• Mar 21, 2011
If you want to do business in the Chinese market, you have to play by the rules set out by the Chinese government... and those rules are subject to change. Such is the case in the automotive segment, where officials from China are reportedly set to add some requirements for automakers that wish to update any contracts in an effort to build more vehicles in China.
Apparently, as much as 30 percent of any additional production capacity over what has already been agreed upon will be earmarked for the Chinese market, and that percentage of vehicles would have to be sold under a new Chinese brand name at a "low cost."

It's not necessarily more brands China wants, it's intellectual property. "During 10 years of trying, China has become a big factory for foreign companies, and their Chinese partners didn't get advanced technology. Through this industrial policy they would like Chinese carmakers to get IP in order to own this market," said Lang Xuehong, automotive analyst with Sinotrust, quoted by Financial Times.

Will the scales fall in favor of more access to the lucrative Chinese market or will the desire to keep valuable intellectual property under the roof of the company that actually earned it through actual research and development triumph? We'll see.

[Source: Financial Times – sub. req.]


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  • 57 Comments
      • 3 Years Ago
      what do we say whenever bush decided to atack the arab countries, to control the oil... nothing.. and now why should we say something when china change rules (in their country)... besides. china has such a large population.. 15 000 millions.. and we have 300.. and we wanna get rid of our cheap labors (hispanics).. when we could use them in factories or whatever.. at this rate china will surpass us sometime soon..
      • 3 Years Ago
      It's not only the technology part. China has been promoting new rules and regulations on the number of cars being sold in mega cities like Beijing, Shanghai and Guangzhou. So The Future of China , as far as the auto market is concerned, is yet unknown, but manufacturers have got reasons to be concerned.
      • 3 Years Ago
      This is very similar to how China treated Russia with regards to fighter aircraft. Once they get the IP, you can bet the foreign manufacturers will get the boot or stiffer financial rules. China rarely innovates, it imitates.
        • 3 Years Ago
        China rarely innovates, it imitates

        Actually it STEALS. Japan imitaded and then inovated. China will steal then inundate the market with poor quality cheap crap.
      • 3 Years Ago
      The West should stop trading with China. Prices would go up in the West (but it might mean we don't buy so much disposable junk) but it would hurt China a lot more.
        • 3 Years Ago
        We wouldn't need China to prop up our debt if we hadn't jumped in bed with them, shipping one of our largest creators of wealth in this country (manufacturing) to them.
        • 3 Years Ago
        It wouldn't and it won't. All that China has to do is stop propping up the US dollar, stop buying up US debt, and sell its existing USD denominated assets. All of that will appreciate the Yuan and lead to an increase of purchasing power of their citizens. Therefore instead of sending their stuff to the West, they will instead enjoy fruits of their labor.

        China is not an export country, it is a production country which happens to export. The days of West getting their stuff for cheap and them getting our worthless IOUs are about to end.

      • 3 Years Ago
      It pains me to see the Chinese government stoop to such mafia-like tactics in a protectionist effort to shore up the local (incompetent) grassroots industry. In the long run, this is not productive to the Chinese people, as it will only further encourage piracy and reliance on foreign IP to produce homegrown vehicles.

