They say that intellectual property laws are getting better in China, but you have to wonder when you hear stories like this one. Shandong Huoyan Electromobile, a small Chinese car maker, has been forced to halt production of its City Spirit, a tiny two-seat electric car, after DaimlerChysler threatened to take legal action because the City Spirit looked too much like its Smart car.

International business law 101: Don’t copy competitors’ products too closely if you expect to sell them in Western markets 

According to a report on Autoweek, Shandong Huoyan Electromobile used a toy model of the Smart to inspire the design of the City Spirit. The cars were exactly the same length and many components, such as the grill and rear window, looked identical.

While Smart is powered by a three-cylinder petrol or diesel engine, the City Spirit was powered by a electric motor. Price was an even bigger difference, with the City Spirit costing 4200 Euros in Europe, or about about half the price of the Smart car.

Shandong is revising the design of the City Spirit’s doors and rear end. It will also be shorten by about 8 inches.

The City Spirit had been in production for the Chinese market since August, and samples had been seen in Hungary and Britain, where it was due to go on sale in early 2007.

What I find incredible about these stories is that there have already been a number of cases where Chinese car manufacturers have found themselves in trouble for ripping off overseas designs.

Surely, if you’re going to make the investment of designing, producing and selling a car, especially if it’s for foreign markets, you’d spend at least a small amount of money on legal advice about whether your design, being inspired by an existing product, would cause problems.

But I guess that that’s’ the point – Chinese business culture still has a long way to go before it understands how Western business conducts itself, and what exactly the rules of the game are. Until then, I’m sure they’ll be many more embarrassing stories like this one.

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Entry was posted on Sunday, December 17th, 2006 at 7:23 pm under Technology.

Read more entries by John Pospisil.
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