The real reasons:
1) As the article finally gets to, engineers in China get less than 1/2 the compensation of American engineers. The reality is that the cost is probably on average much less than half.
2) China has demanded that companies that wish to do extensive business there MUST also include work at the cutting edge of design and engineering. They will not allow just cheap manual labor factories. So in order to get the advantage of cheap labor companies are willing to partner with China on the design and development of future technologies.
GM encourages American students to become engineers and laments about American technical and engineering skills. Why has no one asked GM how many engineers they plan to hire, either experienced or fresh out of school, in the US versus how many they are hiring overseas ??
Journalistic incompetence ? Or just the media's reluctance to ask tough questions to companies that they rely on for significant advertising revenue ? Probably both but with a decided emphasis on incompetence .
Seeking Control of Technology, G.M. Will Build Its Own Research Center in China
BEIJING, Oct. 29 — General Motors announced Monday that it would build an advanced research center in Shanghai to develop hybrid technology and other designs.
It was the latest research investment in China by a foreign automaker despite chronic problems with purloined car designs.
G.M. already has a 1,300-employee research center in Shanghai with its main Chinese joint venture partner, the Shanghai Automotive Industry Corporation. The separate, wholly owned research center announced Monday, for the most advanced vehicle engineering and development, could help G.M. keep greater control over new technologies than through the joint venture.
Kevin Wale, president of General Motors’ China operations, said that the company remained “very comfortable” with its partnership with Shanghai Automotive and that the partner’s recent introduction of its own sedans had shown “no significant impact” on G.M. sales.
Rick Wagoner, G.M.’s chairman, said it was essential to do advanced research in China to adapt technologies quickly to cars being sold locally. G.M.’s joint venture sales in China have grown to an estimated one million this year, from 20,000 in 1999, making it the company’s second-largest market after the United States.
Mr. Wagoner insisted that G.M. could keep control of intellectual property in China even while doing advanced research there. “We think it’s a prudent trade-off, and we think the risk is manageable,” he said.
Chen Hong, vice chairman of Shanghai Automotive, said nothing about the new G.M. project but welcomed a separate plan, also announced Monday, under which his company and G.M. would jointly provide a $5 million grant over five years for a much smaller research venture at Tsinghua University in Beijing. That project will give G.M. closer access to government officials.
Chinese automakers have repeatedly prompted confrontations with Western producers by introducing vehicles that appear identical to Western models, but there has not yet been a case of a Chinese automaker copying advanced Western engine technology.
G.M.’s largest hybrid-car research efforts will remain in the United States. But research will also be done collaboratively in China and information will be shared with the Chinese through G.M. partnerships with universities around the world, Mr. Wagoner said, adding that, “For us, it’s not a question of either/or.”
Honda, Ford, Volkswagen and other foreign automakers have all announced their own research centers in China in recent months, although none have been as aggressive as G.M. in transferring technology to China.
Monday’s announcement coincidentally came after the government’s National Development and Reform Commission disclosed Friday that it was drafting stringent local-content rules for alternative-fuel vehicles to qualify for expected subsidies. The rules will require that major components be made in China.
“They don’t want to give big incentives just for people to import stuff,” said Nick Reilly, the G.M. group vice president for Asia-Pacific operations.
The Chinese government’s move is aimed partly at Toyota, which assembles Prius gasoline-electric hybrid cars in China but ships critical components in sealed boxes from plants in Japan.
G.M.’s existing joint venture research center mainly takes vehicle designs from the company’s American and European operations and tailors them to the Chinese market. For example, wider pillars separating the rear side windows from the rear window are popular because they provide greater privacy for back-seat occupants in a land where many hire chauffeurs even for midsize cars.
But the joint venture may start to do development work for G.M. operations elsewhere.
The prospect of more vehicle development in this country has long alarmed engineers at G.M. operations in the Detroit area and in Australia, a base for G.M. engineering for Asian markets. The joint venture makes use of Chinese engineers who are paid considerably less than half what their American and Australian counterparts receive, though Chinese engineering salaries are climbing swiftly.
G.M. executives have insisted over the years that while G.M. and Shanghai Automotive engineers work side by side at the joint venture, elaborate computer fire walls prevent confidential G.M. information from reaching the Chinese partner.
Shanghai Automotive has rotated some of its best executives through the joint venture as part of a broad effort to learn the latest Western automotive technologies in preparation for eventual exports.
The new wholly owned G.M. research center will work on alternative fuels like ethanol; electric vehicle technology, including hybrids and fuel cells; and energy efficiency in the manufacturing process, including auto parts suppliers.
Lawrence D. Burns, G.M.’s vice president for research, development and strategic planning, said the Chinese government did not want to rely on ethanol from corn and other food crops, so the research would focus on grass and other nonedible plants.
Mr. Wagoner initially said that the company would spend $250 million on the new research center, but later corrected himself to say that G.M. would spend this amount on a new corporate campus in the Shanghai area that would include administrative offices as well as research operations. G.M. officials declined to provide the precise cost and employment at the new research center itself.