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Volkswagen accused Chinese partner FAW of industrial espionage - a new scandal on the horizon?

Volkswagen accused Chinese partner FAW of industrial espionage - a new scandal on the horizon?
Volkswagen FAW industrial espionage scandal

After the triumphant figures related to Volkswagen's success in China, suddenly storm clouds appear on the horizon: German officials openly accusing the Chinese from FAW that they have illegally transferred VW technology in the largest espionage case in the automotive industry in China.

FAW is China's oldest carmaker, currently hovering in the top three car manufacturers in China. In 1991 was established a joint venture with Volkswagen AG, from which the German manufacturer now reap the benefits in recent years, thanks to the boom in sales of new cars in China.

No mention, however, a joint venture based on normal market economy rules in the Western world, the company FAW is controlled by the Chinese. Therefore, the Germans were forced to accept early in some partnership practices less ... common.

Now, VW officials have decided to come to attack, openly accusing the Chinese partner of industrial espionage. Basically, it seems that the Germans have concrete evidence that FAW would be transferred illegally VW technology, especially on engines and gearboxes, which will use technology to manufacture its own model.

As early as 2010 people at Volkswagen have revealed that the FAW have in building a plant of engine and gearbox, basically copied after those developed by the Germans - then, the problem was blatant, because VW did not want to give up excellent market share gained in Chinese market (which sold around one million cars per year produced by FAW).

This time, things are more serious, because the stolen technology will be used on Besturn B50 model, designed primarily for Russian car market, which will be assembled. And where this new Chinese car will compete with VW and Skoda - so a very clear case of unfair competition, especially if we think it's copied technology.

It's a very delicate issue for Germans, who have very ambitious goals in China (increase production capacity to 4 million cars annually by 2018) and a record number of plants - the 11th was inaugurated recently in eastern China in Yizheng, in partnership with Shanghai Volkswagen. Besides, already approved a massive investment plan in China, 14 billion euros by 2016.

Most likely, this scandal is just the tip of the iceberg, because the Chinese practice of technology transfer were illegally seized and other major manufacturers such as Toyota or Mazda. But analysts fear that the implications will have a much greater magnitude than we might think, venturing beyond the boundaries of an industry scandal.


Volkswagen accused Chinese partner FAW of industrial espionage - a new scandal on the horizon?

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