German Paper: "China Steals Volkswagen Patents"

A few months ago, Volkswagen extended its joint venture contract with Chinese partner FAW for another 25 years, with appropriate pomp and circumstance: Chinese Prime Minister Wen Jiabao and German Chancellor Angela Merkel witnessed the signature. Now, Volkswagen takes the unusual step of going semi-public with the theft of intellectual property. According to reports in German media, FAW has “systematically and repeatedly” stolen designs of important components such as engines and transmissions. Volkswagen’s hands are tied.

Volkswagen managers caught partner FAW stealing designs for the Volkswagen transmission MQ 200, writes Germany’s Handelsblatt in a long article which names several (albeit anonymous) Volkswagen managers as sources. “It’s a catastrophe,” a VW exec told the paper.

According to the report, this is not the first case or purloined patents. Two years ago, Volkswagen blueprints were used to copy the EA 111 engine. Volkswagen’s Winterkorn complained to FAW boss Xu Jianyi. Xu apologized, said it was an oversight by an overeager engineer who had been “severely criticized.”

“In the meantime, FAW built a factory in Changchun for the copied engine,” says the report.

Volkswagen had shared construction details with its joint venture FAW-Volkswagen, which builds the engine under license. It did not share the plans with FAW. “The plans should not have gotten to the outside,” a Volkswagen manager told the paper. ”This is no way to cooperate, trust is being violated.”

It is doubtful that Volkswagen will openly fight against the copy. Bigger things are at stake. China already is Volkswagen’s most important market. For 2018, Volkswagen has budgeted four million units for China. Even if Volkswagen would want to take action against the copy, their “hands are tied” until 2013, said a VW executive. That’s when the purloined powertrain will hit the market.

Well, maybe it was a Chinese revenge anyway. The official PR picture with Winterkorn shaking Xu’s hand after the signing of the contract has “Volkswagen/ SAIC” as the backdrop. VW’s other Chinese joint venture partner SAIC is regarded as a bitter rival by FAW, and the improper backdrop is a major loss of the all-important face.

Tip of the hat to the man in the mountains. Demand denied