HyperNormalisation 2016
How Electric Dreams Because China has become a public relations nightmare in America.
Few people or institutions have the power to really move the markets as Warren Buffett and the Chinese government when the two forces came together in 2008 to support Chinese electric car company BYD, little known brand has enjoyed international fame Berkshire Hathaway Warren Buffett has 230 million in the purchase of a 10 percent in the company, and the Chinese government, followed soon with aggressive targets for the soaring production of electric cars.
BYD, which stands for build your dream was about to become the first Chinese car company to make a splash in international markets Thus, when the private company made its first foray in the US in 2011, it no expected fall quite as hard as it was great coming-out party BYD marked the beginning of a new uglier story for the company and a PR quagmire business that continues today.
But in 2008, BYD was on top of his game and Buffett saw something he could not resist a Chinese innovative companies with the potential to conquer the fast growing markets of green technology at His right arm is income China, saying he had never seen anything like Wang Chuanfu, founder and CEO of the company Wang described as a combination of Thomas Edison and former General Electric CEO Jack Welch a perfect blend of technical prowess and business acumen.
Wang, a chemist by training, had built BYD in the largest mobile phone battery manufacturer in the world before turning his attention to automotive markets Combining its rechargeable battery and solar technology with its budding activities in petrol cars, BYD's first fully plug-in electric vehicle to the auto show in Detroit in 2008.
It was the first company considering the complete solution, BYD executive Micheal Austin said chairman Wang WorldPost had considered the entire ecosystem zero emission, then he began to think to replicate this system for transport and residential systems .
Between 2005 and 2008 BYD income more than quadrupled, and in 2010 Businessweek is ranked as the eighth most innovative company in the world a year after the initial investment of Buffett, he had made more than a billion dollars.
Bathed in the prestige, BYD began to consider expansion into US markets and politicians in California, eyeing Chinese investment as the key to economic rejuvenation, conjured a host of incentives to attract the company to their heads of State at national and local level that BYD hopes to bring Chinese money and clean technology manufacturing jobs on American soil.
Mayor Antonio Villaraigosa speaks at the grand opening of the North American headquarters BYD in Los Angeles October 24, 2011.
Oct. 24, 2011, BYD opened its North American headquarters in Los Angeles, to the applause of Chinese officials and investors and the U S All parties announced the dawn of a new era.
We see BYD opening in Los Angeles as a catalyst that will usher in good jobs, global investment and a more sustainable future, Mayor Antonio Villaraigosa said during the inauguration ceremony.
But since that day, BYD and US donors have seen the good, the bad and the ugly of Chinese investment in America after winning contracts to build the first electric bus fleets in Long Beach Los Angeles, the company was accused of everything from the manufacture of dangerous bus to disclose reserved jobs for Californians to Chinese workers and pay just 1 50 per hour the company retaliated against explosive allegations and won, forcing California to give up wage costs BYD But today is once again on the ropes, with the Federal Transit administration and forcing the cancellation of one of its historical contracts on a technicality.
The story of how the American dream BYD turned into a public relations nightmare intertwines the son that bind America and the economic future of California politicians in China have been at the forefront of a push to nationally for Chinese investment in the communities of the recession hit Texas in New York like local politicians see economic salvation of Chinese investment, Chinese companies seek validation on the US markets and the innovation through American partnerships.
On the surface, it is a win-win scenario, but that can quickly be torn by the multitude of political work and professional local interests in search of a voice in the debate and a piece of the pie.
BYD had been quietly infiltrated the digital lives of American consumers for over a decade before Buffett helped launch the brand on the global stage Wang started the company in 1995 as mobile phone battery manufacturer, and upstart quickly captured a part of the culture market BYD America Vice President Micheal Austin, first met with the company in the early 2000s while looking for suppliers for Motorola.
We went to China and did a very thorough investigation of the supply industry of the battery and only two manufacturers of 35 that I visited did not infringe on Japanese patents and BYD was one of them, said Austin.
The company quickly expanded its activities to include 70 percent of the total content of Motorola Razr phones.
A few years later, in 2003, the company took what appeared to be a U-turn when he bought a car company owned by the Chinese state, but this purchase gave Wang a shortcut in an industry he hoped to transform electric and hybrid cars Wang, who still plays an active role in BYD laboratories, planned to use the technical expertise of the company in battery technology to build energy storage systems that could power a car or a house Although the company has spent many years starting on only vehicles with cheap gasoline, by 2008 he was ready to show its first all-electric models, and the time t Couldn been better.
In response to the global financial crisis, the Chinese government opened the floodgates loans for a variety of industries, including solar and electric vehicles It has set an ambitious goal in 2009 to mount the Chinese production capacity for hybrid cars electrical and 2,100 in 2008 to 500,000 in 2011 BYD seemed on that promise and reap the benefits for years to come.
