include Interdigital (18%), Huawei (10%), LG (9%), Nokia (9%) and Samsung (7%)."

Developing Telecoms | Huawei patents top 8,000: ten every day

"China's State Intellectual Property Office has revealed that in the first half of 2005 Huawei posted 1,231 patent applications, making the company the most prolific in the country.

Huawei's total patent applications have now reached 8,000, including 800 applied for in over 20 countries and regions including the USA and Europe. Huawei is now devoting over RMB 4 billion to R&D every year. By the end of 2005 Huawei's domestic applications will amount to 3,000 while the number for international applications will reach 500. The average number of daily applications is expected to reach ten.

Huawei will continue to include standard patents as part of its Intellectual Property Rights strategy and will organise a specialist team that will actively participate in domestic and international standardisation events. For example, Huawei has already declared 46 essential patents in ETSI.

Six research institutes in Beijing, Shenzhen, Shanghai, Nanjing, Xi'an, and Chengdu have been strengthened with five overseas research institutes in the USA (Silicon Valley and Dallas), Switzerland, India, and Russia. Huawei's institutes in Shenzhen, Shanghai, Nanjing and India have been certificated by KPMG to have achieved CMM Level 5."
 

Koji

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Martian, have you brought up the South Korean Chaebols as examples of government support?

Samsung, Hyundai, Daewoo...all are given governmental preference in contracts at the expense of smaller competitors.
 

Martian

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The point is Jaguar and LandRover are still made in Britain and it is a british technology. They might have changed hands as the previous owners wanted to make a profit by selling their brands which is quite common now a days. Similarly, Renault and Bugatti are high-end cars like Italina ferrari, you wont see then that commonly like a Toyota but their technology and design is much superior than any of the Japanese car companies and that is why they are expensive. Citroen is a very common car in Europe. Selling everything in US is not end all of everything.

On that note China has nothing in the league of a Toyota that would have reflected the chinese technology prowess. On the other hand Chinese companies instead of innovating are bluntly pirating cars/bikes from other countries. It shows the hollowness of Chinese technology, cannot make good stuff on their own but good at pirating.

The Hindu Business Line : Chinese checker

BBC NEWS | Business | GM sues Chinese firm for copying
Gasoline-powered engine technology is mature. It is hard for embryonic Chinese car companies to match Toyota's engineers with decades of experience and billions of dollars in R&D budget. Any small car company, Chinese or otherwise, is stuck with reverse-engineering until it can attain sufficient size.

In the new technological field of electric cars, it is another story. Here, Chinese car companies are competing on a more equal footing with foreign car companies. Foreign car companies do not have the advantage of a multi-decades lead.

Berkshire Hathaway, one of the world's largest companies, is run by the world's richest man, Warren Buffet (see #1 Warren Buffett - Forbes.com ). Warren Buffet believes that China's BYD can become a world leader in electric cars.

Why Warren Buffett is investing in electric car company BYD - Apr. 13, 2009

"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."
 

Daredevil

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Gasoline-powered engine technology is mature. It is hard for embryonic Chinese car companies to match Toyota's engineers with decades of experience and billions of dollars in R&D budget. Any small car company, Chinese or otherwise, is stuck with reverse-engineering until it can attain sufficient size.
A country that can produce 4th generation aircrafts unable to produce a car on its own but has to depend on reverse engineering is laughable :lol:. It again shows the hollowness of the claims that China is a technological super-power. It depends on reverse engineering for almost everything. It doesn't have the environment that stimulates innovation in the country. A billion people fed on the CCP propaganda will have to hard pressed to think on their own and that shows in their dismal innovation exemplified by copying of a very low-tech motorbike like 'Gulsar' that too from a third world country like India. :rofl: :rofl:

In the new technological field of electric cars, it is another story. Here, Chinese car companies are competing on a more equal footing with foreign car companies. Foreign car companies do not have the advantage of a multi-decades lead.
Almost every car company right from japanese toyota to american GM are taking plunge into not only electric cars but also electric hybrids. And japanese are leading the way in hybrids.

Berkshire Hathaway, one of the world's largest companies, is run by the world's richest man, Warren Buffet (see #1 Warren Buffett - Forbes.com ). Warren Buffet believes that China's BYD can become a world leader in electric cars.
."
Let's see how BYD electric care is faring

Is BYD’s Electric Car Ready for Prime Time?

Chinese auto makers would love to break into the U.S. market, and BYD Co., the auto upstart part-owned by one of Warren Buffett’s companies, may be among those closest to that goal. However, its vehicle may need more than a little fine-tuning.

The tech chief of a global auto maker who recently drove BYD’s all-electric battery car, the e6, told The Wall Street Journal that he was “truly astonished that they plan to sell such a half-baked car” in China :rofl: later this year and in the U.S. next year.

The ride was “rough,” which indicates a problem with the car’s computer control technology, and its handling was “squishy,” the executive said.:D

BYD has said it would start building beachheads in America by the end of next year by launching the e6. It plans to pick a specific region within the U.S. and initially market “a few hundred” e6s to government agencies, utilities and other corporate fleet customers, priced at slightly more than $40,000.

That’s a risky move because one of electric battery cars’ key enabling technologies — high-capacity, high-power lithium-ion battery — is still punishingly costly and considered still-maturing technologically. Toyota Motor Corp. had planned to use the technology in 2008 but delayed its use in products at least a couple of times. It recently decided to use lithium-ion batteries in a plug-in hybrid it is planning to launch later this year in Japan and the U.S. but is only tiptoeing into the technology as it plans to make only a limited number of the plug-ins available to fleet customers.

The big question: Is an upstart like BYD technically savvy enough to deliver the technology without quality and performance problems?

BYD may be growing by leaps and bounds technologically as a lithium-ion battery and automobile producer, but it doesn’t have a good track record in keeping promises on product launches, and some industry observers suspect there may be technical glitches plaguing its green cars, which include a plug-in hybrid car called the F3DM, in addition to the e6.

BYD began selling the F3DM late last year to fleet customers but has since failed to make it available for consumers even though it said it plans to make F3DMs available in June.

The company’s chairman, Wang Chuanfu, said the delay is because BYD is waiting for government incentives for private buyers in China to buy “new energy cars.” The plug-in hybrid car, priced at about 150,000 yuan, or $22,000, is “too pricey” for common consumers in China, he said, adding that “the car needs subsidies” to sell.

Still, with or without incentives, the early driving impressions on the e6 and the company’s failure to make the F3DM available for private purchases cast doubt over BYD’s goal to get the e6 to consumers not only in China but beyond.

–Norihiko Shirouzu

http://blogs.wsj.com/chinarealtime/2009/10/27/is-byd’s-electric-car-ready-for-prime-time/
That says it all about your BYD electric car. High price, unfeasible technology, rough ride and half-baked car :lol:.
 

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