GM China versus Chery: Disputes over Intellectual Property Rights (A)

Chery, a Chinese domestic carmaker, launched a new mini car model, the QQ, in July 2003. This was several months earlier than the planned launch date for GM’s new mini car, the Chevrolet Spark. The QQ looked very similar to the Chevrolet Spark but was priced much lower. GM claimed that the Chery QQ was a knockoff of the Matiz, a model owned by GM Daewoo. The QQ became a real hit with consumers, while Chevrolet Spark sales were much lower than expected. To make matters worse for GM, Chery was aggressively expanding into other countries where GM had a presence. Intellectual property rights (IPR)disputes were common in China’s automotive industry; several multinational carmakers had also brought infringement cases forward. GM had its hands full: it had to compete with Chery head-to-head in the market while deciding what actions to take in regards to the IPR infringement claim. GM considered several possibilities, including asking for mediation from the Chinese government, private negotiations, suing Chery in China, and going to trial in other countries.