The excitement of the increase in production, combined with a large investment Buffett, bubbling over in the opening shots of a seat and chain dealers in the US Again, timing proved impeccable with banks and companies in America Lower facing a credit crunch and withering consumer demand, the expected BYD investment appeared to be a glimmer of hope on the horizon.
Chinese investment in green technology had already seized the world's attention when government subsidies have allowed the industry of Chinese solar panels capture 60 percent of global market share in 2010 in China's edge in green manufacturing was a powerful political symbol President Barack Obama and his cabinet frequently invoked the specter of Chinese competitors in advocating support for US clean technology manufacturer BYD pushing to move to California in 2011, local politicians seemed primed to return the script on the prolonged loss of American manufacturing jobs to Asian low-cost competitors like China.
Former California Governor Arnold Schwarzenegger, here BYD Wang Chuanfu founder face at a press conference, heard its approval of the company.
At that time, consumer demand and moving up Chinese investors had begun breathing life into other markets in California, alfalfa products in Palo Alto properties to higher education and politicians were California just beginning to realize the job creation potential of Chinese investment FDI in China grew over 20 percent in recent years, and the leaders of California, including Govs Arnold Schwarzenegger and Jerry Brown were team with enterprising mayors like Antonio Villaraigosa in Los Angeles to begin an aggressive courtship of Chinese companies.
When BYD began scouting US sites in 2009, he was Villaraigosa who launched a campaign to bring the company to the city with the unemployment rate in Los Angeles County hovering around 12 percent and businesses local reluctant to grow, city officials looked to Asia for investment.
Los Angeles was in competition with other California cities such as Bay area of Cupertino, but he won the day with an innovative set of money and publicity The city used federal stimulus money to donate BYD January 6 million by the renovation of its facilities lA, and also proposed to display BYD cars at the airport and even find a celebrity to drive a BYD car to the Oscars.
In consideration of the grant, BYD has signed a contract promising to create 58 full time jobs in August 2015, with half of these jobs go to Los Angeles residents, many of them low-income in its own Plan share for the publicly released employment, BYD predicts hiring 102 full-time workers in autumn 2013.
While officials in China and California toasted the future of BYD, the stock price of the company were down or after skyrocketing in the wake of the purchase of Berkshire Hathaway, BYD stocks and profits fell more than 80 percent in 2010 and 2011, sales of its gasoline vehicles have collapsed and investment in new energy markets have failed to repay.
The Chinese government prediction of 2011 of 500,000 new energy vehicles by 2011 had also fallen flat only 8159 hybrid and electric cars sold this year.
Wang Chuanfu came out ahead of himself, and I think it's return to earth, said Greg Anderson, author of How Foot Patrol China plans to dominate the global auto industry, they have expanded incredibly fast and they dealerships ve kind of pulled back on some now.
BYD began to rethink its ambitious plans for the expansion of U In addition to the difficulties of pushing new technologies in consumer markets, the company has come to realize that he faces an uphill battle in the US against the skepticism of consumers and industry on vehicles made in China.
When we went to the auto show in 2008 all Chinese suppliers have been placed in the basement, said Austin BYD America It shows you the respect that the auto industry had for Chinese brands.
Given these difficulties, BYD changed gears in 2011 to focus on a more accessible market segment electric buses.
BYD electrical bus 100 percent operate with iron phosphate batteries and can travel up to 180 miles per charge.
The problem with the entry into the car market is that it is the American dream If you threaten the American Dream that you put up against a real wall, said Matt Jurjevich, a market researcher with BYD America We decided if we seek to make effective market entry, the bus industry and transport is the way to do it, you can affect the greatest number of people a day and you can assign the fastest grid.
BYD hopes to pivot electric buses would help establish a reputation in the country without having to re-educate the individual perceptions of consumers.
They have chosen a niche where there's not a lot of foreign competition, but there is a lot of interest, Anderson says rather than having to convince consumers one at a time to buy their cars, they're just dealing with fleet managers are not so concerned about their image are the cost per mile and reducing emissions.
Thank you Buy America provision to requiring public buses purchased to assemble in the switch to the US BYD buses also meant it would open a manufacturing plant abroad while seeking a location for a new plant, the BYD executives found themselves courted by Rex Parris, Mayor of the desert town of Lancaster, 70 miles outside of Los Angeles.
In 2008 Parris took over a city with an unemployment rate approaching 15 percent and a foreclosure rate that rivals any in the country in search of business opportunities and capital to finance, he decided to green technologies and Chinese investment could be the key to revitalizing Lancaster Parris, who said Chinese economic reformer Deng Xiaoping is his personal hero, ordered the city staff to take mandarin lessons and personally flew several times in China BYD before the courts and other companies.