      Instead China should push for more research money and funding to its homegrown companies, as this would also help employ the hundreds of thousands of scientists, designers, and engineers who would otherwise do nothing but reverse-engineer western technology. In the long run this will foster more competitive homegrown industry rather than encourage a culture of stealing from advanced economies.
        • 3 Years Ago
        They're doing more than one thing at a time. Thing is that you can't just massively subsidize R&D like you're suggesting since they're a member of the WTO, people would accuse you of dumping when you tried to export your cars since the cars would be heavily subsidized.
        And anyways, I don't really see how everyone jumped to this absurd conclusion that they're trying to get IP unfairly. It just says 30% of additional production has to be domestic-that's pretty damned low if you think about it, just look at how much foreign makes produce here in the U.S. for all their new expansion plans, it's almost always higher than that. Is it because the U.S. is out to get other people's IP? This is a pretty absurd conclusion to jump to, and even dumber is the fact that they already have joint venture plants with all the automakers in China, so how would this help get more IP exactly? Building more units doesn't give you more IP and already all the small cars are built in China.
        The only thing this would change is that it'd force all the major brands to pay attention to the low end of the market. Enough of this sensationalist "THE CHINESE ARE STEALING EVERYTHING" nonsense.
      • 3 Years Ago
      Chinese trying to steal foreign industrial information & technology... How low can the Chinese be??? Never heard such absurdity before in my whole life...
        • 3 Years Ago
        Clearly, English is not your first language. Where did I say protectionism is a good thing, and where did I justify it? Was "Pick your poison" not obvious enough? It's no good for anyone whether China does it or anyone else. And protectionism isn't unique to China. The US has repeatedly blocked IP purchases and takeovers by Chinese companies.
        • 3 Years Ago
        It's not so much stealing as protectionism and ensuring their domestic automakers catch up to the foreign ones. Pick your poison.
        • 3 Years Ago
        Dest, I'm talking about the automotive industry & this sort of protectionism hasn't been seen before, so take your pathetic defending of the Chinese back to China. Seems like you have some problem sticking to the main point when you send personal messages to others first. OH, & I loved your amusing arrogance about English. Sad.
        • 3 Years Ago
        How is this defending China? I JUST said this protectionism is bad. There's something wrong with you. I just said I wasn't. I'm "arrogant" about English because your inability to comprehend it is the reason you're attacking me.
        • 3 Years Ago
        Yes Dest, you are right..... It really sounded like you were NOT defending the Chinese in your comments. Amusing childish nonsense.

        Oh, & please use your nonsensical Tu Quoque arguments with your 7 years old friends in your school playground. People here are too grown up to take your amusing Tu Quoque nonesense seriously :)
      • 3 Years Ago
      lol, china...how bout you learn how to make stuff on your own instead of just stealing off all the smart white people out there?
        • 3 Years Ago
        Rock on brother
        • 3 Years Ago
        You mean smart German people?
      • 3 Years Ago
      They haven't got any better after all those years of copying so...
        • 3 Years Ago
        Actually, on harborfreight.com you can buy snap-on caliber tools for 1/100th of the price. Of course you have to sort through the trash to find a great tool.

        Also, some of their tools evolve in design year after year for the better.

        disclosure: I have no financial interest in this company
      • 3 Years Ago
      This is not related to the car industry but relates to the China thing, my best mate developed a door lock.. A pretty damn good door lock (he has offers from big lock compies to buy the patent) he needed to put various parts into production cheapest place was China the only problem is if he made the whole lock there his IP would be stolen. So now he gets part of it made there and does the rest himself which is costing him more money but in the long run it will be well worth it.. Don't trust doing business in China what might be cheap at the start via lower production costs is going to bite you back when they steal your ideas..
      • 3 Years Ago
      How arrogant.
      • 3 Years Ago
      Though many liken present day China to postwar Japan in terms of how far their automotive industry has come along, I don't remember Japan falling this low when its automotive industry boomed in the '50s - '70s.
        • 3 Years Ago
        That's probably because Japan received a good bit of help from the good 'ol US of A, and didn't have to basically manage a 1.3 billion population on its own.
        • 3 Years Ago
        yeah totally agree, I am sure GM japan never have to give up any IP to gain access to the Japanese market... oh wait.
        • 3 Years Ago
        Japan knocked off plenty of U.S. tech in the early days.
        And anyways, the government of China isn't actually forcing you to give them top notch IP, they're just saying that 30% of additional capacity has to be in China and it has to be cheap and affordable because that's what the people need. VW has been expanding in China but a lot of it is at the top end with Audi, but that kinda thing doesn't help the vast majority of newly middle class Chinese people since they can't afford an Audi.
        And unlike Japan, China has a horrible history of being exploited by western companies-basically raped and plundered of it's money and left for dead. They have every damned right to make sure that this time they get to share in the benefits of people having access to their markets, instead of westerners living like kings and treating the locals like worthless slaves.
      • 3 Years Ago
      Freedom-lovin' Capitalist Patriots are lined up to get into Communist China.

      Don't forget to preach it loud and proud when you're over there, boys. See where that gets you. I hope it gives you plenty of alone-time to contemplate what Freedom means.

      Git-R-Done while you're there... or whatever.
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