Volkswagen Partner FAW Accused of Copying Engine and Gearbox Designs
A German report alleges that FAW systematically copied Volkswagen engine and transmission technology, raising concerns about IP protection in China and the future of the joint venture.
Volkswagen managers have accused their Chinese joint venture partner, FAW, of systematically copying proprietary engine and transmission designs, according to a July 2012 report in Germany’s Handelsblatt. The allegations centre on the unauthorised use of blueprints for the MQ200 transmission and the EA111 engine, both key components in Volkswagen’s global line-up.
Volkswagen accuses FAW of copying engine and transmission designs
Details of the alleged design copying
Handelsblatt reported that Volkswagen managers discovered FAW had obtained and used internal blueprints for the MQ200 transmission, a gearbox widely used in Volkswagen models. The report cited several anonymous VW managers as sources, who claimed this was not an isolated event but part of a pattern. In 2010, Volkswagen’s EA111 engine design was also allegedly copied, with blueprints used to produce a near-identical engine for FAW’s own vehicles.
Volkswagen CEO Martin Winterkorn reportedly confronted FAW’s chairman, Xu Jianyi, about the EA111 incident. Xu apologised, attributing the situation to an engineer’s oversight. Despite the apology, FAW went on to build a factory in Changchun to manufacture the engine based on the copied design, Handelsblatt said.
Volkswagen’s response and commercial considerations
Volkswagen has not taken public legal action against FAW over the alleged intellectual property theft. China remains Volkswagen’s single largest market, with the company planning to sell four million vehicles in the country by 2018. Openly challenging its partner risks damaging a relationship central to Volkswagen’s global strategy. The episode highlights the tension Western manufacturers face between protecting intellectual property and maintaining access to the world’s largest car market. Volkswagen’s joint ventures in China accounted for a substantial share of its global sales in the early 2010s.
Intellectual property risks for Western carmakers in China
Western manufacturers have long expressed concern about intellectual property protection in China, particularly within joint ventures where technology transfer is often a requirement. The FAW case shows the vulnerability of proprietary designs once shared with local partners. While Volkswagen’s experience is not unique, the Handelsblatt report brought rare public attention to the issue, putting pressure on both automakers and regulators to address IP protection in future agreements.
- MQ200 transmission: widely used in VW models, allegedly copied by FAW
- EA111 engine: VW blueprint used, FAW built a dedicated factory in Changchun
Volkswagen’s reluctance to escalate the dispute publicly reflects the commercial realities of operating in China. For now, the company appears to be managing the situation internally, balancing the need to protect its technology with the imperative to remain competitive in the Chinese market.
