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G.M. to Build Hybrid Research Center in China
BEIJING, Oct. 29 — General Motors announced on Monday that it would build an advanced research center in Shanghai to develop hybrid technology and other advanced designs, in the latest research investment in China by a foreign automaker despite chronic problems with purloined car designs.
G.M. already has a 1,300-employee research center in Shanghai with its main Chinese joint venture, the Shanghai Automotive Industry Corporation. The separate, wholly owned research center announced on Monday for the most advanced vehicle engineering and development could help G.M. keep greater control over new technologies than conducting the research through the joint venture.
Kevin Wale, the president of G.M.’s China operations, said that the company remained “very comfortable” with its partnership with S.A.I.C. and that S.A.I.C.’s recent introduction of its own sedans had shown “no significant impact” on G.M.’s own sales.
Rick Wagoner, G.M.’s chairman and chief executive, said that that it was essential to do advanced research in China so as to adapt technologies quickly to locally sold models. G.M.’s sales in China have grown to an estimated 1 million this year from 20,000 in 1999, making it the company’s second-largest market after the United States.
Mr. Wagoner insisted that G.M. could keep control of intellectual property in China even while doing cutting-edge research here. “We think it’s a prudent tradeoff and we think the risk is manageable,” he said.
Chen Hong, a top S.A.I.C. executive, said nothing on the new G.M. project but welcomed a separate plan on Monday for G.M. and S.A.I.C. to provide a $5 million grant jointly over five years for a much smaller research venture at Tsinghua University in Beijing. That project that will give G.M. closer access to government officials here
Chinese automakers have repeatedly triggered confrontations with Western automakers by introducing vehicles that appear identical to Western models, but there has not yet been a case of a Chinese automaker copying advanced Western engine technology.
G.M.’s largest hybrid car research efforts will remain in the United States, but research will also be done collaboratively in China and information will be shared with China from G.M.’s partnerships with universities around the world, Mr. Wagoner said, adding that, “For us, it’s not a question of either/or.”
Honda, Ford, Volkswagen and other foreign automakers have all announced their own research centers in China in recent months, although not one has been as aggressive as G.M. in transferring technology to China.
Planned for weeks, Monday’s announcement coincidentally came right after the Chinese government’s powerful National Development and Reform Commission disclosed on Friday that it is drafting stringent local content rules for alternative fuel vehicles to qualify for likely government subsidies. The rules will require that key components be made in China.
“They don’t want to give big incentives just for people to import stuff,” said Nick Reilly, the G.M. group vice president who runs the company’s Asia-Pacific operations.
The Chinese government’s move is aimed partly at Toyota, which assembles Prius gasoline-electric hybrid cars in China but ships the critical components in sealed boxes from factories in Japan.
G.M.’s existing joint venture research center mainly takes vehicle designs from G.M.’s American and European operations and tailors them to the Chinese market. It does so by adding features like wider pillars separating the rear side windows from the rear window — the wider pillars are popular because they provide greater privacy for rear seat occupants in a country where many hire chauffeurs even for mid-sized .
But the joint venture may start to do development work for G.M. operations elsewhere. “I don’t at all rule out the possibility of its doing additional work,” Mr. Wagoner said.
The prospect of more vehicle development here has long alarmed engineers in G.M.’s operations in the Detroit area and in Australia, a rival base for G.M. engineering for Asian markets. The joint venture makes use of Chinese engineers earning considerably less than half of their American and Australian counterparts’ pay, although Chinese engineering salaries are climbing swiftly.
G.M. executives have repeatedly insisted over the years that while G.M. and S.A.I.C. engineers work side by side at the joint venture, elaborate computer firewalls prevent confidential G.M. information from reaching S.A.I.C.
S.A.I.C. has rotated some of its best executives through the joint venture as part of a broad effort to learn the latest Western automotive technologies in preparation for eventual exports.
The new, wholly owned G.M. research center will work on alternative fuels like ethanol; electric vehicle technology, including hybrids and fuel cells; and energy efficiency in the manufacturing process, including by suppliers in the production of auto parts.
Larry Burns, G.M.’s vice president for research, development and strategic planning, said that the Chinese government did not want to rely on ethanol from corn and other food, so the research would focus on grass and other plants that are not edible and cannot be grown in areas suitable for growing food.
Mr. Wagoner initially said that the company would spend $250 million on the new research center, but later corrected himself to say that G.M. would spend this sum on a new corporate campus in the Shanghai area that would include administrative offices as well as research facilities. G.M. officials declined to provide the precise cost and employment at the new research center by itself.
G.M. and S.A.I.C. will jointly provide a $5 million grant over five years for a much smaller research joint venture at Tsinghua University in Beijing as well, a project that will give G.M. closer access to government officials here.