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New Chinese policy may force foreign automakers to share intellectual property

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New Chinese policy may force foreign automakers to share intellectual property

Vanessa Williams

Automotive News -- September 17, 2010 - 2:12 pm ET

Foreign automakers may have to share innovative electric-vehicle technology with Chinese companies in exchange for access to the nation's growing light-vehicle market, The Wall Street Journal reported, citing executives at a group of international automakers familiar with the government's plans.

China's Ministry of Industry is drafting a 10-year plan aimed at making the nation a leader in hybrid and electric-car technology.

The ministry's proposal could require foreign automakers to enter into joint ventures in which Chinese companies hold majority stakes, the newspaper said.

Major foreign automakers fear China will use the initiative to gain control of their intellectual property. China is now the world's largest vehicle market and a major source of sales and profits for many foreign automakers. Under China industrial policy, foreign automakers typically have to establish joint ventures with Chinese automakers to gain access to the market.

At the same time, the country has yet to produce a domestic automaker that can compete globally on the same scale as Toyota Motor Corp., Volkswagen AG and General Motors Co.

Chinese government officials see the electric and hybrid initiative as an opportunity to create such an automaker, The Journal said.

Raising a hurdle

A draft of the Ministry of Industry's electric-vehicle plan includes an investment of up to 100 billion yuan, or $15 billion, in charging stations and other infrastructure.

It also would create three to five globally competitive Chinese car companies with a capacity to build 3 million hybrid cars by 2020, according to The Journal. China hopes the initiative also will produce two to three global makers of core parts, such as advanced batteries and electric motors.

One foreign auto executive quoted by The Journal said the Ministry of Industry's draft "unnecessarily raises the hurdle for our plans for producing an electric car in China." Because China is likely to be a major market for electric cars and plug-in hybrids by 2020, foreign automakers will need to build such vehicles in China, the unidentified executive told the paper.

“The new pending policy would make the process unnecessarily more cumbersome and complicated," he said.

For automakers and other industries, China's importance has grown in the wake of the global financial crisis. But at the same time, Chinese leaders have sought to trade market access for technology to transform the country's industrial base.

In July, the U.S. Chamber of Commerce warned that China's policies are "forcing foreign technology companies to anguish over balancing today's profits with tomorrow's survival."

The Beijing government, according to The Journal, says concerns about the country's investment environment are unfounded.

"China is committed to creating an open and fair environment for foreign-invested enterprises," Chinese Premier Wen Jiabao told global business leaders at a meeting of the World Economic Forum in China this week. "Foreign-invested enterprises in China on the whole enjoy a good environment and have reaped good returns."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100917/GLOBAL03/100919857/1131#ixzz0zpswsPqI

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Kno what's amazing?

In the U.S., anyone proposes a 'restriction' of any sort on a foreign make, and we all hear the same ol' same ol' "It would start a trade war".

I wonder if anyone worries a 'trade war' will happen if they force foreign makes to hand over proprietory tech.... I guess not.

Who is the 'bigger' player here ?

I've said this before WRT foreign makes here- charge the companies a license fee to do business here, based on last year's sales volume; they're not going to leave, trust me.

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China's Ministry of Industry is drafting a 10-year plan aimed at making the nation a leader in hybrid and electric-car technology.

By stealing and copying other automaker's technology.

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By Drew Johnson

There have been a number of reports of Chinese car companies stealing designs and technology from the world’s more established automakers, but the Chinese government has devised a plan to curtail that problem – make it a legal requirement.

China's Ministry of Industry and Information Technology has proposed a new plan that would require foreign automakers to share electric vehicle technology with China’s domestic auto industry. Under the terms of the plan, any foreign automaker that refused to comply with the regulations would be banned from selling vehicles in China – the world’s largest auto market.

Additionally, the plan would require any foreign automaker to form a joint-venture with a Chinese car company before establishing a China production base for EV components. The proposed regulations would cap the foreign automaker’s share of the joint-venture at 49 percent, meaning the Chinese partner would have a controlling stake of the entity.

