Behind BYD’s success, Chinese customers, BYD

Ever wondered what BYD stands for?

“It stands for Build Your Dreams,” Xin Jin, a business manager at BYD’s Cupertino, California office told me.  Or that is what most people think. Definitely, that is what Warren Buffett thinks.

In a recent to trip to BYD’s headquarters in Shenzhen, Buffett gave the Chinese electric car maker a big show of support.  “I like the name,” he said, as cited by the Associate Press, “let us ‘build our dreams’ together.”

The America’s most famous investor owns a 10 percent stake in BYD, a $230 million investment that is now worth more than $1.5 billion.

It does not take much research to discover that BYD are the initials of the Chinese characters Bi Ya Di, which does not mean anything but sounds foreign or Western. Many Chinese companies use Western-sounding names to make their companies or product brands sound modern, or to imply their businesses have Western connections.

Despite some nationalistic tendencies among Chinese youths, most of China’s upwardly mobile middle class consumers favor Western brands because of their quality and reputation. A recent article in Harvard Business Review reveals that only 45 percent of Chinese consumers prefer local brands, down from 57 percent three years before.

In addition to quality considerations, Chinese consumers believe that Western products elevate their social status. This is extremely important to them because the Chinese are very status-conscious people.

Many Chinese companies eventry to position their products to have Western appeal. Metersbonwe, a Chinese casual-wear fashion company, uses Western models to showcase their apparel.  According to a survey by McKinsey, 90% of respondents believe that Metersbonwe is a foreign company.

So, here is a million-dollar secret for multinationals that want to capture Chinese consumers’ hearts, minds, and wallets: promote your flagship brands but tailor them to Chinese consumers’ tastes.

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