The day of the American power in the world is finished, a little more, Parris said that if we will participate, we will have to start treating other countries with respect and we really haven t, especially Asian countries they're doing us a favor we are not doing the favor we re those who need jobs.
Lancaster Mayor Rex Parris and BYD America President Stella Li mount a BYD electric bus at the opening of Lancaster manufacturing facilities.
Parris persistent pursuit BYD paid in April 2013 when California Gov. Jerry Brown announced plans to build the plant in Lancaster during a visit to the headquarters of BYD in Shenzhen Office Parris helped BYD acquire a manufacturing plant RV failing could be easily converted for the production of buses, including the possibility of buying surrounding land as the company grows.
In mid-2013, the mayors of Lancaster and Los Angeles, and two consecutive governors gave their ringing endorsement of BYD and the company had won a small contract to supply electric buses to Stanford University in California began to feel like a second home for the company, which had relied heavily on the bus commands and taxi friendly local governments in China now the enthusiastic embrace of California politicians seemed to smooth the road in the U S.
Yet the company was woefully unprepared for the civic complex business environment he faced in Los Angeles County, a landscape populated by a wide range of local politicians, newspapers, interest groups and the competitors.
The problem started with the first significant orders in early 2013 BYD electric bus 10 for Long Beach Transit, followed by a contract with LA Metro 25 bus BYD won the Long Beach contract Proterra Carolina South, a manufacturer had obtained the vocal support of some transportation officials and local newspapers who wanted long Beach to support a US company.
This public gap leads to intense scrutiny and local media glommed on floors detailed briefings each pip - including cracks near the back door - as bus BYD process durability tests, and they have often attacked BYD selection on Proterra criticism even led to an interruption of several months in BYD durability tests; Last summer, the government has temporarily pulled federal funding during a dispute about whether the buses purchased by Long Beach match the bus being tested.
But it was a precursor of the real PR nightmare before charges that BYD had violated laws on minimum wage, bringing Chinese workers and pay them January 50 an hour to work in US facilities.
In October 2013, investigators from the California labor commissioner Bureau acting on a tip conducted a surprise inspection of BYD facilities in Los Angeles and Lancaster From this inspection and the resulting interviews, slapped the desk nearly 100,000 fines on BYD for a combination of the minimum wage, pay stub violations and breaking off.
But worst of all was really the story of the construction of the incident of a Chinese company donated money from the government to create American jobs rather flies in temporary Chinese workers and pay them pennies.
The first allegations BYD underpaying its Chinese workers stem from a complaint filed by Sandra Itkoff, former vice president of BYD America Strategy After being fired BYD in 2012, Itkoff sued the company for wrongful termination and discrimination in a written complaint filed a month before the office of Commissioner of the inspection, Itkoff said she was excluded from meetings of all Chinese staff, the BYD buses were riddled with security problems, and the BYD cheap labor in China to its headquarters in Los Angeles, pay workers from 5000 to 8000 per year.
Local activists protest outside the headquarters of BYD after the company was accused of paying employees 1 50 per hour.
press and local activists were in arms advocacy groups held a demonstration in front Activist Madeline Janis office of the company accused the company of hiding abusive treatment of Chinese workers and substandard electric buses behind a false promise to provide good jobs and clean transportation organization Janis Angelenos, Los Angeles Alliance for a new economy, and several media called transit long Beach and Los Angeles Metro to break contracts with BYD.
But as the public firestorm reached its climax, the Office of the Labor Commissioner overturned BYD course suddenly presented documents showing that its Chinese employees in Los Angeles were actually paid 12 to 16 an hour in Chinese wages, which encourages the office to file the citations minimum wage.
When the work of the raid came, they waited a sweatshop with a group of workers, and there weren t There were technicians working on the equipment, said Austin BYD America.
Despite the justification of BYD to court, many critics outside the company, who requested anonymity because of fear of reprisals, argue that BYD was underpaying its workers They suggested that the company was able to outmaneuver by producing documents from Chinese sources Office of the labor Commissioner that the office had no way to fully investigate.
BYD initially refused to provide documents concerning compensation for Chinese workers or contact information for a temporary Chinese employees to protect the privacy of its workers after the publication of this article, a representative BYD HuffPost extended the opportunity to review the documents, but only in person at the offices in Los Angeles, which was not possible.
Lanny Davis, lawyer of BYD, HuffPost also said that lawyers BYD spent weeks to submit documents to the office of the labor commissioner, including bank statements and proof of payments, and after much study and careful examination, lawyers and investigators in California labor commissioner agreed that BYD has paid the five temporary Chinese workers above the minimum wage in California.
