Understanding China, One Blog at a Time

An American in China

Buffet and BYD- The Chinese Disaster

Posted by w_thames_the_d on March 15, 2011

I find the following pretty humorous. I remember hearing about Warren Buffet singing the accolades of a Chinese car manufacturer and thinking WTF? I even blogged about it. It was one of those odd moments where you think, what are they seeing that I am not…
Then you find out that BYD is not doing that well and aside from knocking off other car designs, it has had some quality and safety issues in China. Lets think about that. Can you imagine just how screwed up a thing has to be to be considered unsafe in China? The funny thing is that irrespective of the problems of BYD, Buffet supposedly already made a mint on the deal. To me its just another obvious truism, that Chinese products suck.

from here
“Are Chinese cars nothing more than cheap copies of more successful automakers’ products from other parts of the world? That’s a question that has been asked rather widely for the last several years as the numbers of large Chinese automakers has risen dramatically – even more so as they have shown their wares at major auto shows outside their home country.

There is certainly no doubt that many, if not most, cars rolling out of factories in China bear a striking exterior resemblance to popular models from Japan, Europe and the United States. But do those exterior facsimiles go more than skin deep, and if so, does it matter? What about the actual guts of the vehicles – are Chinese automakers creating their own important new technologies, especially in the burgeoning eco-friendly segment?

These are the questions bandied about in a special report from Reuters, targeted specifically in the direction of BYD, the Chinese automaker that has been buoyed by major investments and backed by Warren Buffett. The big draw for Buffett and his money was BYD’s proprietary battery technology, which it uses on its own plug-in vehicles, some of which are supposedly coming to America.

Reuters, citing documents it received by a third party from WikiLeaks, is charging that BYD’s battery tech may not be all its cracked up to be, and that sales of its EVs are painfully slow. Further, officials such as Guanzhou Consul-General Brian Goldbeck reportedly said two years ago that BYD’s vehicles may pass China’s lax copyright laws, but aren’t likely to do so in other countries.

Just as damningly, unnamed consultants claim BYD’s vehicles are very unlikely to pass U.S. safety standards, saying of one of BYD’s models, “If you shut the doors too hard, they fall off.” Removable doors? Not good. Some automakers polled by Reuters claim that BYD requests just enough parts from reputable suppliers to reverse engineer the designs and then assembles them itself using inferior materials.

What all of this means for BYD and for Warren Buffett’s billion-dollar investment into the company remains to be seen, but it can hardly bode well for the brand’s chances in competitive markets like the United States.

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