Not everyone is convinced that Warren Buffett’s investment in China’s car and battery maker BYD is a good idea. William Pesek wrote an article for Bloomberg.com; as the title “Buffett's China-Gushing Charm Sells Like Sex” suggests, the author does not attempt to conceal his reservations.
First on the China, Pesek has his barrel of criticism:
Then, Pesek takes a few shots at BYD the company itself:
To support his arguments, Pesek also cited a very respectable business man, Terry Gou, chairman of Foxconn Technology Group, to support his negative case. Gou accuses BYD of stealing trade secrets that helped BYD double revenue from its handset business from 2005 through 2007. In particular, Gou was said to be critical of Buffett: “He doesn’t know the technology,” Gou told Bloomberg Businessweek last month, referring to the batteries used in electric vehicles and plug-in hybrids. “He just used his name to speculate on the stock.”
For those of us who want to jump on the bandwagon (or should I say “electric car”) of BYD, the stock is traded in HongKong, but two classes of ADR is available in the US under the symbols “BYDDY” and “BYDDF”, both in the pink sheet.
BYD stock, together with its ADR's, climbed about 30% in the past two weeks or so, coinciding with Buffett's trip. At least for short term, Buffett's investment and his trip paid off.
Time will tell whether Buffett’s investment will be a good idea or not in long term. For now, it is an outright success.
Watch Bloomberg’s coverage of Buffett’s recent trip to China:
First on the China, Pesek has his barrel of criticism:
Never mind the specifics of China’s boom or risks ranging from excessive pollution, bad loans and instability. Never mind which World Trade Organization rules are trounced in the process, which regional agreements about territorial claims are blown off, which despots are financially supported to win access to national resources, which websites are banned or how an undervalued currency is damaging job creation in other developing nations.
Then, Pesek takes a few shots at BYD the company itself:
BYD is having trouble living up to the hype. Its F3 sedan, China’s best- selling car in 2009, could be mistaken for Toyota Motor Corp.’s Corolla. It won’t deliver electric cars to California this year as promised. And its E6 car will get about 100 fewer kilometers out of a six-hour charge than the company announced at the Detroit auto show in January 2009.
To support his arguments, Pesek also cited a very respectable business man, Terry Gou, chairman of Foxconn Technology Group, to support his negative case. Gou accuses BYD of stealing trade secrets that helped BYD double revenue from its handset business from 2005 through 2007. In particular, Gou was said to be critical of Buffett: “He doesn’t know the technology,” Gou told Bloomberg Businessweek last month, referring to the batteries used in electric vehicles and plug-in hybrids. “He just used his name to speculate on the stock.”
For those of us who want to jump on the bandwagon (or should I say “electric car”) of BYD, the stock is traded in HongKong, but two classes of ADR is available in the US under the symbols “BYDDY” and “BYDDF”, both in the pink sheet.
BYD stock, together with its ADR's, climbed about 30% in the past two weeks or so, coinciding with Buffett's trip. At least for short term, Buffett's investment and his trip paid off.
Time will tell whether Buffett’s investment will be a good idea or not in long term. For now, it is an outright success.
Watch Bloomberg’s coverage of Buffett’s recent trip to China:
