Nissan’s Chinese gamble

As you may have heard, mastering clean energy is a big deal these days. Just this week, we see a decent series at the Financial Times, and a fresh cover story in Wired magazine (not online yet) devoted to the transformative potential of the industry, not just for technology and the environment but for the ...

Kiyoshi Ota/Getty Images

As you may have heard, mastering clean energy is a big deal these days. Just this week, we see a decent series at the Financial Times, and a fresh cover story in Wired magazine (not online yet) devoted to the transformative potential of the industry, not just for technology and the environment but for the global economy. This is where things get complicated: Every major country wants the prize in order to revive its own flagging economy, and not all of them will necessarily get it.

Car companies themselves can't be expected to bear automatic allegiance to any country -- a point that Carlos Ghosn (above) made clear this week. Ghosn suggested that in order to get into China's market, his company, Nissan, is prepared to hand over any proprietary electric-car technology that Beijing wishes -- a big deal, considering that intellectual property is the Chinese juggernaut's Achilles heel.

As you may have heard, mastering clean energy is a big deal these days. Just this week, we see a decent series at the Financial Times, and a fresh cover story in Wired magazine (not online yet) devoted to the transformative potential of the industry, not just for technology and the environment but for the global economy. This is where things get complicated: Every major country wants the prize in order to revive its own flagging economy, and not all of them will necessarily get it.

Car companies themselves can’t be expected to bear automatic allegiance to any country — a point that Carlos Ghosn (above) made clear this week. Ghosn suggested that in order to get into China’s market, his company, Nissan, is prepared to hand over any proprietary electric-car technology that Beijing wishes — a big deal, considering that intellectual property is the Chinese juggernaut’s Achilles heel.

Ghosn’s precise remarks, reported by The Wall Street Journal’s Norihiko Shirouzu, are that “there’s no limit to [the] technology we bring to China.” His senior deputy for China, Kimiyasu Nakamura, said, “We wouldn’t hold back” in sharing technology. “We are going to figure out within that legal framework exact methodologies as to how we could transfer technology here.”

What Nakamura was referring to is an anticipated set of rules that China will impose on foreign companies, requiring them to liberate their high-tech blueprints in order to work in the world’s fastest-growing large economy. This subject is being discussed in a congressional hearing today, as Juliana Gruenwald writes at the National Journal. Basically, you get to sell your product for a few years, until Chinese companies know enough about it to make it themselves. For those who follow Soviet history, the approach will seem familiar: During the Great Depression, Stalin offered a hand to hard-up Western companies, which built one-off, state-of-the-art steel mills, car plants, dams and railroads under the watchful eye of Soviet managers — who then copied the plans.

But Ghosn is clearly worried. In December, his company comes out with the Leaf, a $33,000 electric car. It is Nissan’s entry into a market that, like other new technologies over the years such as the cell phone and the personal computer, will take time — a decade or more — to scale into profitability without subsidies. That’s why, while other heads of big companies — among them, Jeffrey Immelt of General Electric, Jürgen Hambrecht of BASF, and Peter Loescher at Seimens — wring their hands and shout about China’s IP demands, Ghosn is taking the plunge. From China’s perspective, the strategy is ingenious. From Ghosn’s? We’ll see.

Update: Michigan Congressman John Dingell today wrote a letter to China’s ambassador to the U.S., requesting that foreign companies not be compeled to share IP in exchange for market access, reports Mike Ramsey at WSJ

<p> Steve LeVine is a contributing editor at Foreign Policy, a Schwartz Fellow at the New America Foundation, and author of The Oil and the Glory. </p>

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