Chery has applied for 19,191 patents and obtained 12,393 patents. How has Chery building on technology for 23 years persistently accumulated innovations through patents to set up competition barriers? How has Chery progressively changed intellectual property (IP) into “capital” and “rich ores” that can be developed, be utilized and constantly create new value from patent protection to IP operation? On the afternoon of September 17, the National Intellectual Property Administration, PRC organized over 10 key Chinese media outlets such as people.cn, CCTV, China Daily and China Intellectual Property News, to visit Chery under the theme of “Intellectual Property, Future of Competition”, thereby finding out how Chery has spurred innovation vitality and build “hardcore” brand competitiveness through IP.
01 Building the moat of “Technology Chery”
Since its founding, Chery has taken independent innovation as its core strategy, and invested 5 to 7 percent of its annual revenues to independently develop core technologies restricting the development of China’s auto industry, thus developing an array of independent technologies and products, and forming strong IP reserves.
Take the core technology of the engine known as the “heart” of the vehicle for example. Until the early 21st century China had not developed any car engine independently and imported engine technologies had been backward.
In this context, Chery bet all what it had-about 2 billion yuan on engine development in 2002, which was then considered to risk its life with money in the industry.
Chery went through all hardships to successfully develop the ACTECO engine series with independent IP, to achieve a breakthrough in Chinese high-performance engines, and set off an engine development fever among Chinese automakers.
To date Chery has brought over 8 million units of engines off line and six engines have been listed among “‘China Heart’ Ten Best Engines”.
From engines to transmissions, from core parts to platform development, from traditional automotive technologies to “electric, intelligent, connection and sharing” technologies such as new energy and intelligent connection…Chery has broken foreign core technical barriers one after another. Meanwhile, Chery was aware of the importance of IP protection early. Since 1998, Chery has applied for patents for all its innovations to build a “moat” of “Technology Chery” .
Increasing patent applications and authorizations have witnessed Chery’s confidence in “keeping core technologies firmly in hands” and the ever-growing innovation strength of “Technology Chery”. To date, Chery has applied for 19,191 patents and obtained 12,393 patents, including 3,692 patents for invention, ranking top among Chinese automakers. Chery owns nearly 30 national innovative enterprises, technical centers and laboratories, and has won the “National Science & Technology Progress Award”, “China Top 10 Innovative Enterprises” and other honors over 10 times.
02 Increasing the “gold content” of IP
“The large number of patents is far from being enough for the creation of a high-level IP system”. According to Li Yongjie, IP Director of Chery Holdings, Chery has changed its IP protection focus from the number of patents to the quality of patents early since 2008. Within only two or three years, the percentage of Chery’s applied patents soared from 70% in 2007 to 61% in 2011.
Chery has mapped out an IP development strategy, established an IP work system based on organization and supported by systems and processes, and worked on IP throughout R&D, production and sales.
Chery has also improved its patent layout according to the trend of auto development, and stepped up deployment in cutting-edge technical fields on the basis of consolidating traditional core auto technologies. According to the “2019 Auto Patent Innovation Index” released by China Automotive Technology and Research Center Co., Ltd., Chery was ranked first among Chinese automakers in terms of patent quality-the most valuable ranking category; in the field of intelligent connection representing cutting-edge technologies, Chery was ranked among the world top and first in China.
As one of China’s earliest new energy vehicle developers, since starting to develop energy-efficient and new energy vehicles early in 1999, Chery has established a perfect new energy technology R&D system covering vehicle integration, core technology and core parts development, and applied for over 1,000 new energy patents and obtained over 600 patents, ranking top in the industry. Take the lightweight all aluminum body independently developed by Chery New Energy for example, the company applied for 124 patents for the body alone, and the body has created over 10 “firsts” in China such as “first production all aluminum body” and “first body-battery pack integrated structure”.
03 Horizontal & vertical “alliances”, future of competition
During China’s upgrading from a “manufacturing power” to a “brand power”, IP is not only a “protective umbrella” for corporate innovations, but also “capital” and “rich ores” that can be developed, be utilized and constantly create new value.
Chery has started from scratch, grown in number and achieved a qualitative leap in IP development, and is now working on IP protection and operation. According to Li, to establish a long-effective mechanism, Chery has initially established a “three-in-one” work pattern, i.e. further extending IP work horizontally and vertically based on its existing work system to promote local economic and industrial development. Horizontally, Chery has initiated the “Wuhu Wanjiang Intellectual Property Operation Center” to push Wuhu’s other industries into a fast track of IP development; vertically, Chery has established the “Anhui New Energy Vehicle Industry Intellectual Property Alliance”, to drive the upstream and downstream sectors of the auto industry to set up industrial patent pools with IP as the link of interests, connect patent value and accomplish integrated development.
Intellectual property, future of competition. Benefiting from the building of core competitiveness including IP, Chery has created a forward development system, and significantly improved in technology, quality, cost, delivery and investment. According to a survey conducted by J.D.Power, a global automobile quality test institution in 2019, Chery was ranked 26th above most international brands in terms of product quality, up to leading standards among Chinese brands.