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Why Boston Power Went to China

Why Boston Power Went to China

Kevin Bullis of Technology review recently interviewed the CEO and owner of Boston Power an automotive battery manufacturer. The interview revealed that while the US government brushed her aside, the Chinese government went out of its way to support her work. As a result, a major research initiative was lost to the US. Why is it that the US, already losing out to Asia in R&D is still not willing to wake up to the opportunities it is losing, and will it finally wake up when it is too late?

Kevin Bullis of Technology review recently interviewed Christina Lampe-Onnerud who is the founder of Boston Power, a start-up battery manufacturer. The interview revealed that Lampe-Onnerud recently set up a large R&D facility and a battery manufacturing base in China. Key points that emerged in the interview are discussed below.

When Lampe-Onnerud sought a $100 million loan from the US government, she was turned down. However, China stepped in and offered her a $125 million package of venture capital, low interest loans and grants. Not only was the money forthcoming quickly, she was also invited to meet with the Chinese Premier. In the US she was not only denied funding support but could not even meet anyone senior in the bureaucracy to present her case. Chine was far more eager to get her R&D and her manufacturing base and that is why she went there.

Another hurdle she faced as an entrepreneur in the US was is in organizing small production trial runs. No major battery manufacturer was willing to do a pilot run for her under $1 million. Even then, they required long lead periods. In China on the other hand, she was able to get trial runs for as little as $5000 that came out of her own savings and since spare capacity was available, she could try out her ideas almost immediately. This was a crucial issue for an entrepreneur who was still testing her new ideas and innovations.

The environment in China proved especially conducive for battery manufacturers. There are rules that restrict the usage of gasoline fuelled cars but there are no restrictions on battery driven vehicles. This further added to the advantage of manufacturing automotive batteries in China. Lampe-Onnerud said that even had she got the US grant and set up facilities in the US, they would have had to move to China eventually due to the large volumes of business there.

Responding to another question about the established players in the market and whether she could compete in such a specialized field, Lampe-Onnerud said that while most major players have established ties with major automotive makers, she has been able to get contracts with large Chinese auto makers. As a consequence she has opportunities to grow that she would not have had in the US. China, she said, appreciates new battery technology and is willing to be innovative in acquiring it.

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The New Asia Innovation Team