SAIC Undoes Investment In Chery Over IP Issues
Shanghai Automotive Industry Corp., General Motor's automotive
manufacturing partner in Shanghai, has returned its 20%
investment stake in Anhui's state-owned Chery because
of Chery's use of a GM design in its car, the QQ.
The controversy had SAIC in a bind for more than a year,
because SAIC invested in Chery at the request of the Chinese
government. The Chinese government has been acting unsuccessfully
to consolidate the Chinese auto industry from its more
than 30 companies to five. Unfortunately for SAIC, Chery
somehow acquired the GM designs, and went ahead with manufacture
before GM did., putting the company in an awkward position
between its foreign partner and the Chinese government.
SAIC's president made it clear that the company invested
in Chery because it was asked to by the Chinese government,
and had now returned the stake to Chery. He also said
that SAIC strongly disapproved of any intellectual property
violations which were made, and asked that the SAIC name
not be associated with Chery.
The SAIC move removes a huge headache for GM, which now
sees China
as its greatest growth market. In 2003, GM sold more than
650,000 vehicles in the China market. For months, SAIC,
GM and the Chinese government were looking for a resolution
to the problem.
The resolution seems to suggest that major Chinese companies
are willing to accept Western standards for intellectual
property protection.
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