BYD: Unknown Business Logic?

　　 main The price of the product is nearly 30%. Manufacture Businessmen are still happy to sell.

How can Wang Chuanfu guarantee the stable profit margin of BYD, a company with 140 thousand employees?

BYD fans, who are buying on the market, may be the best time for you to launch. In the second half of this year, BYD motor has cut its price entirely. The 60 thousand yuan car named F3, which was once famous in World War II, cut its price by nearly 20 thousand yuan, and the mid priced F6 with a price tag of nearly 100 thousand dropped 30 thousand yuan. Although a profit of up to 30% will surely delight some consumers (just like Audi, which charges 300 thousand of the price, suddenly 200 thousand, 800 thousand Hummer 600 thousand can be done), but not all. automobile Manufacturers can be so "generous", especially in China's low-end car market, no one like Wang Chuanfu "huge profits."

It may be the pressure of the brutal growth of China's independent brand auto makers recently. Perhaps BYD is preparing to clear up its inventory and launch more competitive models. But there is no doubt that Wang Chuanfu's behavior will surely surprise the peers: such a high price cut may not even cost even, and profits. (2010, when Fawkes was listed, the 09 one was only 8000 yuan down, and the latest Peugeot 307 was less than 10000 yuan from the old one). But you must believe that Wang Chuanfu's price cut is not "reluctantly giving up". The Anhui businessman, who looks soft and strong, seems not to have done any business at a loss.

The less advanced people live on

Compared with Li Shufu and Yin Tongyao, Wang Chuanfu is a truly backward person in China's private car enterprises. But the first car F3 he worked on was stunned in 2005. Similar to the TOYOTA corolla of the best seller, the high quality sheet metal technology, the strong plastic feeling and so on, it makes people feel vaguely that the car seems to have been separated from the traditional product image of Chinese private car companies. The words "how to build cars for battery makers" were also drowned by F3's hot sales. Although the high imitation of the year has reduced the cost of the car, Wang Chuanfu now seems to be too low on the price of his car. But what kind of magic weapon does he keep in the low price space that his peers can't match?

BYD may be the least needed in China's auto manufacturers. In 2003, Wang Chuanfu made a magnificent turn from the acquisition of Shaanxi Qinchuan Folel from the battery manufacturing field. But he did not want to adopt the "big purchase" mode for auto parts, like big car manufacturers.

It is said that Wang Chuanfu initially planned to produce dozens of core components of his car, such as engine, chassis, air conditioning, electronic control system, headlamp and body mold. Because engine is the core technology of automobile manufacturing enterprises, and electronic equipment such as air conditioning is the most cost effective component. {page_break}
 

As a matter of fact, BYD has produced much more auto parts than its initial plan, large enough to car body castings, central control moulds, and small to meter and driving computer screens. Although BYD has not publicly stated the proportion of parts of its cars, it is within the group. But we can see the whole picture from its nuance. It is said that less than 10 yuan electronic pointing device on BYD's rearview mirror is produced by itself.

Scaling up the investment and purchasing cost of the production line is a general rule for large international automobile enterprises. More and more meticulous division of labor makes it impossible for car manufacturers to be big and complete. Therefore, mature motor enterprises in Europe and America will form the "Motor City" effect accumulated by their supporting businesses in their locality. However, this may be a nightmare for a car company that is not big enough. According to the industry figures, only a set of ordinary automobile mold input costs need at least 100 thousand cars or so sales to flatten.

Although BYD is 5 years old, its sales volume is still less than 500 thousand. (starting from 2005 annual production and sales of 25 thousand vehicles, and by 2009, BYD realized the total sales volume of 448 thousand units), Wang Chuanfu certainly realized that he did not have the strength to establish a complete supply system for parts like European and American car companies, so he chose the internal digestion method. The problem is that large and whole has been proven not only to save costs but also to improve quality. Each component's production needs corresponding production equipment and technology. How can Wang Chuanfu realize the internal manufacturing of many parts and realize the current "small and complete" operation?

