Volkswagen And FAW Kiss, Make Up, And Stay Married For Another 25 Years

Bertel Schmitt
by Bertel Schmitt

In February 1991, Volkswagen signed its second Chinese joint venture deal with First Automobile Works (FAW) in frigid Changchun in Northern China. This deal, and the older JV with SAIC turned into the cornerstone of Volkswagen’s world domination plans. In no country does Volkswagen sell more cars than in China – and it wants to double the current number in a few years. Written for a 25 year term, the joint venture with FAW would end in 2016. It won’t. It has been extended for another 25 years.

The old contract is still good for a few years, so why the rush? Well, there was that other matter. In summer, there were reports about FAW purloining plans for an engine and a transmission. The matter made big waves in Germany, and ripples in China.

Today, Reuters was told that everything is fine, that the couple will stay married for another 25 years, and that they will spend $12.56 billion in China between 2013 and 2015. Reuters was also given a terse statement to the effect that neither of the venture partners had infringed on one another’s rights in the past years.

This comes after Volkswagen CEO Martin Winterkorn and FAW-CEO Xu Jianyi had a meeting, and came to the conclusion that a little adultery should not stand in the way of a mutually beneficial marriage.

I can only imagine how the discussion went:

Xu: “Our contract expires in 2016.”

Winterkorn: “Does it really? Time flies.”

Xu: “You want another one?”

Winterkorn: “Sure!“

Xu: “What about those patents?”

Winterkorn: “You also want to do it again, don’t you?”

Xu: “You devil.”

Winterkorn: “Patents? What patents?”

Xu: “Got a pen?”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Carfriend313 Carfriend313 on Nov 29, 2012

    The Chinese market is more important to Volkswagen than however that patent leak turned out.

  • Th009 Th009 on Nov 29, 2012

    In front of a Volkswagen/SAIC backdrop again -- or is it an old photo?

  • Wmba Wmba on Nov 29, 2012

    FAW seem to be the only entity to have kicked sand in Ferdy Piech's eyes and gotten away with it. (Discounting Eyebrow-of-the-Year Award winner Osamu Suzuki, who may or may not be able to ditch the monetary side of his dismissal of the agreement with VW) Building an engine plant to make copy VW EA111 engines from stolen plans is apparently just a rollicking good laugh for FAW. So I am led to wonder whether Ferdy has some devilish plan dreamed up to cook their goose in the future. I hope so, because so far, Piech has taken a couple of haymakers without retaliating. Most uncharacteristic. On the other hand, the EA111 engine has been around for 40 years. The ones they sell today in the Polo and cheaper Euro Golfs have been modified beyond their original designer's dreams, except for that iron block. The new EA211 engine which comes out in the new Up! and other VWs is the latest tech, which seems to amount to changing the block to aluminum, and other small improvements. In fact, it is hilarious to read this Chinese car blog: cusations-the-faw-plagiarism-patent-disputes-gordian/64837/ Absolute bs justification for stealing VW IP, by essentially saying FAW improved the copy. FAW said: "relevant person in charge of the FAW Party Propaganda Department, said after the outbreak of the patent door “, FAW latest independent R & D series engines, such as project 4GB and 4GC, its advanced nature have been more than the EA111 engine, “FAW is not necessary to plagiarism an outdated engine technology.” What I glean from that is there is a FAW PR guy with the job title "Head of Party Propaganda Department". Get 'em, Ferdy!