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ICG Risk Blog - [ A China facet: White light vehicle cloning driven by absence of indigenous vehicle designs and packaging ]

A China facet: White light vehicle cloning driven by absence of indigenous vehicle designs and packaging

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Previous: A China facet: Defective materials and products driven by greed and ineptitude

BMW and Mercedes have commenced legal action against Shuanghuan for its "blatantly, unashamedly copies. On display in Frankfurt are the Shuanghuan UFO and CEO SUVs. UFO is a Toyota RAV4 clone, and CEO is a 95% copy of the BMW X5. (We say 95% because Shuanghuan apparently elected to copycat Mercedes-Benz for the CEO's front end design.)" The "Nobel is said to be a replica of Daimler's SmartFortwo":

Charging that the [Shuanghuan] CEO is a copy of BMW’s popular X5, the company has filed suit to prohibit its sale in Germany by the Chinese carmaker Shuanghuan Automobile. That did not prevent Shuanghuan’s European importer from showing off the CEO on Tuesday at the Frankfurt Motor Show.

[The Frankfurt Motor Show showed] that the struggle over intellectual property rights between China and the West — a battle that has ranged over products from designer handbags to computer chips — now extends to cars.

[Neither BMW or DaimlerChrysler] which is taking legal action against Shuanghuan to prevent it from selling the Noble, a subcompact that bears an uncanny resemblance to Daimler’s Smart minicar. The Noble did not appear at the show, though the importer, China Automobile Deutschland, insisted that it decided on its own not to distribute the car in Germany…

Chinese carmakers sometimes copied the exterior of a car from one model, and the interior from another. In the case of the CEO, for instance, it is not clear that the BMW X5 was the sole inspiration for its design. Auto critics have said that while the rear end of the vehicle is a dead ringer for the X5, the front end looks more like a Toyota Land Cruiser.

BMW emphasized that under the hood, the CEO is no X5 [unlike other Chinese clones of which we are aware]...

The BMW X5 is pictured on the left and the Chinese CEO SUV is on the right

The term clone bears explanation. We differentiate vehicle or vehicle component reproduction by mathdata, clone and copy methods:

  1. Computer Aided Design (CAD) "mathdata": Original automotive OEM design data in its native form; if not sold or otherwise intentionally transferred to an outside party, it is obtained illegally, i.e., IP theft (in competitor hands a solid/physical object so produced IS the identical component).
  2. Clone: Vehicle/component copied by the use of white light photogrammetry; for a solid/physical object it produces a near perfect copy of the target (but does not address materials, coatings, dynamic design criteria or internal software).
  3. Copy: Vehicle/component copied by the use of more simplistic engineering analysis; for a solid/physical object it produces a nominally similar product but requires much more time and cost (due to the dropping cost and increasing availability of white light scanning, the 'copy' function is fading).

Whereas the Chery QQ minicar was produced from illegally obtained mathdata of the Chevy Spark/Daewoo Matiz, the CEO clone of the BMW appears to be produced by white light scanning. This process will become increasingly common and so vastly compresses the revenue window available to the original designer.

Reverse engineering broadly refers to analyzing and dissecting something with the goal of recreating it. In 3D scanning, reverse engineering typically means the process of measuring an object using a 3D scanner and then creating CAD data that reflects its original design intent. This can also be done by using rulers, calipers, or a CMM. Reverse engineering is sometimes referred to as Reverse Modeling.

For those unfamiliar with photogrammetry, white light scanning or structured light scanning, used in reverse engineering, here is a short summary with a deeper introduction to the technique. Here is a before and after; a photo of a physical Porsche body panel and the reverse engineered surface file of that panel. Two useful/short case studies are here and here. I recommend this masters project, Reverse Engineering of Automotive Parts Applying Laser Scanning and Structured Light Techniques, as a straightforward description of the reverse engineering process shorn of vendor technicalities.

While white light scanning is a pan-industry norm for legitimate reverse engineering, inspection, hybrid modeling and archiving, and is known to be used for conventional competitive analysis, the emerging norm is a Chinese-led wholesale cloning of vehicle subsystems or, increasingly, entire vehicles.

From a limited distribution 2006 ICG report:

Driven by competition from other Chinese automotive manufacturers as well as foreign badges Chinese OEMs have targeted foreign OEM design information, specifically CAD or "mathdata" as a means of leapfrogging the design cycle. In the absence of obtaining mathdata for coveted designs, Chinese OEMs will increasingly resort to brute force copying of entire platforms that they perceive as valuable to the Chinese market and early export penetration. US and EU OEMs should expect collection activities from multiple Chinese OEMs and component manufacturers locked in a domestic competition that considers foreign Intellectual Property (IP) as little more than harvestable assets.

Having surrendered basic manufacturing technology in Joint Ventures (JVs) with Chinese partners, US and EU OEMs have progressively less to offer the Chinese other than design data and marketing know-how not tendered as part of a JV. The foreign OEMs Daimler Chrysler and BMW, recognized by the Chinese as possessing superior manufacturing technology, will continue to suffer predation against their proprietary technologies as well as design data.

