Writing | Roomy
Editing | Zhou Changxian
Unexpected yet not surprising, the arrival of iPhone14 failed to create any surprises. “No surprises” has become the main theme instead.
From the market to the technology industry, everyone believes Apple has already hit the ceiling of the smartphone market. Due to the lack of innovation, the appeal of new products has decreased, and a more intense external competition is needed.
Speaking of this, I think of an old story. Over two hundred years ago, when Watt invented the steam engine, the king asked him what he was doing. Watt said he was busy making something that monarchs dreamt of having. The king was puzzled, and he asked, “What is it?” Watt replied, “Power, energy.”
Two seemingly unrelated things are actually expressing the same thing: innovation is energy.
Now let’s shift our focus to the latest Fortune Global 500 list, which is considered a barometer of global industrial trends.
Don’t get it wrong; this transition is not abrupt. Because whether it is the structural change of “real estate retreating and new energy entering” or the “give-and-take” of listed companies, both are closely related to innovation and are the most direct reflection of changes in industrial trends. Today, what we are focusing on is the appearance of BYD on the list.
In some consumer surveys, there is a common conclusion: it is only a matter of time before BYD enters the Fortune Global 500. There are two reasons for this conclusion: heroes are made by their times, and BYD has not disappointed these times.
Looking back at the past, after 28 years of entrepreneurship, BYD has created a path of self-improvement, and the process of seeking this path reflects the vision and wisdom of Wang Chuanfu in surpassing market cycles several times.
Breaking into the Fortune Global 500
Chinese companies entering the Fortune Global 500 is not new, but BYD’s entry brings a different meaning.
Looking at the list in recent years, the mainstream camp has changed many times, from real estate to the internet, and then to new energy vehicles… witnessing the changes of the times all the way.
Among the Chinese companies on the 2022 Fortune Global 500 list, there is a pattern. They are mostly state-owned enterprises and mostly concentrated in traditional industries, which still exist in this year’s list.
There are 145 Chinese companies on the list, 2 more than 2021, and 21 more than the United States, making it the world’s number one for four consecutive years. However, there are also some noticeable changes: withdrawal of real estate, and major entry of energy companies, with 48 industrial energy companies, accounting for 1/3.
The change of the list can be summarised in three words: some stayed, some withdrew, and some entered. Under the trend of the times, two car companies newly entered the list – Stellantis Group (merged from PSA and FCA) and BYD.
PSA and FCA have both been listed in the Fortune 500. Therefore, BYD, as a new car company from China, is the only newly listed car company. From this perspective, BYD’s entry into the list represents the strength of China’s automotive industry’s transformation towards electrification and the beginning of leading the trend.
It should be pointed out that BYD’s entry into the list is not just due to its identity as a “new energy car manufacturer”.
Since its establishment in 1995, Wang Chuanfu has planned for the long-term development of the company. Today, BYD has grown into “an all-industry ecological closed loop of the four major industries of automobiles, rail transportation, new energy, and electronics, and a company that provides overall solutions for new energy.” As a company with multiple identities, it has entered the top 500 in the world.
BYD’s entry into the list can be said to be a technologically innovative change. From the perspective of Apple, Tesla, or Huawei, companies that continue to innovate are always worthy of respect.
In Wang Chuanfu’s thinking, innovation is the core vocabulary, and BYD has always been committed to innovation as the power source. This is also why many people in the research results feel that BYD “has lived up to the times” and belongs to technology as a source, accumulating and developing.
In the lobby of BYD’s Shenzhen headquarters, there is a huge “patent wall”. The gray wall nearly ten meters high has more than 3,000 patent nameplates densely arranged, and in the most prominent position, there are eight big characters: “Technology is king, innovation is the foundation.”
For many years, BYD has embraced technology and the times but has not followed the trend. In fact, any company that can lead the trend of the times, such as Toyota, Volkswagen, and Tesla, is the same.
