SAIC Wants More Rights In China R&D, But GM Thinks Differently

SHANGHAI - August 21, 2007: James E. Queen,

GM group vice president of global engineering visited Shanghai on August 9. Queen met with senior officials from Shanghai Automotive Industry Corporation (SAIC) and Pan Asia Technical Automotive Centers (PATAC).

James E. Queen, GM Group Vice President of Global Engineering

Insiders say the purpose of Queen's trip is to pacify, if not satisfy SAIC and PATAC's desire for more ambitious plans on research and development.

A month earlier, SAIC president Hu Maoyuan and senior PATAC official Yu Xiuhui took a trip to the GM headquarters in the United States. The goal of that trip was to ask for more rights on R&D investment decisions.

Chinese government has long time stated its policy priorities in auto industry very clearly: instead of relying on foreign partners, Chinese auto-makers should develop their own auto technologies.

In line with this government policy, SAIC has started a joint research center with GM, Pan Asia Technical Automotive Center in 1997, of which each partners holds 50 percent stakes. Now SAIC wants PATAC to have more rights in R&D and to develop its own brands and auto technologies.

However, GM, a world auto giant now in difficulties, hopes to cut spending by restructuring its global R&D resources. GM's now has five global R&D centers: compact SUVs and high-end vehicles in the United States, compact cars and mid-sized passenger vehicles in Germany, small and mini-vehicles in South Korea, rear-wheel powered vehicles in Australia and middle-duty trucks in Brazil.

Under its global strategy, GM wants PATAC to function primarily as a R&D center for Shanghai GM and help SAIC develop its own auto technology at the same time.

"Four years ago, we have four R&D centers worldwide and these R&D centers could develop new car models on their own. Now we can not afford the costs to do that," said James E. Queen. "We've hammered out a new strategy that allows R&D centers in different place to play different roles and share resources."

However, senior Chinese officials from PATAC have higher expectations. "Our goal is that PATAC will have the ability to develop an entire car by 2007," said Liu Qiming. "The ability to develop an entire car model means we will manufacture new car models based on our own engineering capability but we will borrow auto technologies worldwide."

"We want to have more rights on R&D and finally have the capability to develop entire car platform," said a PATAC engineer. "Our object is very clear; however GM would not allow us to proceed with our plans."

For more information about the burgeoning auto industry in China please visit http://www.gasgoo.com/Autobiz/list/7/China-News.html