The Long Crisis

With General Motors and Chrysler looking into the deep dark hole of bankruptcy and the world economy in a tailspin you might wonder how any company anywhere can still grow as an automobile manufacturer. Warren Buffet was impressed that such a company exists and has quietly taken a 10% stake in that company, one that has in fact achieved an amazing growth record since its start up in 1995 as a manufacturer of batteries, cell phones, and since 2003 electric powered automobiles.

You can safely guess that it is not an American company. American automotive companies are still trying to restore the past, an impossible task. The company that Buffet has invested in is a company that is looking to the future by developing new breakthrough technologies. Oddly enough at the same time it has reverted to man power on assembly lines as opposed to expensive robots. As you may have guessed by now the company is located in low cost labor and low cost labor benefits heaven China.

Last fall Berkshire Hathaway quietly bought 10% of BYD for $230 million. The deal, which is awaiting final approval from the Chinese government, didn’t attract much attention 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.

The man behind BYD, Wang Chuan-Fu, is worth studying and paying a great deal of attention to. Compare the way that he thinks and conducts his business to the managers of GM, Chrysler, and even Ford, and you will see why America and Japan have lost the advantage that they once held in manufacturing operations.

To learn more about BYM, founded only in 1995 and already employing over 100,000 workers and generating annual sales of over $4 billion in 2008, visit the Money.CNN website.

You will quickly see that there is no way a company like GM will be able to compete in electric cars or anything else in the high technology at lower cost driven markets of the 21st century. It looks like the top level competition for the electric car market in Europe, Asia, and even America will be from a company based in China.

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