BYD: Wang Chuanfu's Expansion Roadmap

The most important steps in life are one or two steps. China's richest man Wang Chuanfu A blockbuster is logical.

In September 28, 2009, Hurun announced the "2009 Hurun rich list". BYD President Wang Chuanfu has the fortune 35 billion yuan to become China's richest man. A year ago, in the Hurun rich list in 2008, Wang Chuanfu still ranked 6 billion in the twenty-second place.

In just 365 days, from 6 billion to 35 billion, this has gone beyond the traditional pattern of wealth growth. What happened to Wang Chuanfu in the year? What happened in the world? Oh, standing behind Wang Chuanfu is Warren Buffett, whose stone is gold. wealth Catalyst.

Wang Chuanfu has three carriages: batteries, cell phones and cars. BYD started from the foundry industry to imitate the way of exploration, to take the lead in mergers and acquisitions, to create capital myth, and the industrial layout of "1+1" is indispensable.

Buffett's "golden touch"

In September 2008, Buffett broke into an enterprise that he did not know, China's BYD.

Among investment principles of investment genius Buffett, the most famous thing is "never invest in businesses that do not understand". The best example of implementing this principle is that he did not touch the US high tech boom in 1990s, but he missed Microsoft and Google too.

This is the first time that Buffett has violated his investment principles. For the first time, he has been involved in technology enterprises. BYD's battery, cell phone and electric vehicle business can be said to contain complicated and difficult technology. Buffett acknowledges that he does not understand these three businesses at all.

The promoter of Buffett's investment is Buffett's old partner Charlie Munger. Munger said: "I know that people generally think that Warren and I (investing in BYD) seem crazy, but I don't think so."

Munger added: "if you see BYD's car, you will understand what kind of car it is. I think everything they do: cars, glass, tires... They are excellent. This is not the same. I think cooperation with BYD is a very important cooperation. "

Munger even said, "BYD may be a small company, but it has great ambitions. If BYD fails, I will be very surprised. I think it's the greatest honor ever to cooperate with BYD. "

China's technology companies can be totally different from the Chinese shoe making and underwear enterprises that Buffett has invested in. Although Buffett was initially skeptical about investing in BYD, Munger insisted on it. Buffett said: "investing in BYD is Munger's idea. When Munger meets genius, and sees this person doing business well, he is very happy. "

In early 2008, a fund manager introduced Byd Co to Munger. After going through a number of surveys, Munger found that Wang Chuanfu, founder of BYD, was a very special entrepreneur, which aroused great interest.

Munger told reporters on Fortune magazine Wang Chuanfu: "this guy (Wang Chuanfu) is simply a mixture of Edison and Welch. He can solve technical problems like Edison, and can solve business management problems as well as Welch. I've never seen such a person. " {page_break}
 

Under Munger's strong recommendation, Buffett decided to entrust Sokol, President of Sino US energy company, a wholly owned company, to fly to China for field visits to BYD.

At BYD, Wang Chuanfu visited the factory with Sokol. When it was introduced that the battery used in the factory was made of recyclable materials, in order to prove that the electrolyte of the battery was non-toxic and recyclable, Wang Chuanfu poured a cup of electrolyte immediately, and drank it face to face, and wrinkled her face and said, "the taste is not very good (but it doesn't matter)." Then he poured it down and handed it to Sokol, so that he could taste it, but was politely declined.

When Sokol returned to the United States and described the scene to Buffett, he said, "this guy is incredible. You must see him." When it comes to Wang Chuanfu's consumption of electrolyte, he also stresses "no kidding".

Later, Wang Chuanfu went to America to see Buffett and Munger. Buffett asked Wang Chuanfu: "so far, what competitive advantages does BYD have relative to its competitors?"

Wang Chuanfu replied, "our competitive edge is based on the establishment of our own intellectual property rights." Buffett then asked, "how can we maintain the leading edge of competition?"

Wang Chuanfu answered, "we will never stop innovating."

Buffett initially decided to buy a 25% stake in BYD, but was rejected by Wang Chuanfu. As a result, Wang Zhi agreed to sell no more than 10% of the shares. Buffett felt lucky at the same time. He felt that Wang Chuanfu did not want to sell his company, which in itself was a good omen.

In September 27, 2008, Buffett's flagship Affiliated Companies, Berkshire Hathaway's Affiliated Companies, announced that it would subscribe to HK $2 at HK $8 per share. The 2 billion 500 million shares account for about 10% of BYD's shares, with a total transaction value of HK $1 billion 800 million or 2. 300 million dollars.

In July 30, 2009, China's regulatory authorities formally approved Buffett's stake. BYD's share price also rose from HK $8 per share last year to 41 in September 29th. HK $65, Buffett's book float HK $about 10000000000.

In dollar terms, Wang Chuanfu is also the biggest winner in the list. His net wealth was 10 from 12 months ago. 600 million dollars, up to 5 billion 800 million dollars. Share prices have been increased six times in a year.

From this investment, we can see Buffett's consistent investment logic: investing in excellent entrepreneurs and excellent teams, and investing more in BYD should be betting on Wang Chuanfu. Buffett invested in BYD, not a concept of automobile, but a new energy concept + China concept. Compared with PetroChina's investment in China, BYD may have more long-term strategic significance.

