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It's time for Chinese regulators to punish copycat carmakers
Yang Jian | 2016/6/17

SHANGHAI -- Ten years ago, it became fashionable for Chinese brands, new to the car industry, to copy the design of popular foreign models.

Over the years, most major Chinese carmakers have outgrown their copycat phase. They've built their own automotive design teams and tapped foreign talent to lead them. 

Yet, China's regulators still protect domestic companies that continue to copy foreign models. Two recent cases illustrate the bad habit.

The first incident involves Jaguar Land Rover, which sued Jiangling Holdings this month for marketing a Landwind X7 crossover that closely resembled the Range Rover Evoque.  

The British luxury automaker also asked China's State Intellectual Property Office to annul Jiangling's patent rights for the Landwind X7. 

Jiangling, a small company formed in 2004, counterattacked with a request that the regulators revoke the Evoque's patent rights. The regulators, in their wisdom, ruled that both models should lose their patent rights.

The Landwind X7, which went on sale in China last year, shares the Evoque's roof line and tapered windows and character lines on the side panels.  

Obviously Jiangling's patent rights deserved to be revoked, but it is a mystery why the office also ruled against Jaguar Land Rover. With its patent rights annulled, Jaguar Land Rover will find it difficult to pursue its case against Jiangling Holdings in the Beijing court. 

If this ruling smacks of favoritism, an earlier court ruling against Honda is downright outrageous.

Earlier this year, the high court in north China's Hebei province reviewed Honda's lawsuit filed against Shuanghuan Automobile, a small local automaker. 

In 2004, Honda sued Shuanghuan for copying the CR-V crossover, but the court did nothing. Meanwhile, the central government revoked Shuanghuan's production license because it produce so few cars. 

In April, the Hebei court finally ruled that Honda must pay Shuanghuan 16 million yuan ($2.4 million) compensation for bullying the small Chinese carmaker. 

The rulings against Honda and Jaguar Land Rover have compromised the ability of China's courts and regulators to ensure fair competition.

And even though they were intended to protect Chinese carmakers, the rulings ultimately will do more harm than good.

China's car market has undergone a couple of decades of robust growth and now car ownership is common. 

Over that period, Chinese car buyers have developed a high level of brand awareness. To win their favor, domestic automakers must demonstrate quality, reliability and original design.  

This explains why major Chinese carmakers are opening styling studios in Western countries and recruiting experienced international designers to lead their in-house design teams. 

For example, Geely hired styling veteran Peter Horbury from Volvo, while Chery tapped James Hope, a former designer at Ford, General Motors and DaimlerChrysler.

Times have changed. Chinese copycats have little chance of success in today's market -- and China's auto executives know it. 

The two rulings by the Hebei court and the State Intellectual Property Office shocked industry observers and drew ridicule in Chinese media. 

It's time for these institutions to punish companies that copy foreign car designs, rather than condone this unlawful practice. 

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