Wang Chuanfu
The industrialist Munger called 'a combination of Thomas Edison and Jack Welch'
Biography
Wang Chuanfu was born in 1966 to a peasant family in Anhui province, China, and was orphaned young. In the story Munger told with visible feeling, an older brother recognized that a genius had been born into the family and gave up his own prospects to nurture his little brother's education — an act of Confucian family devotion that Munger credited with making BYD possible. Wang trained as a metallurgical engineer and in 1995, with roughly $300,000 borrowed from a cousin, founded BYD in Shenzhen to make rechargeable batteries.
BYD first conquered the rechargeable battery business, becoming a main global manufacturer of lithium-ion cells and a supplier to companies like Apple and Huawei. Then Wang did what incumbents consider impossible: he entered the automobile business from zero, built a car in which essentially everything except the glass and the rubber was made in-house, and rode the electric-vehicle transition to global leadership. Munger, introduced to the company by Li Lu, persuaded Berkshire Hathaway to invest $232 million in 2008 — a stake that appreciated many-fold as BYD became one of the world's largest EV makers.
What drew Munger was not the industry but the man. BYD was a bet on a single individual's combination of engineering depth and operational ferocity — the kind of bet Berkshire almost never made, and the kind Munger defended for years as one of the most rational they ever placed.
Key Stories
17,000 engineers. At the 2009 Berkshire annual meeting, shortly after the investment, Munger laid out the thesis in its purest form. BYD had achieved its position in lithium batteries "from a standing start at zero under the leadership of the founder, Wang Chuanfu," then repeated the trick in automobiles with vertically integrated manufacturing that Munger called "not normal" and "very unusual." His conclusion: "And I don't want to bet against 17,000 Chinese engineers led by Wang Chuanfu, plus 100,000 more talented Chinese in a brand-new area — constructed the way they want it. I will be amazed, if great things don't happen here."
The eighth son of a peasant. At the 2019 Daily Journal meeting, Munger told the founding story as a moral parable: "Wang Chuanfu is the eighth son of a peasant. An older brother recognizing a genius had been born into the family, he just gave up everything in life to nurture that little brother genius. Now that's Confucianism." He extended the thought into one of his characteristic civilizational arguments: "Confucianism partly created BYD. That older brother of Wang Chuanfu was a hero. And of course what Wang Chuanfu has done is a miracle."
Easier people to compete with. At the 2009 Wesco annual meeting, with Wang present in the audience, Munger delivered his most quoted line on the man: "I think Wang Chuanfu will do amazingly well in China. He has the right discipline and personal attributes. I wouldn't personally choose to spend my life competing with Wang Chuanfu — there must be easier people to compete with." He added: "I think he wants to make a contribution to civilization... I think he will succeed because he deserves to succeed."
Impact on Munger's Work
Wang Chuanfu changed the shape of Munger's late-career investing in three ways. First, he proved that Munger's management-quality thesis could carry an entire investment. BYD had no Graham-style asset margin and no conventional moat analysis behind it; it had a founder who worked seventy-hour weeks as a matter of lifelong routine — "These are not normal people that make these unusual achievements," Munger observed in 2013 — and a culture of fanaticism. The bet was on the person, and the person delivered.
Second, Wang validated the Li Lu channel. The BYD position originated with Li Lu's research, moved from Li Lu's fund to Berkshire's balance sheet after Munger's advocacy, and later to the Daily Journal's. "That was a venture capital type investment," Munger said. "We bought marketable securities, not Berkshire, but Li Lu did. And it's been a wonderful investment." The episode demonstrated that Munger's circle of competence could be extended into Chinese industry when the extension ran through someone he trusted completely.
Third, Wang became Munger's favorite concrete case in the argument that cultural and family structures produce economic outcomes — that Confucian discipline, the engineering-led organization, and the work ethic of a founder who came up from nothing are durable competitive advantages invisible to spreadsheet analysis. When Munger wanted to explain why he was optimistic about China for a hundred years, BYD and its founder were always the first example within reach.
Key Passages From Munger's Speeches and Letters
"And I don't want to bet against 17,000 Chinese engineers led by Wang Chuanfu, plus 100,000 more talented Chinese in a brand-new area — constructed the way they want it. I will be amazed, if great things don't happen here."
"I think Wang Chuanfu will do amazingly well in China. He has the right discipline and personal attributes. I wouldn't personally choose to spend my life competing with Wang Chuanfu -- there must be easier people to compete with."
"Wang Chuanfu is the eighth son of a peasant. An older brother recognizing a genius had been born into the family, he just gave up everything in life to nurture that little brother genius."
"I don't think Wang Chuanfu hardly ever has worked a week that doesn't have 70 hours of labor in it in his whole life. These are not normal people that make these unusual achievements."
Referenced In
Source: Charlie Munger Knowledge Base — Munger speeches, Wesco Financial annual letters, DJCO annual meeting transcripts