If you think 2003 is the starting point of Wang Chuanfu's relationship with the auto industry, you are totally mistaken. In 1998, Wang Chuanfu, who made batteries, had enough interest in electric vehicles. Perhaps it is the reason for studying battery all the year round. He insists that the use of new energy storage equipment and new energy is bound to be the trend in the future. Holding the dream of making electric cars to buy a declining automobile business may be an ambush for Wang Chuanfu to build a century old enterprise. But the problem is that he did not understand the automobile industry at that time, nor did he have the qualification to produce cars. {page_break}
 

Everything is ready except for the east wind.

Wang Chuanfu, who was eyeing the auto industry, acquired the Beijing Ji Chi automobile mould Co., Ltd. in 2002, and renamed it BYD automobile mould Co., Ltd. Before buying fryer, the company also provided products for other auto companies, but this business is certainly not Wang Chuanfu's original intention. He is waiting for the final step to enter the automotive industry completely, and Qinchuan Folel appears at the most suitable time.

Qin Chuan Folel had a car named Folel before being bought by Wang Chuanfu, but the quality was not to be flattered, and the location was chaotic. It is worth noting that Wang Chuanfu did not immediately launch a new product after the completion of the acquisition, and his acquisition was more than two years away from the listing of F3. Now that we have paid a lot of money to buy automobile production qualification, in the years when electric vehicles are not yet popular, Wang Chuanfu's first task is to make this traditional car project earn sustainable development funds.

Perhaps a layman needs a longer time to touch the essence of the automobile industry. Perhaps Wang Chuanfu has done a lot of hard work for this. But two years of integration must have burned a lot of money. It is unthinkable that nothing has been achieved in the automotive industry. In 2004, Wang Chuanfu even announced that BYD had entered the field of electronic products such as mobile phones, and BYD Microelectronics Co., Ltd. was established. For China's electronics OEM industry, 2004 does not seem to be the best time to enter, because Foxconn and Flextronics have erected gold lettered signboards in this field.

With Wang Chuanfu's shrewdness, he certainly will not work for OEM. When he invested heavily in the foundry production line, he might still have another "abacus".

We might as well make a guess: at present, Wang Chuanfu's OEM business can extend from mobile phone to notebook and electric paper books, because the mobile phone and computer have a strong commonality in technology, they need processors, memory and application programs, which makes Wang Chuanfu almost able to get through the diaphragm between mobile phone and computer. It is worth noting that the driving computers and electronic control devices used on automobiles are also the deformation or derivation of computers. Perhaps when Wang Chuanfu chose to do mobile phone OEM, he had already taken into account the possibility of the future production of automotive electronics.

Facts have proved this speculation. It is understood: BYD's OEM factory has completed a large number of automotive electronic equipment after completing the production tasks of NOKIA and Motorola, and these products will appear in BYD's vehicle.

Good internal structure and insight into {page_break}
 

According to the insiders, the investment in the equipment of BYD's foundries can be gradually leveled by the continuous orders of large mobile phones and computer enterprises. When these orders were completed, BYD's foundry production line began to contribute to BYD and other industries. Many foundry enterprises in China are in the state of "breaking the equipment", and the utilization rate of equipment is very high. Therefore, BYD factory can help BYD's "busy" hand in hand, and the cost of this "busy" should be very low. The market price of the electronic pointing device installed on the rearview mirror is close to 10 yuan, while BYD only needs 2.67 yuan for its own production. )

It is understood that Wang Chuanfu established more than 20 business units in BYD. The various parts of the OEM business are classified into different sequences. Its automobile division, which is subdivided by components, is very detailed. (for example: 12 business unit is auto mold, 13 business department is car design department, responsible for modeling, oil sludge, mathematical model, etc. 14 business department is responsible for die casting, 15 business department is responsible for automobile air conditioning, airbag, audio, ABS and many other core components). The leadership of the Department directly reported to Wang Chuanfu, so flat structure enables Wang Chuanfu to understand every minute change of BYD at the first time. Probably when he feels that a business department of a car needs an electronic product, he can quickly mobilize the relevant departments of mobile phone OEM to nurture.

