In the world of automobiles, especially among Chinese domestic car brands, there are two heavyweight entrepreneurs with the surname "Fu" - Li Shufu, the controlling shareholder of Geely, and Wang Chuanfu, the controlling shareholder of BYD. At the beginning of this year, the big moves made by these two entrepreneurs have sparked heated discussions.
Recently, Lotus collaborated with L Catterton Asia Acquisition Corp to go public overseas through a SPAC (special purpose acquisition company). This is another significant move by Li Shufu after the listing of Polestar and ECARX last year.
On the other hand, Wang Chuanfu fired the first shot by lowering prices at the beginning of the year. On February 19th, BYD's flagship car models, Qin PLUS and Tang 05 Honor Edition, were launched with a starting price as low as 79,800 CNY. According to the data released by the China Association of Automobile Manufacturers, BYD ranked first in the 2023 China's new energy vehicle sales chart with 3.024 million units sold.
Both have their own strengths. The battle for the title of "the strongest king" among private car companies has been going on for many years, and the outcome is still uncertain.
Bai Wenxi, Vice Chairman of the China Enterprise Confederation, told the Science and Technology Innovation Board Daily that Geely is well known for its strategy of acquiring and integrating multiple automobile brands, including Volvo, covering multiple brands and domestic and overseas markets from low-end to high-end.
On the other hand, BYD is renowned for its innovation and leading technology in the field of new energy vehicles, particularly in electric vehicles and battery technologies.
These two private car company leaders, one born in 1963 and the other in 1966; one from a rural family background, with only a high school education, and the other went to university and even obtained a master's degree. One is versatile and diversified, while the other is strategic and focused. Finally, their paths converged on the vast racetrack of the Chinese automobile market.
Their different choices of paths and competition strategies reflect the different layout ideas and personality traits of these two "Fu" entrepreneurs.
The Rise of China's Independent Automobile Brands
Li Shufu is older than Wang Chuanfu.
Li Shufu was born in 1963 in a peasant family in Taizhou, Zhejiang. He was the third child among four siblings and grew up in poverty. He even worked as a cowherd in his childhood. However, he had an extraordinary business mind. After graduating from high school in 1982, Li Shufu used 120 CNY given by his father to buy a camera and started a photography business, which laid the foundation for his success.
In 1984, Li Shufu discovered the growing demand for refrigerators in the market. After independently developing and producing the evaporator, a key component of refrigerators, he established the Huangyan Polar Flower Refrigerator Factory. By 1989, this 26-year-old factory director had become a millionaire. In 1993, Li Shufu acquired a state-owned motorcycle factory in Linhai, Zhejiang. In a few years, the motorcycle sales soared to become the leader in the domestic scooter market.
While Li Shufu had achieved some success in the field of individual economy, Wang Chuanfu was still studying hard in school. After his parents passed away when he was a teenager, with the help of his elder brother and sister-in-law, he finally got admitted to Central South University in Hunan to study metallurgical physics and chemistry, which laid the foundation for his future research in batteries.
After that, Wang Chuanfu studied tirelessly. After graduating from his undergraduate program in 1987, he entered the Beijing Nonferrous Metal Research Institute to pursue a master's degree, specializing in battery research. After graduating in 1990, he stayed to work at the institute.
Through a fortuitous opportunity, he was sent by his unit to work as the general manager of a battery company in Shenzhen. Shenzhen turned out to be the land of fortune for Wang Chuanfu, as he saw a huge business opportunity there. At that time, mobile phones were becoming popular, and the small batteries inside them were quite expensive.
Wang Chuanfu decided to venture into business, starting his legendary path: BYD Company was established in Shenzhen on February 10, 1995; by 1997, Wang Chuanfu had already sold 150 million nickel-cadmium batteries, making his company the top battery supplier in China; in July 2002, BYD went public in Hong Kong, and Wang Chuanfu entered the top 50 list of Chinese billionaires.
After becoming the world champion in the battery industry, in 2003, at the age of 37, Wang Chuanfu announced his entry into the automobile manufacturing industry. At that time, he boldly claimed, "Making cars is just assembling parts, just like making toys." He acquired 77% of the shares of Xi'an Qinling Motor, an automobile company, with an investment of nearly 270 million CNY, and quickly launched the pure electric taxi EF3, the electric concept car ET, and the hybrid model Hybrid-S.