The difference is that even with a global view of companies, BYD is still one of the few companies that provide overall solutions for new energy. Even if the top eight car companies are added, they are all global companies, and BYD’s business model is still unique in the world.
Previously, Time Magazine selected the “2022 100 Most Influential Companies”. BYD, as the only Chinese car company on the list, was considered the only new energy company capable of competing with Tesla globally.
Today, “Tesla- BYD swapping positions” is considered to be more and more like the battle between Apple and Huawei in the automotive industry, which is also a recognition of BYD’s technological innovation.
In May of this year, Musk tweeted: “It seems that few people realize that China is leading the world in renewable energy and electric vehicles. This is a fact no matter how you look at China.” As a tech and innovation-oriented person, Musk has already felt the powerful pressure brought by BYD.Currently, BYD has not only established a complete industrial chain, but also has a presence in more than 70 countries and regions across all six continents and over 400 cities. Recently, BYD entered the Japanese market, bringing them one step closer to surpassing Toyota’s goal.
Overall, from technological innovation, industrial layout, to commercial footprint, BYD has proven to be a mature international enterprise from multiple dimensions.
As multinational company research specialist Wang Zhi Le once said, “Chinese manufacturing is in the Western marketplace, German and Japanese manufacturing is in Chinese factories, and American manufacturing is in Chinese laboratories.” Although this statement is blunt, it also points out some of the past sorrows of China’s manufacturing industry. From this perspective, BYD’s entry into the Fortune 500 has injected a dose of vitality into Chinese companies’ globalization efforts.
The ability to read the times by Wang Chuanfu, BYD’s leader, is worth exploring. Two logical points are worth pondering when breaking down the behind-the-scenes of BYD: Technological depth determines strategic height, and those who do not seek the overall situation are not worthy of the domain.
Unlike Huawei’s entry into the Fortune 500 list as a “technology and communication enterprise,” BYD’s entry was actually more difficult, as there were too many barriers to overcome. Although BYD stresses that “industry is not limited to automobiles and business is not limited to China,” automobile business still accounts for over 50% of BYD’s revenue, so the primary focus will still be on “automobiles.”
In the past, the automotive industry was a traditional industry that had been around for over 100 years. How to achieve overtaking has always been a headache for China’s automotive industry. Wang Chuanfu understood early on that breaking through traditional technological barriers was very difficult, and new trends had to be sought.
He once stated: “There is not much hope for traditional cars to surpass foreign brands. New energy is an opportunity, at least 10 times higher than traditional cars.” His goal was clear: to avoid being choked by petroleum and instead being choked by rare metals such as nickel and cobalt.
However, some people believe that in the era of electrification, when giants like Volkswagen and GM turn around, Chinese cars will be besieged again. Market voices are varied and complex, but Wang Chuanfu’s persistence remains unshaken.
“We must dare to innovate, be tenacious and persevere, and persist without giving up. We must also work hard and speak less.”
Speaking less is indeed a characteristic of BYD, and has even been misunderstood by outsiders. Without visiting BYD and seeing the wall full of patents, it may be difficult to understand what BYD has been insisting on over the years.For a long time, BYD has been “opposed”. After Wang Chuanfu made his first fortune in the battery business, he acquired Qinchi Automobile and used it as a springboard to enter the automotive industry, which was opposed by many people. Later, BYD announced that it was going to make electric vehicles, and its stock price fell by 40% that year.
Some of BYD’s persistence often seems to be out of line with the market mainstream in the short term. For example, in the past decade, except for Toyota, almost every car company believed that hybrid technology was just a transitional technology and did not need to spend too much time and money on innovation. However, BYD, whose goal was to surpass Toyota, invested a lot of talents and resources to develop hybrid technology.
At a time when the electrification transformation was undecided and the debate between the new and the old was still ongoing, BYD began to “cultivate” itself. From the first electric car e6 equipped with lithium iron phosphate battery that went public in 2009 to the first half of this year with sales of 641,400 units, surpassing Tesla’s 560,000 units, becoming the global sales champion of new energy vehicles.
