Byd, Porter Diamond

Topics: Automotive industry, Automobile, Electric vehicle Pages: 21 (6960 words) Published: June 17, 2013
National Competitive Advantage of China in Electric Mobility: The Case of BYD

Corresponding Author: Kasperk, Garnet Center of International Automobile Management, RWTH Aachen University Templergraben 64, 52062 Aachen, Germany, gk@im.rwth-aachen.de Phone +49 241 80 93348, Fax +49 241 80 93248 Wilhelm, Jan Chair of Organization, RWTH Aachen University, Templergraben 64, 52062 Aachen, Germany, jw@im.rwth-aachen.de Wagner, Wolfgang Volkswagen Corporate University, China Cuipingbeilixiqu, 16Haolou-1Danyuan, 2311; 101121 Beijing, Tongzhou District, China. wagnerclean@gmail.com

Abstract Whereas in Europe, national activities to drive e-mobility forward still have to be coordinated at EU level, Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and busses. This paper presents the case of the Chinese company BYD („Build Your Dreams“), that began selling a plug-in electric car in China, at least a year ahead of similar efforts in the U.S. and Japan. In a Case Study setting, it addresses BYD’s strategic approach of consequently exploiting locational advantages, the importance of a favorable national home base, and the strategic implications for both western and Chinese companies aiming at positioning themselves in the market for e-mobility. Keywords: Porter’s diamond; BYD; e-mobility; National competitive advantage; China; Automobile industry

1. Introduction China is now the biggest automotive market in the world. Within only 10 years, all relevant car producers have established joint venture companies with mostly state-owned Chinese companies. In 2009, 8.3 million passenger vehicles were manufactured in China, surpassing the U.S. as the second largest automotive producing country. The growth process – driven by domestic and foreign firms as well – has been strongly supported by a focussed government strategy. With only 48 cars per 1,000 inhabitants, the remaining growth potential is considerable. As local competition is increasing, Chinese automobile producers start to exploit foreign growth options and to position themselves increasingly as global companies. The barriers for positioning in classical markets for gasoline-engine cars are high, and realizable competitive advantages in the global competition still have to be identified. However – Chinese companies clearly see their chance for an early positioning in the electric vehicle market, where all global players now start from the same technology level. Automakers even break a long-embraced rule of secrecy, spotlighting models 18 to 24 months ahead of production to be in the forefront of what they expect to be a large-scale shift to electric power vehicles in the next few years. Government policy is strongly supporting this development. The main arguments for Chinese carmakers and China becoming a major player in e cars is not based on technological advance but on favourable national framework conditions combined with a strategy exploiting national advantages – building together a strong diamond. 2. The Competitive Development of China The competitive development of national economies proceeds, according to Porter (Porter, 1990), in four consecutive steps.

figure 1: stages of country development and the positioning of china (porter, 1990) CIAM Working Paper 1

According to the Global Competitiveness Report, China is currently ranked as a country in the investment-driven stage, which is also named “efficiency-driven stage” (World Economic Forum, 2009). For countries in this second stage of competitive development, the willingness to invest heavily is the main driver for development. Government plays a substantial role, as it takes the lead in channelling money to key industries, supports the acquisition of foreign technologies and encourages exports. The political focus is to be laid on long-term economic growth,...

References: 17
Wang, H.: Betting on Chinese Electronic Cars? – Analysing BYD´s Innovation Capability (2009): 17th Gerpisa International Colloqium Sustainable development in the automobile industry: changing landscapes and actors, Paris 17-19 June
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