Initially, BYD's car models did not receive market acclaim. Wang Chuanfu changed his strategy and imitated successful models of established car manufacturers. In December 2008, the F3DM model was launched, becoming the world's first mass-produced plug-in hybrid vehicle. In September of the same year, Warren Buffett bought 10% of BYD's shares, worth 230 million US dollars.
In 2013, BYD's stock price soared, its main business grew comprehensively, and its revenue reached 52.863 billion CNY, marking a breakthrough in China's automotive industry.
When Wang Chuanfu started his car manufacturing journey, Geely, which was manufacturing fuel vehicles, had already entered the list of top ten automobile brands in China by sales volume. This was due to Li Shufu's bold decision to enter the automobile industry in 1994.
That year, Li Shufu purchased 850 acres of land in Linhai City, Zhejiang, and established the Geely "Hongqiao Automobile Industrial Park." In December 2001, Geely obtained the qualification for producing sedans, becoming the first private enterprise with car manufacturing qualifications in China. By then, Geely already had three automobile production bases, including Ningbo (Meiri), Linhai (Hongqiao), and Shanghai Pudong (Huapu).
Looking back, Li Shufu has said, "When you're young, you must have dreams. My dream is to let Chinese people buy a car with one year's income."
In the automobile manufacturing industry, Li Shufu did not want to rely solely on price wars to win the market, so he had to move upstream in the value chain. In 2010, with great ambition, he took a stunning step: he acquired the renowned European car company Volvo. Since then, Geely has carried out a series of high-profile acquisitions, including the acquisition of a 9.69% stake in Germany's Daimler AG in 2018.
When the trend of new energy vehicles emerged, Geely also kept up with the pace, actively engaging in technological research and development and product innovation. Currently, Geely covers the entire range of car models, from high-end to low-end, from supercars to affordable vehicles. With several recent listings in the past year, Geely Holdings has quietly but proudly become an "automotive kingdom."
As a result, Li Shufu became a business rival of Wang Chuanfu, and the two of them engaged in fierce competition.
The "Clash of the Titans" in the era of new energy
It is worth noting that two Chinese automotive industry leaders have chosen radically different competition strategies in their corporate development.
Yuan Shuai, Deputy Secretary-General of the Zhongguancun Internet of Things Industry Alliance and Executive Director of the High-Quality Development Promotion Project for Special and New Enterprises, told reporters from the Science and Innovation Board Daily that BYD has chosen to focus on the field of new energy vehicles, deepening its core technologies such as batteries, motors, and electric control, and using this as a basis to promote the research and development and production of complete vehicles. Geely, on the other hand, has adopted a diversification strategy, not only having a presence in the passenger vehicle sector but also venturing into commercial vehicles, motorcycles, and other areas, thereby forming a relatively complete industrial chain at an earlier stage.
In the "era of conventional fuel vehicles," Li Shufu's Geely Automobile experienced rapid development. However, in the "era of new energy vehicles," Wang Chuanfu's BYD made remarkable strides.
This reflects the different perspectives of the two individuals on the industry: BYD, just established in 1995, made new energy technology a key focus, while Geely started investing in research and development only in 2006. In 2015, Li Shufu proposed the "Blue Geely Action" plan, with a goal to increase the proportion of new energy vehicle sales to 90% in five years.
Under this plan, Geely designed four major new energy powertrain routes: hydrogen fuel cells, pure electric, methanol, and hybrid, and launched new energy brands such as Geometry, Lynk & Co, and Lynk & Co Zero. In 2021, Li Shufu also partnered with Baidu to establish Baidu Intelligent Vehicle.
In addition, Li Shufu expanded the company's development roadmap to include areas such as smartphones, satellites, and vehicle chips, aiming to create a complete vehicle-networking ecosystem.
However, the progress of the "Blue Action" plan did not go as expected. In 2022, BYD replaced Geely as the top-selling domestic car brand. In 2023, BYD's sales were about 1.34 million vehicles higher than Geely.
In contrast to Li Shufu, Wang Chuanfu focused on new energy vehicles from the beginning and even announced the cessation of production of conventional fuel vehicles in March 2022.
Moreover, since the start of automotive manufacturing, Wang Chuanfu has been dedicated to "technological excellence" and opposed to blindly expanding the market scale while neglecting technological innovation. He once said, "The leader in technology is often the leader in the industry." Since 2002, BYD has made significant investments in power batteries and started research and development in hybrid technology in 2003, with a cumulative investment of hundreds of billions of CNY to date.