“If you want to compete with others and walk the same path as others, it’s a dead end.” Wang Chuanfu’s tough words are not outdated in any era. It can be said that BYD, which has adhered to its principles for 28 years in the face of doubts and has not followed the usual path, has finally “cultivated itself”.
Today, with the support of disruptive technologies such as DM-i Super Hybrid, Blade Battery, and e-platform 3.0, sales of new energy vehicles have exploded, and BYD has achieved a turnover of US$32.8 billion, ranking among the Fortune 500. In addition, the support of battery, semiconductor and other businesses has made BYD’s market value exceed trillion level.
For nearly 20 years of car making, Wang Chuanfu has fulfilled his initial commitment, and BYD has become a “leader in new energy vehicles”. Moreover, BYD has also formed a unique style: advocating technology, solving problems through innovation, and perseverance.
Talking about this, we cannot help but admire Wang Chuanfu’s strategic height.
“You need strong technology to see far and deep.” Wang Chuanfu believes that without leading technology, you cannot become the world’s number one. He also firmly believes: if others can do it, we can do it too.
It is precisely because of these traits that investment guru Charlie Munger praises Wang Chuanfu as a “hybrid of Edison and Welch.”
Those who do not plan for the overall situation will not be able to plan for a domain
BYD, who has a long-term vision, is often misunderstood as “not doing its job.”
Although it could make money by relying on the battery business, it chose to make cars instead. However, it was not “unique to car manufacturing”, and it also dispersed its energy into various subsidiaries, and let these subsidiaries go out to make money in the market.”The confidence of Wang Chuanfu’s words lies in BYD’s market layout in the entire industry chain, whether it is in business units for the motor, battery, or powertrain, so that they can compete with peers. In fact, many Chinese companies lacked the courage to try these businesses in the past and are now desperately trying to catch up. Wang Chuanfu, who has long been called a “technology madman,” lamented, “some entrepreneurs who do not understand technology think we are gambling, and some investors who do not understand the market and technology also think we are gambling.” He added that he has a small appetite for risk and will never gamble. Wang Chuanfu has a clear understanding of market trends and constantly maintains a sense of crisis. He believes that the development speed of new things is never proportional because of competition and oversupply, innovation must be made. However, before the weakness of the domestic industry, BYD could only accumulate experience through fuel vehicles while laying out new energy vehicles. This process was a demonstration of BYD’s adherence to the principle of “perseverance” and hard work. Now, after nearly 20 years of sticking to it, BYD is experiencing a comprehensive explosion from technology, products to the market. Competition pressure is the driving force for innovation, a principle that Wang Chuanfu firmly believes in and that is now being validated by Zeng Yuqun, the head of Ningde Times. After years of intense competition in the power battery sector, BYD’s fierce offensive has made Ningde Times more and more under pressure. Under this pressure, Zeng Yuqun decided to change his strategy, use Avita to make cars and find another innovative path. As the saying goes, “those who do not plan for the global scope are not enough to plan for a domain.” As for the future of Ningde Times, it is still unknown how they will proceed. Today, the only company that is not subject to the entire industrial chain is BYD. In the fields of on-board chips, semiconductors, as well as batteries, motors, and electronic control, BYD is the only global company that has mastered core technologies and can provide one-stop new energy solutions. Wang Chuanfu likes to describe this technology kingdom as a fish pond, where everything from chips, electric vehicles, to rail transportation are “big fish” in the pond. They just need to be caught when the market demands. These are the fundamentals that BYD is proud of. However, BYD does not keep its technology to itself and pushes for changes in the industry chain. Therefore, BYD actively participates in global industrial cooperation, sharing the achievements of core technology, and striving to find a path of open innovation. This is also a necessary path for becoming a global company.”From a certain point of view, it is precisely due to the global planning that BYD has landed on the Fortune 500 list, everything goes smoothly and falls into place.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.