Collection activity will not be limited to China. In many cases, the asset will be defended less outside of China than within China. Low cost is not low risk: realities of IP Loss notes:

While certain assets are likely targets inside China, the key is to think "asset" instead of "country". Risk cannot be based on countries or "risky areas" but rather wherever a sufficiently valuable asset is accessible at any tier in any country - as the collector will move to the least defended point that contains the IP.

This wholesale cloning is seen as IP usurpation by the legitimate owner. The Chinese generally do not so much disagree as decline to comment; that changed with the curious defense by Shuanghuan:

The Chinese carmaker accused by BMW and Mercedes-Smart of copying their designs has rejected the claims, citing that it had approval from the Chinese government to build the cars as its defense. Shuanghuan manufactures the Noble minicar, an almost identical replica of the Smart Fortwo, as well as the CEO, a SUV with the rear-end of a BMW X5…

"Noble and CEO cars, approved by the Chinese government, are legal products," a spokesperson for Shuanghuan told reporters from AFP. Further, the spokesperson explained that the Noble is only sold in China, while the only export markets the CEO is sold in is in parts of Africa and Southeast Asia.

White light scanning has many limitations that will spawn ancillary IP collection efforts. From a limited distribution 2006 ICG report:

The marriage of design to manufacturing and assembly will hinder their aggressive effort. Many products are specifically designed for a process, not well understood from reviewing a print or a scanned image. Vehicle dynamics is a product development process unique to each OEM’s developed testing methods. If not married with the prints and manufacturing methods, the clone will not reproduce the same results.

A sample forecast of Chinese IP collection efforts to supplement white light clones. From a limited distribution 2006 ICG report:

We would expect collection efforts against OEM product development processes, which might be reasonably achieved by hiring staff from [redacted] or key suppliers in order to reduce the unknowns in vehicle dynamics affecting manufacturing…

Materials and coatings knowledge will face increasing collection to support dimensional characteristics of scanned/cloned parts and act as a driver for materials cost reduction. Expect key Tier One and Two suppliers and base materials producers possessing these skills to be targeted.

It remains to be seen what actions that US/EU OEMs can take without suffering retribution elsewhere by Chinese authorities, a response standard to the Chinese.

BMW sues Chinese carmaker over X5 clone
Motor Authority
Posted on 12 September 2007

Germans See Imitation in Chinese Cars
By MARK LANDLER
New York Times
September 12, 2007

Car Companies See Counterfeits in China
24/7 Wall St
September 12, 2007

Rumormill: China Automobile almost kicked out of Frankfurt show?
by Alex Nunez
Auto Blog
Posted Sep 12, 2007 3:35PM

Chinese companies copy tires, too
Motor Authority
Posted on 6 September 2007

Chinese Carmakers Will Not Show Their 'Clone' Cars in Frankfurt
Pure Green Cars
By on September 04,2007

Chinese Taking "FAKES" to another whole level: Cars
By BRIM
UpTempoAir
August 31, 2007

There will be no stopping the Chinese-built Smart clone
by Sebastian Blanco
AutoblogGreen
Posted Aug 31st 2007 1:15PM

Clones are perfectly legal, says Shuanghuan
Motor Authority
Posted on Thursday 30 August 2007

BMW joins smart in threatening copy-cat Chinese
by
Damon Lavrinc
Auto Blog
Posted Aug 27th 2007 9:58AM

Chinese Toyota RAV4 & BMW X5 Clones Coming To Frankfurt
Gianni9
submitted on 07/19/2007: 10:51 AM
from: carscoop.blogspot.com

White-Light Scanning Validates Faster, Better Processes for Molded Auto Interior Trim at Eifel Inc.
The use of white-light scanning and photogrammetry ensures accuracy of tool building programs.
By Jack Thornton
Moldmaking Technology
February 2007

3D Scan IT and InnovMetric help Eifel Inc. halve injection-mold delivery times and maintain margins
PolyWorks Case Study

Solving leakage problems on car door assemblies
PolyWorks Case Study

The Basics of Photogrammetry
Geodetic Services
HTML

Chinese tigers prey on Europe’s roads
Cheap labour and low costs prove a challenge for EU car manufacturers, writes Lorraine Mallinder
European Voice
8 March, 2006

Reverse Engineering of Automotive Parts Applying Laser Scanning and Structured Light Techniques
Ngozi Sherry Ali
Project in Lieu of Thesis, presented for the Masters of Science Degree
The University of Tennessee, Knoxville
May 2005

Reverse Engineering
Using digital processes accelerates design and increases manufacturing quality.
Aerospace Engineering
September 2004

Similar material here:
Reverse engineering: the catalyst behind the next big aerospace leap
by Ping Fu, CEO & President, Raindrop Geomagic

Reverse Engineering: An Overview of the Options
By Lisa Federici
Moldmaking Technology
March 2001

For Steel-Wool Maker, Chinese Lessons
By JOHN HOLUSHA
New York Times
Published: May 28, 1996

Gordon Housworth



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