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- Sept. 23, 2010 -

Global Supply Chain News: Will Western and Japanese Car Makers Capitulate to Proposed Chinese Demand to Turn Over Electric Car Technology?

Policy "Violates Sanctity of Intellectual Property Law," Congressman Dingell Says; Nissan Already Rolling Over

 
     
 


SCDigest Editorial Staff

SCDigest Says:
This summer, the US Chamber of Commerce issued a statement saying that China's policies are "forcing foreign technology companies to anguish over balancing today's profits with tomorrow's survival."

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The increasingly touchy relationship between many Western and Japanese companies and China may be about to take a new turn, as the Wall Street Journal reported last week that  China's Ministry of Industry and Information Technology was developing plans that would force foreign car makers to turn over advanced technology for building electric cars and batteries as a precondition getting access to the potentially vast Chinese market.

The China's Ministry is said to be developing preparing a 10-year plan with the specific goal of building China into "the world's leader" in developing and producing battery-powered cars and hybrids. The news comes from sources inside several foreign car manufacturers that have seen copies of the draft policy documents.

The proposal as it stands now would limit foreign car makers in the Chinese market to a minority stake in joint ventures with Chinese companies.

The plan is just one of many initiatives designed to thrust China into the lead in a wide ranging number of  "green" technologies to keep its export machine humming as these new markets develop globally. According to the WSJ's sources, the proposed policy supports a government strategy of  building three to five Chinese companies into globally competitive makers of all-electric cars or plug-in hybrids by 2020, as well as development of two to three global suppliers of key supporting technologies such as advanced batteries and electric-motors.

While the new policy is not official, and it is possible the Chinese government leaked parts of the idea to test reaction and ultimately settle for a less onerous but still attractive deal for its auto industry, reaction from many has been swift and strong.

Yesterday, long-time Detroit area Congressman John Dingell sent a stern letter to China's US Ambassador which noted in part that the policy would  "violate the sanctity of the intellectual property laws we hold so dear in the United States and amounts, in my estimation, to a violation of China's obligations as a member of the World Trade Organization."

Leaders of Western countries and companies have been increasingly critical of the lack of protection for intellectual property rights for them in China and the heavy-handed requirements the Chinese government places on foreign companies in many product areas to access its markets.

 

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This summer, the US Chamber of Commerce issued a statement saying that China's policies are "forcing foreign technology companies to anguish over balancing today's profits with tomorrow's survival."

Nissan Has No Qualms

Meanwhile, just days after the news broke about the possible new requirements, Nissan CEO Carlos Ghosn announced early this week that his company was already considering turning over more of the Japanese automaker's advanced electric car technology to its Chinese manufacturing partner.

Ghosn said Nissan is talking to Dongfeng Motor Group about transferring lithium-ion battery know-how and other technology to its existing joint venture that produces traditional automobiles for the Chinese market. Nissan plans to begin test marketing its Leaf brand electric car in China early in 2011, and is now also considering producing the Leaf within China.

"There's no limit to technology we bring to China," Ghosn said at a press conference related to the opening of a new traditional car factory in Zhengzhou.

Another Nissan executive, Kimiyasu Nakamura, seemed to express no concern whatsoever regarding the proposed policies.

"Whatever final shape and form the policy might take, we wouldn't hold back" in sharing Nissan's electric car technology, Nakamura said. "We are going to figure out within that legal framework exact methodologies as to how we could transfer technology here."

 

What is your reaction to the proposed new China electric car technology? What do you think of Nissan's seeming willingness to give the store (and maybe company) away to penetrate China's market now? Is there anything Western companies or governments can really do? Let us know your thoughts at the Feedback button below.

 
 
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