{"id":305858,"date":"2010-02-11T01:04:00","date_gmt":"2010-02-11T06:04:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/here-is-exactly-how-warren-buffetts-chinese-auto-company-byd-copied-competitor-designs-piece-by-piece-2010-2"},"modified":"2010-02-11T01:04:00","modified_gmt":"2010-02-11T06:04:00","slug":"here-is-exactly-how-warren-buffetts-chinese-auto-company-byd-copied-competitor-designs-piece-by-piece","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/305858","title":{"rendered":"Here Is Exactly How Warren Buffett’s Chinese Auto Company BYD Copied Competitor Designs Piece By Piece"},"content":{"rendered":"

\"byd<\/p>\n

Here’s the copy cat manufacturer business model:<\/p>\n

1. Blatantly copy designs that required substantial research expenses for your competitors to produce.<\/p>\n

2. Set up a cash cow business whereby you undercut your competitors with copy cat products that sell for less due to lower labor and design costs.<\/p>\n

3. Then use the cash flow from your cash cow to develop even better products than your competitors.<\/p>\n

    <\/ol>\n

    It’s the viciously competitive (and borderline intellectual-property-infringing) avenue by which many Asian manufacturers have moved up the value chain. (Toyota included, who is now a victim of the practice)<\/p>\n

    Caing has an excellent article outlining how BYD, the Chinese auto and battery company that Warren Buffett has famously invested in, executed just such a strategy.<\/p>\n

    Caing:<\/a><\/p>\n

    Last May, the city of Xian started switching its taxi fleet to the BYD F3 car, which at first glance could be confused with a Toyota Corolla. Indeed, the F3 is an inside-outside copy of the Japanese manufacturer’s small car but costs only half as much.<\/p>\n

    BYD isn’t shy about its business practices. In the F3’s introductory period, the company marketing department touted Corolla similarities as a sales point. At some service centers in the city of Zhengzhou, F3 owners could spend a few hundred yuan to have the exterior badge swapped with a Toyota logo. And last year, after just five years in production, annual F3 sales reached 300,000 units, making it one of China’s best-selling cars.<\/p>\n

    To develop good cars in the shortest time possible, BYD spends tens of millions of yuan every year buying and then dismantling the newest models built by manufacturers around the world.<\/p>\n

    That’s also how Wang set up the company’s first battery production line. In those early years, a fully automated Ni-Cd battery production line from Sanyo cost tens of millions of yuan, so Wang decided to make one himself. He reverse-engineered the setup for an identical production line that cost only about 1 million yuan.<\/p>\n

    Of course, for a manufacturer to become a leader, rather than just an imitator, they have to perform item #3 above, which is the most difficult. Yet BYD seems to be now developing new innovative battery technology well ahead of auto leaders… all funded by its copy cat cash cow products.<\/p>\n

    Copying was in Wang’s blood. After a 2003 visit to BYD’s Songjiang laboratory in Shanghai, for example, a former Chery Auto expert noted that he saw only two pieces of lab equipment that had been imported; the rest were Chinese-made imitations of foreign equipment.<\/p>\n

    How can simple imitation win a market? The Chery veteran said BYD strategy’s is based on focus, brazenness and precision.<\/p>\n

    Rather than waste effort creating new models for the sake of variety, a limited number of resources are spent on developing key products. That’s the company’s focus. As a brazen market player, BYD picks best-selling products and blatantly copies them, head to toe.<\/p>\n

    Read more at Caing ><\/a><\/p>\n

    Join the conversation about this story »<\/a><\/p>\n

    See Also:<\/b><\/p>\n