Wang Chuanfu expressed his thanks to Buffett for his stake in BYD. Later, he commented: "Buffett's stake in BYD is very important, especially in the promotion of global brand value. Buffett's company is a very respectable company. And its investment is also long-term. With its investment, BYD's electric vehicles, including new energy products, will definitely increase their sales and brand value in the US. "

The youngest rank cadres go to sea

In February 15, 1966, Wang Chuanfu was born in an ordinary peasant family in Wuwei County, Anhui. In 1987, after graduating from Central South University, Wang Chuanfu was admitted to the Beijing Nonferrous Metals Research Institute of the Chinese Academy of Sciences for master's degree. Founded in November 1952, the General Institute of nonferrous metals research is the largest comprehensive research institution in China's nonferrous metals industry. {page_break}
 

After graduating from graduate school in 1990, Wang Chuanfu stayed in the 301 room of the Beijing Nonferrous Metals Research Institute, the Chinese Academy of Sciences, and chaired the research on the alkaline Ni MH two rechargeable battery.

In just two years, Wang Chuanfu, 26 years old, was appointed to deputy director of the 301 room of the research institute with excellent results. He became one of the youngest directors in the country. In 1993, the Institute set up Beagle Battery Co., Ltd. in Shenzhen. Wang Chuanfu became the general manager of the company, and moved from a pure technician to an enterprise management post.

At this time, a popular analog phone called "big cell phone" became popular, tens of thousands of dollars, and became the symbol of the era's status and wealth. The price of rechargeable batteries used by the cellular phone is as high as 1000 yuan, which attracted Wang Chuanfu's attention. In 1995, Wang Chuanfu decided to set up a battery manufacturing enterprise in the sea.

According to his later explanation, he chose to go to sea because he sniffed the business opportunities in the battery.

Although a "big phone" was sold to twenty thousand or thirty thousand yuan at that time, many people still bought it, which made him realize that "the development of mobile phones will increase the demand for rechargeable batteries in the market. As long as it can scale, recharging battery technology is not a problem."

He borrowed money from his cousin Lv Xiangyang. At first, Lv Xiangyang did not agree. He thought Wang Chuanfu had a stable and promising job, but entrepreneurship was risky. Wang Chuanfu can be lobbied again and again, and finally Lv Xiangyang gave him 2 million 500 thousand yuan to start the capital.

In 1995, Wang Chuanfu incorporated BYD Technology Co., Ltd., in an old workshop in Liantang, Shenzhen. He and more than 20 employees began to write one of the countless entrepreneurial stories in Shenzhen.

At that time, Japanese rechargeable batteries dominated the whole world, and domestic manufacturers mostly bought the caller core to assemble, with little profit and almost no competitiveness. How to open up the situation? After careful consideration, Wang Chuanfu decided to rely on the advantages of his own technology research, and from the very beginning, he turned his attention to the production of the core component, the core component of the rechargeable battery, which has the highest technology and the most profitable.

At this time, Wang Chuanfu, who is seeking rapid development, found in an international battery industry dynamics that Japan announced that it would no longer produce nickel cadmium batteries, which would inevitably lead to an international shift in the production base of nickel cadmium batteries. Wang Chuanfu immediately realized that this will create an unprecedented golden opportunity for Chinese battery companies. So he decided to set foot in the production of nickel cadmium batteries.

At that time, a nickel cadmium battery production line in Japan needed tens of millions of yuan investment, and Japan banned exports. Wang Chuanfu could not afford to buy such a production line. According to the characteristics of the enterprise, Wang Chuanfu decided to build some key equipment by himself, and then decomposed the production line into one process that could be completed manually. As a result, a production line of 4000 nickel cadmium batteries with a daily output of only about 1000000 yuan was built, and the overall cost was 40% lower than that of Japanese competitors. With the advantage of cost, through some agents, Byd Co gradually opened the low end market.

In the second half of 1995, Wang Chuanfu tried to give BYD's products to the largest cordless phone manufacturer in Taiwan. Unexpectedly, the excellent quality and low price of BYD products have aroused great interest of Daba. At the end of the year, Daba did not hesitate to give orders to other manufacturers for Wang Chuanfu. {page_break}
 

In 1997, BYD has grown from a small unknown role to a medium-sized enterprise with annual sales of nearly 100 million yuan. In the past 3 years, BYD has achieved an annual growth rate of 100%.

In 1997, the financial turmoil swept across Southeast Asia, and the price of global battery products plummeted 20%~40%. Japanese manufacturers were at the edge of losses, but BYD's low cost advantage seemed to be more flexible. PHILPS, Panasonic, SONY and even GM have issued an exciting large purchase order to BYD. In the nickel cadmium battery market, Wang Chuanfu used only 3 years to seize nearly 40% of the world's market share, and BYD became the well deserved boss of nickel cadmium batteries.

Since then, Wang Chuanfu has focused on the European and American markets. From 1999 to 2000, Byd Co emerged in such markets as the Panasonic list, Panasonic, SONY, GE, AT&T and industry leader TTI.

In 2000, Wang Chuanfu invested heavily in the development of lithium batteries. He soon had his core technology and became Motorola's first lithium battery supplier in China.

In 2001, Byd Co's share in the lithium battery market rose to fourth place in the world, while nickel cadmium and nickel hydrogen batteries rose to second and third places, achieving 13. 6 billion 500 million yuan of sales, net profit of up to 2. 5 billion 600 million yuan.