Although the commissioner's office dropped the minimum wage quotes, he stuck BYD with 1,900 penalty to pay for temporary workers in RMB rather than dollars Quotes involving incomplete heels salary and rest breaks remain on appeal lawyer BYD Lanny Davis issued a scathing assessment of the office findings.
This is not a Saturday night live satire of bad government; it's for real, he told the WorldPost Is it possible that bureaucracy has made such useless things to a startup company that is the reverse of the story that everyone is complaining.
One might think that the state of California would say to the Commissioner of Labor, are you kidding 1,900 because they paid RMB rather than dollars Are not we trying to attract foreign investments.
When the dust settled on the debacle of the minimum wage, the company was still in possession of its two key contracts Long Beach Transit and LA Metro Although the road was clear, in December blocked the Federal Transit Administration Transit Long Beach using a federal law grant to buy BYD buses.
The FTA said that at the time of submission in 2013, BYD has not yet comply with the Disadvantaged Business ETS company policy This requires bidders on contracts funded by the federal setting percentage goals for sales they probably will perform with companies owned by minorities and women.
In response to the FTA's decision to block funding, BYD and Long Beach Transit has been forced to cancel last week 10 bus contract and put up for BYD re-tender intends to participate in the new round of bidding, but given the controversy over the past year, this process can put Proterra in a strong position to take over.
The company based in South Carolina has also recently taken a strong ally Ray LaHood, a former secretary of transportation and overseer of the FTA under President Obama, has joined the company's board of directors in February While working in the cabinet of Obama, LaHood wrote enthusiastically about a Proterra visit the website of the white House.
In 2009, Proterra has no financial resources or customer orders to market its bus rapid battery charge, he wrote, but with the help of the Department of Transportation grants to transit agencies across the common country Proterra was able to make that leap.
American soap opera BYD is far from over, but its history is far from a cautionary tale for the Chinese expansion in the United States Parris Mayor of Lancaster, who argues that BYD will grow to be as big as General Motors and Toyota, said there are fundamental problems with the way America deals with Chinese investment.
If we want to bring back these jobs, we must recognize that we do not get to call all the shots, it must be fair both ways, Parris says you're putting all the obstacles before him and at the same time complaining about China's obstacles.
Some analysts also point BYD ineptitude in dealing with local political and civic forces rarely seen in China Confident that his powerful political donors could pave the way to success, the company was caught off guard when faced with the local opposition.
In China, when you work with the central or provincial government, you may very well get things done; they can simply make the order and to do so, said Stanley Kwong, director and professor of business studies in China Initiative at the University of San Francisco in California, it doesn t matter if you get Senators Barbara Boxer and Diane Feinstein and the Governor Jerry Brown, people might not listen to you at a local level.
strained relations with local activists have strengthened the narrative that the company could not get its promises of jobs Madeline Janis of LAANE said his organization was postponed when he approached BYD's obligation to create jobs for low income residents of Los Angeles in response, BYD claims that employs around 50 workers from its Los Angeles headquarters and factory of Lancaster, and said it is on track to meet its obligations contract with the city of Los Angeles.
Critics like screaming bloody murder, saying BYD all this tax money, and for what they were supposed to create 100 jobs, said BYD America Austin Everybody business plans, but we had a contract which was for 58 jobs in August, 2015.
But these clear obligations have shrunk by BYD boldest predictions of hiring more than 100 workers in autumn 2013, and bad publicity about broken promises stuck in the local media.
Reacting to the early criticism about job creation in BYD, a former Los Angeles Deputy Mayor Austin Beutner, who led awareness Mayor Villaraigosa to society, put the performance of the company in a long perspective term.
Things like this are about planting seeds, told Bloomberg Beutner when the seat of Los Angeles opened Some grow fast, some grow slowly, but you got the crash.
Outside the US, BYD has seen ups similar and downs in its international expansion While the company experienced significant profit growth in 2013 a major contract for electric taxis in London fell by Struggles February in developed world can be offset by growth in developing markets BYD executives recently announced plans to build a bus manufacturing plant outside Sao Paolo, Brazil, which is capable of producing 4,000 buses per year to supply contracts South America.
For its part, BYD said it remains confident in its technology, stressing that it has built over 1,000 electric buses and sold them everywhere from Malaysia to the Netherlands.
I think it speaks a lot about the US market we had a lot of trouble here, but if done in other places, said Matt Jurjevich BYD America It could just be that our brand is growing in globally before it develops in America.
CORRECTION This article originally said that Jack Welch was the former CEO of General Motors instead General Electric has also been updated with additional quotes from the legal representative of BYD.
How Electric Dreams Because China has become a PR nightmare in America Huffington Post, china, electric, dreams.