The proposed plan is "tantamount to China strong-arming foreign auto makers to give up battery, electric-motor, and control technology in exchange for market access," a senior executive at a foreign car maker told The Wall Street Journal. "We don't like it."

Despite the executive’s stance, China insists it is “committed to creating an open and fair environment for foreign-invested enterprises.”

Early fallout

For good reason, the world’s automakers are growing increasingly concerned about China’s proposed regulations. Toyota had planned to launch its third-generation Prius hybrid in China this March, but has suspended those plans until the regulations become a little clearer. Several other automakers will likely follow in Toyota’s footsteps, potentially hampering the rollout of greener vehicles in China.

Lofty goals

Although China has yet to produce a major player in the global auto industry, the country is setting some pretty lofty goals for itself, including becoming the world leader in green car technology. "China is going to go from following the industry to leading the industry in automotive technology," said Zhang Baolin, president of Chang'an Automobile Co., a state-owned enterprise in Chongqing. "There will be lots of opportunities for us in the new-energy automotive field."

The Industry Ministry has already set the goal of having 5 million electric or plug-in hybrid vehicles on China’s roads by 2020, which is five times greater than the U.S.’ set goal. The Industry Ministry also predicts China will be able to build and sell 3 million hybrid vehicles a year by the same date.

Despite the gravity of the situation, the Chinese government could make a ruling on the situation as early as next month.



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This is asinine; forced intellectual theft, and their government knows that they can get away with it because any opposition in North America will be squashed by outcries of 'protectionism' or accusations of being anti-free trade. As much as I hate the idea, I'd be in favour of throwing up a tariff barrier, or a similar measure over this. Imagine if America demanded a Chinese manufacturer to reveal its IP to an American one in order to business on this continent?!

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Report: China forcing foreign automakers to give up EV secrets?

by Jeff Glucker (RSS feed) on Sep 20th 2010 at 10:31AM

So you want to sell your foreign cars in China? If you're an automaker, it might cost you a whole lot do so. A report in The Wall Street Journal claims that the Chinese government wants to force foreign companies to divulge their electric vehicle technology secrets in order to sell their products in China.

China wants to become a global power in the development and production of electric cars and hybrids. Apparently, they want to skip the whole research part and go right to utilizing technology developed and tested by others. This would be fine if they wanted to pay for said tech, but simply bullying manufacturers into handing it over is not the way to go.

From the WSJ:

"The car executives are joining a chorus of companies criticizing China's industrial policies. Business people and government officials say Beijing's so-called indigenous-innovation efforts discriminate against them and are aimed at gaining control of foreign intellectual property."

China is a very important market for automakers, as it's the world's largest purchaser of automobiles. China's current proposal says that any foreign automaker wishing to produce new-energy products there must establish joint-venture agreements with Chinese companies. The foreign automaker would then only be allowed to hold a 49-percent stake in the newly formed alliance. Obviously, this isn't sitting well with companies that have invested massive sums of money developing new energy-efficient solutions.

Forcing a so-called "alliance" that all but hands over highly-valuable intellectual property to the Chinese party is not an example of China "playing nice" with others. Hopefully, a more workable solution can ultimately be agreed upon. Unfortunately, China has a lot of leverage here. It knows exactly how important its market is to every other automaker on Earth, and it's obviously not afraid to twist arms to get what it wants. Thanks for the tip, Sea Urchin!



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China's boom is going to go bust. Just wait and see.

The Chinese working force is demanding better wages and working conditions. Now, their government is demanding that they can leech even more off of the global economy by taking the intellectual property of foreign corporations and companies (mainly American) by force.

As the days go by and as the world keeps turning, I think manufacturers -- I'm sorry, foreign ... no, American ... no, OUR companies and corporations -- are going to seriously start contemplating bringing down the manufacturing powerhouse that they essentially built out of very little to nothing.

China has a lot of nerve doing this.

I say, let them eat meat. :AH-HA:

Their undoing will be their own undoing and so be it. I'll welcome American industry back with open arms. The minute we fight fire with fire here is the minute we reclaim an important part of what gave our country such a strong and prosperous economy.

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