Sunday, January 2, 2005

Chery's QQ has been the subject of controversy. GM says it's a copy of one of its models. Chery denies the charge.

Chinese carmaker ambitious, controversial

GM has accused Chery Automobile Co. of copying Chevy design, plans to sue.

By Christine Tierney / The Detroit News

GM says Chery copied this Chevrolet Spark for its QQ model. Chery's new Crossover. Chery's Oriental Son. Comment on this story Send this story to a friend Get Home Delivery

Chery Automobile Co. Ltd. first gained notoriety two years ago when General Motors Corp. accused it of copying one of its vehicles. But the Chinese carmaker is now in the spotlight because its ambitious growth plans have put it on a fast track in China's budding auto industry.

Although it ranks eighth in sales among China's carmakers, Chery is already the biggest Chinese vehicle exporter. It also plans to become the first Chinese company to build cars abroad.

GM first brought Chery to the world's attention in 2003, when it accused the carmaker of copying the Chevrolet Spark, a hatchback based on GM's Daewoo Matiz.

Chery denies the charge, but the QQ bears a striking resemblance to the Spark and also outsells it.

The dispute reflects the confusion, risks and ambitions in China's new auto industry, where global carmakers are battling pugnacious upstarts for a piece of what may become the world's largest auto market.

With Chery now starting to sell vehicles outside China, GM may find itself competing against the ambitious Chinese automaker in more markets.

GM, which has a substantial presence in China, tried to halt Chery's QQ output by leaning on its venture partner, the powerful Shanghai Automotive Industry Corp. SAIC also had a partnership with Chery and agreed to sever the ties.

GM complained to government officials in Beijing, but authorities took no action against Chery.

Under President Yin Tongyao, a former senior engineer at China's FAW-Volkswagen venture, Chery is pursuing plans that would help fulfill the country's goal of becoming a major producer and exporter of cars.

Established in 1997 in Anhui Province's Wuhu Economy and Technology Development Zone, Chery has boosted its share of China's market to 4 percent, from 0.3 percent in 2000.

It now sells four cars -- the Fengyun, Qiyun and Son of East sedans, and the QQ. Next year, it plans to launch a sport utility vehicle, a new sedan and a crossover.

Michael Dunne, president of consulting firm Automotive Resources Asia Ltd., classifies Chery as one of China's 'young tigers,' or hungry new automakers, in contrast to the nation's 'married lions' -- established companies that first built vehicles using Soviet technology and now produce cars with foreign partners.

"The young tigers will stumble initially when they try to export, but so did Toyota Motor Co.p., so did Hyundai Motor," Dunne says.

Chery exported around 10,000 vehicles last year -- more than any other Chinese carmaker -- to a dozen countries, including Cuba, Egypt and Bangladesh. It also has plans to assemble cars in Iran and Malaysia.

GM has not given up the fight against Chery -- one of a series of disputes over rampant trademark and patent violations in China. In December, GM said it would sue the automaker in a Chinese court in a case expected to draw worldwide attention.

You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com.