The copyright spate between Fiat SpA and China's Great Wall Motor Corp has put accusations by overseas car makers of patent infringement by Chinese car makers in the spotlight once again.
Only this time the lack of intellectual property rights has replaced quality concerns as a new problem for domestic car makers as they try to drive into overseas markets.
On Monday in Hebei Province's Baoding, the home market of Great Wall Motor Corp, the Peri subcompact car, which Italian car maker Fiat claimed as resembling its Panda city car, rolled off the assembly line. The car maker displayed the Peri at an auto show in Shanghai in April.
Great Wall plans to sell the controversial Peri, powered by a 1.3-liter engine, in more than 80 overseas markets, including Italy, in the second half of next year despite Fiat having started legal proceedings in the Chinese and European markets.
Peri is the first passenger car for Great Wall, China's largest sport-utility vehicle maker which aims to diversify its product line-up and boost sales. The firm received oral approval for output on October 24.
Great Wall said it spent 300 million yuan (US$39.94 million) on the development of the Peri subcompact car. In China, the Peri is priced between 43,000 yuan and 53,000 yuan, and the price overseas will also be very competitive, said Wang Fengying, president of Great Wall.
The copyright row followed similar claims by Daimler AG and BMW over Shuanghuan's Nobel and CEO models.
Both Daimler and BMW threatened to take legal action against Shuanghuan's Noble subcompact and CEO sport-utility vehicles for allegedly copying the design of Mercedes-Benz's Smart Fortwo and BMW's previous generation of X5 SUV.
The Shuanghuan Noble was not exhibited at the Frankfurt Motor Show, which was held a month ago, after Daimler pledged to block sales of the model - priced at 7,000 euros (US$10,080), the lowest price for a small car in Europe - in overseas markets.
It's not the first time that Shuanghuan is involved in a patent infringement. Three years earlier, the Patent Reexamination Board of the State Intellectual Property Office of China ruled that several patent rights of Honda's CR-V SUV were valid and protected, clearing the way for Shuanghuan to be charged for copying the Honda CR-V design onto its SR-V model.
In fact, several Chinese car makers have faced IPR lawsuits. General Motors Corp claimed Chery's QQ, China's top-selling subcompact car is a knock-off of its Chevrolet Spark while Toyota sued Geely for a trademark resemblance.
Germany-based Neoplan Bus GmbH, an affiliate of Europe's third-biggest truck maker Man AG, filed a lawsuit against Zhongda Auto Industrial Group for copying the exterior design of its flagship Starliner coach on Zhongda's A9 Coach last year.
Most lawsuits against Chinese auto firms over alleged piracy were unsuccessful because patent infringements concerning the body of a car are usually difficult to prove.
"Overseas car makers are sometimes unwilling to proceed with the procedures as they are afraid the move would give (alleged) copycat (models) more publicity and damage their brand awareness," said Klaus Paur, director of the automotive division in TNS, an international consulting firm in Shanghai.
Some industry analysts said Chinese car makers are not fully aware of the seriousness of the IPR issue, especially those specializing in "self-designed" models. A lack of IPR awareness and negligence will cause the auto industry to lose economic benefits.
Chen Meizhang, professor of IPR Law at Beijing University, said: "In order to save time on production cycle and R&D investment, some auto makers take advantage of others' patents to speed up their program."
Paur said Chinese passenger car makers lag behind their overseas peers in the area of design and that's why copying might be the only opportunity for them to quickly learn the nuts and bolts of rolling out new cars and sell them in overseas markets.
"We have already seen patent disputes leading to curb on sales for Chinese car makers in overseas markets in Italy and other parts of Europe. The more they export to the matured markets, the more sensitive international car makers are for legal assistance," Paur said.
"The IPR issue will cause very considerable problems, and Chinese car makers should protect their exports because copying (of other designs) is not really helping them in the long term," Paur warned.
China's auto exports may increase at least 46 percent this year, fueled by increased demand for sedans and trucks.
Auto shipments will exceed 500,000 units in 2007, following a doubling of overseas sales to 342,400 units last year, the Ministry of Commerce said in a statement on its Website.
Auto exports rose 70 percent to 294,000 units in the first seven months of this year from a year earlier, the China Association of Automobile Manufacturers earlier projected.
Exports of passenger vehicles totaled 119,552 units through August, more than the total exports achieved last year, according to a report from Automotive Resources China, a division of J.D. Power and Associates.
The top 10 export destinations are Russia, Ukraine, Britain, Venezuela, Italy, Syria, Poland, Germany, Algeria and Colombia, the report said.