China's auto pirates are so bold and brash they would make Blackbeard blush. They continue to utter denial upon denial of any wrongdoing with the straightest of faces as they blatantly and flagrantly steal vehicle designs across the entire manufacturing spectrum.
Today, the compact SUV Honda CR-V is being faithlessly replicated by China's Laibao S-RV. Toyota's land cruiser Prado SUV has been cloned as the Dadi Shuttle. The luxury Mercedes C-class has been reincarnated as the Geely Meerie. The Rolls-Royce Phantom has a bastard twin in the Hongqi HQD. Even big bus liners are not immune, with Neoplan's Starliner now carbon copied as the Zonda A9. In what might be darkly comical under other circumstances, China is also producing a variety of "Frankenstein cars" that feature the front end of one car, the back end of another, and still other features from other cars.
China's grand theft auto is not only outrageous. It is a tragedy waiting to happen. While each pirated vehicle may look like the real thing, most are deathtraps on wheels that have been put together with inferior metals and materials and an array of counterfeit parts.
Why are China's auto pirates getting away with both figurative and literal murder? For starters, Big Brother is never around when you really need them. Indeed, vehicle manufacturers around the world have gotten absolutely no help from their respective governments in the enforcement of intellectual property laws. This is particularly puzzling politically because automakers — whether in the United States or Europe or South Korea or Japan — represent one of the best sources of high paying jobs for the citizenry.
This lack of government action has, in turn, forced the world's auto manufacturers to seek relief in the Chinese courts. This is like trying to nail water to wall. The laws are weak, judges are biased, delays are interminable, and car companies almost always lose.
The poster child for China's home-court legal advantage is the infamous Chery QQ. Note here that if you substitute the letter "v" for the "r" in Chery, you come up with Chevy. This is a typical Chinese-style trademark infringement.
As for the QQ itself, it is a blatant ripoff of the Chevy Spark. It was designed from stolen plans, and the copy is so good that most of the parts, including the doors, are seamlessly interchangeable. So far, GM has predictably struck out in the Chinese courts, and the QQ is outselling the Spark by five to one inChina. From a consumer health and safety perspective, this has been a disaster as the Chery QQ has performed miserably in crash tests.
The lack of their own governments' support coupled with their abject failure in the Chinese courts has put the world's automakers into the ultimate strategic cul-de-sac. As a matter of market strategy, most of the world's auto manufacturers are now reluctant to unilaterally crack down on China's auto pirates for fear of being excluded from mainland China. Whether it is GM or Ford or Chrysler or Mercedes-Benz or Honda, these companies want to be able to both produce in China using cheap Chinese labor and to sell into the fast-growing Chinese market.
Precisely because of this perverted devil's bargain, Chinese piracy has become a particularly virulent form of forced technology transfer. In essence, the Chinese government is holding the world's auto manufacturers hostage, forcing them to remain quiescent on the piracy issue in exchange for being allowed to "play" in China.
The long-term ramifications of this forced technology transfer are profound. The more technology Chinese automakers steal, the less help they need from foreign auto companies in joint ventures and the harder it is for foreign auto companies to compete on costs. In the bitter end game, China will emerge as the world's 21st century Detroit and dominate world vehicle manufacturing for decades to come. Who says that crime doesn't pay?
Navarro is a business professor at the University of California-Irvine and author of 'The Coming China Wars.' Visit www.PeterNavarro.com.