When Foxconn continues to expand its scale to ensure that the profit margin of the OEM industry is not optimistic, Wang Chuanfu may not be worried that China's "demographic dividend" will be exhausted in the future. At that time, Wang Chuanfu could choose to use the premium of BYD brand products that had already formed climate to subsidize the subcontracting department. But Foxconn, a foundry company, has not found its brand base. Recently, the "galloping plan", which has been transformed from manufacturing to retail terminals, has opened up 1 electronic retail stores and the "Flying Tiger project".

Wang Chuanfu once named his integration mode as BYD mode, which has strong integration and radioactivity from the core product to integrate as many profit points as possible on the industrial chain. For example, batteries are the core technology of electric vehicles. In 2008, Wang Chuanfu also acquired the Ningbo Zhongwei Semiconductor Co., Ltd., which was used to make motor driven chips, plus the already formed automobile business. He has completed the layout of the electric vehicle industry chain, waiting for the time to achieve his ambition. However, as an electronic communication terminal, the mobile phone has a strong share of many technologies and computers, e-books and other products.

BYD enters new field

At present, BYD has successfully extended its foundry business to the notebook area, and is also ready to enter the field of electric paper books with great ambition.

Similarly, BYD's "solar energy plan" is launching a complete industrial chain plan from ore to industrial silicon, Gao Chungui, polysilicon, silicon wafer, solar cells, modules and solar power stations. Wang Chuanfu expects that he will reduce the cost of polysilicon from US $35 to US $15 in this way. {page_break}
 

"Integration and integration" is easier said than done, and it is not easy for Wang Chuanfu to form a state of mutual nurturing between his many integrated businesses. Perhaps in the future BYD's Ningbo mid latitude will produce solar cell control chips, BYD molds will produce related plastic parts, and electronic manufacturers will produce corresponding display devices and meters. So, do you have any reason to doubt the competitiveness of BYD's solar energy business?

BYD's current situation is far more complex than when Wang Chuanfu started his business in 1995. But "the rivers and lakes are not the old rivers and lakes, but Lao Wang is still the old king".

In the history of BYD's development, nickel cadmium batteries play an absolutely important role. In 1996, mobile phone is still a fashionable thing in China. A cell phone battery can easily cost thousands of yuan. But in Japan, nickel cadmium batteries are banned by the government. Wang Chuanfu grasped the opportunity of Japan's nickel cadmium battery manufacturer's industry transfer and made a good dig for the first barrel of gold.

Perhaps Wang Chuanfu did not have much money at that time, according to people familiar with the matter. "In those days, Wang Chuanfu made a certain transformation in the battery production line, turning the automatic production line into a" semi-automatic "production line. He used a lot of skilled workers, thereby greatly reducing the cost. In the same year, he made a mobile phone battery less than 15% of SONY and SANYO.

Perhaps this experience has made Wang Chuanfu fully aware of the charm of Chinese manufacturing mode, and when he entered the field of foundry, he may still believe in the low cost of this manufacturing mode. According to people familiar with the matter, Wang Chuanfu and Terry Gou have many similarities. Their lives are frugal. They are all workaholics. What's different is that Terry Gou likes to buy all kinds of automation equipment. He believes that this can improve efficiency and ensure higher productivity. But Wang Chuanfu favors the transformation of production lines and the use of manpower instead of some insignificant robotic arms. Perhaps Wang Chuanfu's approach is more suitable for the current manufacturing industry in China. A teacher with tens of dollars worth of tools may be able to match the machining quality of a robot arm. But the speed and yield are quite different.

The more obvious example is that after Wang Chuanfu's acquisition of Folel, he did not move the automobile factory to the more convenient coastal areas. He built two factories in Xi'an, while BYD's solar energy plan started from Shangluo, Shaanxi, where the manpower cost is even lower than that of Xi an.

At this point, you may not be surprised by BYD's big price cuts. Even if the profit margin of a car falls, the overall profit of the auto division may not be affected. Even in the automotive industry, small losses are made, but profits from OEM will be complemented. If this kind of small loss is taken for the promotion of brand awareness, BYD will still make money.

The latest news is that BYD will enter the field of home appliances with its own brand. This may be another release of the remaining capacity of BYD's OEM business. Perhaps in Wang Chuanfu's mind, the business of BYD will be connected in a more flexible way in the future, and profits will flow like water in every business and flow into a big river.