With the benefits of "technological excellence," Wang Chuanfu led the company to quickly gain market share and embarked on a path of cost reduction and efficiency enhancement through scaling. Additionally, Wang Chuanfu diversified his presence in the new energy vehicle race, leaving no stone unturned in various aspects of the vehicle manufacturing chain.
In terms of industry, BYD has built an entire electric and intelligent automotive industry chain, encompassing complete vehicle manufacturing, battery manufacturing, and chip manufacturing. The power battery segment has been opened up to the market, and there are plans for semiconductor manufacturing to go public.
In January 2021, BYD released three new models, serving as a catalyst for the increase in BYD's new energy vehicle sales.
In 2022, BYD's stock price exceeded one trillion CNY for the first time. In the same year, BYD surpassed Geely in sales volume and became the top-selling Chinese domestic car brand.
In December 2023, BYD's sales volume surpassed Tesla's for the first time, opening a new chapter in the Chinese market for the era of new energy vehicles.
Regarding the future of the two companies, Bai Wenxi, Vice Chairman of the China Enterprise Alliance, believes that Geely is expected to continue to grow and expand into multiple automotive market sectors through continuous acquisitions and the development of new businesses. BYD, on the other hand, will continue to strengthen its leading position in the field of new energy vehicle technology, especially in electric vehicles and battery technology. Both companies will actively deploy in the new energy vehicle market, and it is expected that this field will be the focus of their competitive development in the coming years.
"The Investment Landscape of Giants"
The "Science and Technology Innovation Board Daily" recently noted that in recent years, Geely has been continuously investing in the automotive industry, both upstream and downstream.
According to data from Caixin Venture Capital, Geely Holding has been involved in 80 public investment events, with invested companies including Yichong Technology, Zhi Dou New Energy, Chuantu Microelectronics, and others.
It is worth mentioning that Li Shufu, also known as the "car fanatic," has long been a master of capital operations. Since the acquisition of Volvo, Li Shufu has become increasingly skilled in capital operations, including acquisitions, integration, spin-offs, and listing. He currently holds a total of 8 listed companies under his umbrella.
Earlier reports speculated that the three-year-old Jike will be sprinting towards an IPO, potentially becoming the fourth Chinese new energy vehicle force to be listed in the United States after NIO. In addition to Jike, Li Shufu has two other IPO projects in the pipeline: Yuan Cheng Auto and Caocao Mobility. With these, Li Shufu now controls a total of 11 listed or soon-to-be-listed companies, spread across exchanges such as the Shanghai Stock Exchange, Shenzhen Stock Exchange, Hong Kong Stock Exchange, Nasdaq, and SIX Swiss Exchange.
According to Li Shufu, the fundamental law of the automotive industry is "size wins," and ultimately there won't be too many car companies surviving in the global market, only large-scale enterprises can survive.
With the sales of electric vehicles surpassing Tesla, BYD is accelerating its layout in the first-level market of the electric vehicle industry chain.
Data from Cailian Press Venture Capital-Exzhong shows that BYD has participated in 99 public investment events, focusing on areas such as semiconductors, new materials, batteries, and car manufacturing. This includes investments in companies like XingAi Technology, Shendi Semiconductor, Xiwuo Bus, and Fushixin Materials. In the chip field, it covers AI chips, intelligent driving chips, silicon carbide epitaxial chips, and other sub-segments.
From the above layout, it can be seen that Wang Chuanfu's investment core is still to support the development of BYD's industrial chain, not only actively promoting self-developed technology for electric vehicles but also introducing more innovative technologies and resources through investment to ensure the security of the supply chain.
The Science and Technology Innovation Board Daily noted that BYD began its investment layout as early as 2009, mainly driven by its internal CVC investment department. The invested companies were mostly holding subsidiaries and joint ventures of BYD, including BYD Semiconductor, GAC NE, and Tengshi Electric Vehicle, focusing on the integration of BYD's main business with battery, automobile, rail transit, and new energy technologies.
In addition to being an entrepreneur, Wang Chuanfu has long been an industry investor with a forward-looking strategic vision. By integrating a series of investment projects in the solid foundation of the electric vehicle industry, he aims to become a global industry leader.
Zhu Keli, Executive Director of China Information Association and Founding Dean of the National Research Institute of New Economy, told the Science and Technology Innovation Board Daily that the strategic development direction of a company is often determined by the personality of its founder. Geely and BYD, these two companies are likely to have differences in their future directions:
Wang Chuanfu may continue to deepen his layout in the new energy vehicle sector, while Li Shufu is more likely to expand his international and domestic layout through more capital means.
