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Monday, January 17, 2011

France moves to avert rift with China.

The French government and the automaker Renault SA are trying to avert a standoff with Beijing over reports that a Chinese industrial espionage ring stole details of Renault's electric vehicle technology.

The carmaker suspended three executives Jan. 3 on suspicion of involvement in leaking information. It filed a criminal complaint on Thursday, alleging that it was the victim of "organized industrial espionage, corruption, breach of trust, theft and concealment."

The French media, which first reported the case earlier this month, has pointed the finger at China. Reports alleged that a leading Chinese electricity company paid a large sum of money into accounts held by the accused executives outside France. The executives deny involvement.

But Renault's criminal complaint, which was filed with Paris prosecutors, appeared designed to cool the febrile atmosphere surrounding the allegations. It did not name the people or organizations accused of spying, talking instead of "persons unknown."

Renault followed up with a statement saying "to ensure that the judicial procedure is carried out in the calmest possible conditions, Renault will not take part in any controversy."

Patrick Pelata, Renault's chief operating officer, appeared to try to play down the issue in an interview in the Jan. 8 edition of Le Monde. He said data on the structure and price of its electric vehicle might have been passed on, but that crucial information about batteries and motors had not leaked.

The case has shaken France. The UMP party, which holds a majority in the National Assembly and has the most seats in the Senate, submitted a bill to tighten protection of corporate information Tuesday. The party, of which French President Nicolas Sarkozy is a member, has stated that China is behind the espionage.

But the French government appears anxious to keep the case from growing into a full-blown row. Christine Lagarde, French economy minister, said Wednesday, when Renault was initially expected to file a criminal complaint, that no assumptions should be made on how the information was passed on and which country was involved.

China is an important export market for France, which has striven to improve its economic ties with the country.

Sarkozy clinched a 16 billion euro (1.8 trillion yen or $21.6 billion) deal to sell aircraft and uranium fuel for nuclear power plants to China when Chinese President Hu Jintao visited France in November.

Meanwhile, China has dismissed the French media reports as "baseless." An official at the country's embassy in Paris reportedly told the Chinese media that Chinese companies do not need data from Renault and are capable of producing hi-tech environmental technology themselves.

A Chinese company that has been identified as a buyer of the information declined to comment in a telephone interview with The Asahi Shimbun.

A prevailing view in the Chinese media is that the incident stems from jealousy in France of China's rapid economic ascent, and that it represents an attempt to deal a blow to Chinese companies that are growing into rivals of French firms.

Japan's Nissan Motor Co., which is partnered with Renault, declined to comment on the espionage incident, saying it involved a different company.

After initially falling behind in the development of hybrid technology, the Renault-Nissan alliance has bet its future on electric vehicle technology. It has committed itself to spending 500 billion yen to develop and produce electric vehicles.

The development of electric vehicles by Renault and Nissan centers on battery technology the Japanese automaker has been developing since the 1990s. Nissan rolled out its new electric Leaf five-seater in Japan and the United States last month.

Nissan's wariness of getting embroiled in the spying case is likely inspired by the same calculations that have led Renault and the French government to try to dampen the controversy. In 2010, Nissan sold 1.02 million vehicles in China, the largest market in the world for the automaker.

(This article was written by Shinji Inada, Keiko Yoshioka and Takashi Ebuchi.)

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