Red alert

City residents blame BYD for nosebleed crisis

BYD H1 profit triples from booming NEV sales

In the midst of a PR crisis

Just a week ago, electric car and battery maker BYD seemed to be on a triumphant path. In the first quarter alone, it reported sales of  286,329 of its new energy vehicles, compared with 104,145 in the first three months of last year. Net profit in the first three months also doubled from a year earlier to Rmb808 million ($119 million) amid record sales.

Within a week, BYD’s golden moment was being tarnished by a new scandal that could threaten its rapid growth. Last Saturday, a group of residents in Hunan province made claims on the internet that a BYD factory in Changsha’s Yuhua district was emitting gas so pungent that hundreds of children nearby were suffering from mysterious nosebleeds. Parents were so furious that they gathered outside the factory, holding photos of their bleeding children and banners that said, “We want fu [a term that means fortune in Chinese, but which is also a play on the name of BYD founder Wang Chuanfu], we don’t want poison.”

According to media reports, children living in the vicinity of the plant have experienced nosebleeds since April this year. Grown-ups, too, have reported nausea, vomiting, and persistent coughing. One survey claimed to show that residents in Jiahe City, a large estate closest to the factory in question, were displaying the most severe symptoms.

Yuan Qun, a parent from Jiahe City, told Phoenix News that her seven year-old daughter Xiao Tang had been suffering from a persistent nosebleed for well over a month. She said she was horrified to find her in bed one morning with her sheets stained with blood. She later discovered that half of her daughter’s class of 44 children were suffering from a similar ailment.

The factory in Yuhua is BYD’s only production facility for its self-developed “DM-i” hybrid electric and gasoline vehicle system. An engineer told Guancha, a news site, that the gas could be the result of the painting process, which relies on  chemicals generally referred to as Volatile Organic Compounds (VOC). Concentrated exposure can cause ailments including irritation to the nose, throat and skin, as well as damage to the liver and central nervous system.

The South China Morning Post reported that the BYD plant had been added to a watchlist of VOC polluters by the Changsha government last year and that it was ordered to cut emissions from processes with new coating techniques by October this year.

In response, the Shenzhen-based car giant admitted that its factory may have created odours that reached neighbouring residential areas but claimed that the emissions “comply with national regulations and standards”. The automaker said it had also filed police reports, alleging that the complaints about nosebleeds were groundless and malicious.

The Changsha government says it has hired third-party testers to get to the bottom of an issue that’s sparked protests in the city. Nevertheless, the situation begs the question of why large residential estates and elementary schools are located in such close proximity to the factory. National standards stipulate a separation between factories and residential developments of at least  300 metres, while also factoring in considerations such as prevailing wind directions.

However, as BYD continues to expand the plant to accommodate expanding output, the distances between the factory and nearby homes  has narrowed. Some of the closest homes are now just 40 metres away.

Still, the reason that the smell has got so much stronger over the last few months likely has to do with BYD’s stellar car sales. Liu Jun, another parent in Yuhua, reckons that previous emissions of VOC were  lower. But factory output more than tripled year-over-year to 62,500 units in the first quarter of this year, bringing intensified pollution.

Worse, BYD has also been running behind schedule in output terms. Phoenix News reckons that it still has orders for 400,000 cars that are yet to be delivered and the backlog is growing by the month. The Yuhua factory is expected to become the company’s largest production base in China with output of 600,000 EVs a year, says the Hunan Daily. Amid the current investigation, the plant has halted some production lines, however…

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.