The chinese government ordered BYD Co. to surrender land in a recent zoning dispute. They confiscated approximately 121 acres of land in Xian, a central chinese city. This caused a slow in chinese national competition in the car battery and auto maker market. BYD was no longer able to build the car plant they were planning on building there next year. China's minestry of land and resources said that the reason for confiscating the land was because the land was illegally adjusted to industrial from agricultural. They also scolded dozens of government officials, and fired the main decision makers who were a part of planning how to build on the land.
In addition to firing of government officials, they hit BYD with a 295 million yuan plan, which is 442,000 dollars in U.S dollars. Still, an individual close to BYD said the company, one of China's best car brands, might have to look for a different site in Xian to build a third assembly plant. Each existing plant in the city can produce 200,000 cars a year. BYD said Wednesday that its car sales in China last month fell 25% from a year earlier to 33,085 cars, even as China's overall vehicle sales rose 19%.
I think It would be a shame that BYD, a main player in the Chinese auto industry would be out of the competition because of a mistaken use of land, and a fine. I think this was a little bit extreme of a consequence and I believe they should of approached BYD in a different manner and went into greater detail about why China's ministry of land and resources was taking the land. I want to follow BYD in the future to see how they recover from this set back.
http://online.wsj.com/article/SB10001424052748704763904575549793829052072.html?mod=WSJ_auto_IndustryCollection
Very interesting article Alex!
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