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Venture capitalist compares Elon Musk's Tesla strategy in China to Sun Tzu's 'Art of War'

Key Points
  • Tesla's entrance into the Chinese vehicle market is akin to the strategy described in "The Art of War," venture capitalist Paul Holland said.
  • "Go right to the home territory of your competitor and make sure you dominate there," Holland said.
  • Chinese electric-vehicle makers are the biggest competition for Tesla, the general partner at Foundation Capital argued.
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Venture capitalist: Elon Musk's Tesla strategy in China to Sun Tzu's 'Art of War'

The entrance by Elon Musk's Tesla into the Chinese vehicle market is akin to the strategy described in Sun Tzu's "The Art of War," venture capitalist Paul Holland said Tuesday on CNBC.

"Go right to the home territory of your competitor and make sure you dominate there," the general partner of Foundation Capital said on "Squawk Alley." "He's not going to Detroit. He's going to Shanghai."

The definitive work of Sun Tzu, believed to be a Chinese military leader who lived about 2,500 years ago, has informed warfare strategists through the ages on how to gain battlefield advantages. Modern-day business and sports figures also have drawn on the book's tactics and philosophies.

The strategy by Musk, Tesla's CEO, is particularly wise, Holland said, because he believes Tesla's largest competition in the electric-vehicle category will come from Chinese companies.

He singled out Byton, based in Nanjing, China, as a top rival to Tesla, whose Model 3 was the bestselling electric vehicle in the world in the first 11 months of 2019.

The No. 2 selling EV was from a different Chinese company, Beijing-based BAIC Group.

Holland said Byton has "hundreds of developers" working in Santa Clara, California, as the company seeks to develop vehicles it views as comparable to Tesla. He said Byton also has a "very large' factory in China, which is the world's biggest vehicle market.

"I think it makes it almost doubly smart that Elon is in Beijing and in Shanghai," said Holland, an investor in Netflix and Uber.

Holland's comments Tuesday come as the first Tesla Model 3 cars manufactured at the company's Shanghai factory were delivered to Chinese consumers.

Built in 10 months, the plant is the company's first outside the U.S. and is considered critical to Tesla meeting rising demand in China for its vehicles.

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