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Are Chinese OEMs still copying western car design?

At the 2013 Frankfurt Motor Show, Chinese OEMs displayed much more innovative design concepts than in the past

At the 2013 Frankfurt Motor Show, Chinese OEMs displayed much more innovative design concepts than in the past. Constantly accused of ‘copycatting’ western OEMs’ vehicle design, China’s car manfacturers have finally proved their design prowess.

This effort has been compounded by a recent wave of foreign car designers being hired by Chinese companies. This is no doubt a virtuous trend but it may still take many years before the copying of car designs will reduce. Meanwhile we have been left to ask whether design theft is over for good: are Chinese companies moving into a new phase of R&D?

Taking a more critical view of things, it is true to say that what happens at motor shows does not necessarily reflect what is subsequently seen on the roads. Although it may well be true that full copies of another car’s outer design are not as frequent as before, other vehicles do remain a major source of inspiration for domestic OEMs. By simply observing what is driving on the Chinese roads, it seems that the creativity of Chinese car makers is more focused in engineering patchwork copies, i.e. cars which are a ‘patchwork’ of different existing designs.

So why are Chinese car manufacturers still copying the body design of western cars – and how can this new trend be explained?

This question must be contextualised: the vast majority of Chinese OEMs produce and sell cars for the Chinese market only. Few have ventured, and will venture, in the next few years into other more economically and legally complex markets such as the EU and the US. At present, Chinese consumers are not technically as mature and demanding as western consumers, cars are first and foremost a status symbol, the gateway to the middle class. Therefore, these purchasers focus more on the outer design of vehicles than technology, safety and performance.

Given that not all buyers can afford foreign brands – and half of all purchasers are first time buyers – most consumers seek something from the domestic market which may still recall the glamour of western brands. Culturally speaking, a Chinese consumer does not feel ashamed by driving an ugly version of a renowned car brand and model.

Chinese OEM design

Pushed to imitate

Imitation may be the sincerest form of flattery but Chinese OEMs do not perceive this as being in any way a bad thing. They do not necessarily copy in order to trick consumers; often, the company website states with pride that their designers had conceived the model after having diligently absorbed and digested technical learning from western companies. For the original designers, it is a blatant admission of having been copied, for the secondary OEM, it is a statement of their business philosophy.

It cannot be denied that Chinese manufacturers have no own tradition of R&D in the automotive sector. Based on their history, and on the cultural principles stated above, copying outer shapes of cars is indeed a way for Chinese OEMs to gain know-how and experience in car design. A developed R&D department in the design field is the sign of a reached maturity for a car company but Chinese OEMs are simply not yet there. From their perspective, looking at what others have done is surely a way to gain that much needed knowledge of proportions and lines – although it is indeed an illegal way of going about things.

But competition and consumer demand, requiring the launch of new models at a faster rate, may also be to blame. Companies without their own R&D traditions can cope with this pressure by exploiting what others have made, and save a lot of time and money in the process. However, consumer and competitive pressures are not the only factors plaguing domestic OEMs: the Chinese government’s five year plan for the automotive industry, issued in March 2011, requires manufacturers to account for 50% of sales in the internal market. In truth it is estimated that Chinese cars now make up for almost 40% of the country’s sales. OEMs are being pushed to increase the tempo but, instead of building up their own R&D, they are simply exploiting and combining what is already popular on the market.

A sense of impunity is also holding domestic OEMs back from not copying. This may very well be due to the fact that copiers are often partners of the copied: the foreign joint venture partner will often be reluctant to seek a hard confrontation with the much needed local partner for many reasons. Even if a hard stance is taken against them, it is highly likely that the foreign company will be forced to accept compromises.

On the other hand it may be due to the law itself: aside from a few exceptions, most western OEMs do not succeed at pressuring enforcement in China. While many have blamed conniving judges and politics, in reality, legal mistakes by foreign companies have given an excuse for courts to issue judgments that were indeed unfair, but were actually formally correct from a legal point of view. Forgetting to register suitable and proper IP rights for a design is a mistake that many still make. Differences between legal systems are often overseen, creating patent weaknesses and the risk of invalidity declarations.

Change afoot

Recent auto shows, like Frankfurt and Shanghai, have certainly given reason for foreign OEMs to be optimistic: they can take confidence in the fact that some Chinese manufacturers have decided to show the courage of displaying original designs. However, this trend appears to be clear evidence of an increasing bad faith of Chinese car manufacturers, rather than the oft-quoted sincere flattery statement.

While the design copycat issue must be gradually overcome in the coming years, other IP infringement issues are already of a more pressing nature: top of the list is the counterfeiting of spare parts. This has been an ongoing problem and is surely of bigger concern to foreign car manufacturers due to the gross safety implications. Trademark grabbing and illegal exploitations are also an ongoing problem for many OEMs, which may cause more damages on a daily scale than a once in a while copycat car.

As for the future, once the Chinese have reached their outer design maturity, and consumers are more educated and demanding, the battlefield will move from outer design to patent disputes on in-car technology.

Paolo Beconcini is a Partner at Carroll, Burdick & McDonough LLP

This article was first published in the Q4 2013 issue of Automotive World Megatrends Magazine. Follow this link to download the full issue

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