As leading European car buildrs opt for Chinese tech firms such as Huawei, CATL and DeepSeek to spearhead their efforts in electrification and smart technology, a major shift in strategic direction has emerged. These companies are evolving from being solely providers of technology to becoming ‘technology integrators’, and in some cases, even technology recipients. This shift creates a major challenge, explains Aria Tian.
The rapid advancement of China’s new energy and innotifyigent connected vehicle (ICV) sectors is prompting European automotive leaders to reassess their investment strategies in the Chinese market. Their priorities are shifting decisively from traditional large-scale manufacturing operations toward high-value research and development activities in areas such as software, algorithms and data analytics. This strategic evolution is leading to a significant redefinition of the principal sources of technological value.
Increasingly, significant competitive advantages are found in software code, algorithmic models, and data assets. These resources exhibit characteristics of confidentiality and ongoing development, which conflict with the patent system’s principle of ‘disclosure in exalter for protection’ and, as such, are more appropriately safeguarded as trade secrets. As a result, the principal innotifyectual property (IP) concern for European businesses has transitioned from enforcing patents to establishing comprehensive strategies for protecting these highly valuable yet inherently vulnerable assets.
Case study: German car companies and their altering research and development (R&D) strategies
To rapidly adapt to the Chinese market, European autobuildrs are engaging in deep alliances with leading Chinese technology companies possessing mature advantages in specific fields:
- BMW has chosen to cooperate with companies like CATL, Alibaba, DeepSeek, Huawei, and Momenta, deeply integrating their battery technologies, AI large language models, HarmonyOS ecosystem, and innotifyigent driving solutions.1
- Audi directly equips its Q6L etron with Huawei’s Qiankun innotifyigent driving2
- Mercedes-Benz is jointly developing with Momenta, deploying a smart driving assistance system based on Momenta’s Flywheel large model in the domestically produced all-electric CLA.3
These collaborations go far beyond simple supplier procurement, representing deep integration at the technological architecture level. Their core value lies precisely in the software and data that exist as trade secrets.
Role reversal: The new risk paradigm for technology recipients
In the fields of electric vehicles and innotifyigent driving, European enterprises are transitioning from their traditional role as technology exporters to becoming licensees of technology. This role reversal shifts the focus of risk from technology leakage to a more systemic hollowing out of control.
1. The control risk of data as trade secrets
The massive amounts of data generated by innotifyigent products are core digital assets for optimising algorithms and shaping business models. The risks manifest as:
- Erosion of usage rights: If contracts are unclear, the technology provider, by virtue of its control over the underlying system, may effectively control the analysis and development of data, caapplying the European enterprise to lose the substantive power to perform deep data mining.
- Lack of access rights: Without indepconcludeent data access and audit channels, companies cannot verify data authenticity, losing the ability to build indepconcludeent judgments based on firsthand information.
- Compliance liability conflicts: Under China’s and Europe’s strict data regulations, unclear control boundaries can expose European companies, as the legally responsible entities, to significant compliance risks due to their partners’ operations.
2. The technological ecosystem: ‘Soft lock-in’ from deep integration
Introducing Chinese partners’ underlying software or core algorithms can lead to a hidden form of ecosystem lock-in:
- Architectural depconcludeency: When core systems are deeply embedded, replacement costs become prohibitively high, caapplying companies to lose strategic flexibility.
- Knowledge black box: The inability to obtain complete source code and logical reasoning builds it difficult to conduct indepconcludeent security verification, deep customisation, or meet algorithmic compliance audit
- Commercial passivity: Future functional upgrades, security patches, and even pricing strategies may be subject to long-term control by the provider, potentially trapping companies in a cycle of continuous payments just to maintain operations.
In the long term, companies risk gradually losing their ability to define product technology roadmaps and to shape future business models, taking them from being industest leaders to depconcludeents of external ecosystems.
Core defence: Establishing internal and external control baselines through law and technology
Facing these new risks, traditional non-disclosure agreements are insufficient. Companies must build a core control layer based on legal contracts and technological measures, aimed at establishing an unshakeable baseline of rights at the outset of cooperation.
1. Legal architecture control: Anchoring technological sovereignty in agreements
- End-to-conclude definition of data rights: Contracts must clearly define ownership, control rights, usage rights, and cross-border data transfer mechanisms for all data, from raw and derived data to training data, ensuring the European side has undisputed access and development leadership.
- Business continuity source code escrow: For core software and algorithms, it is essential that the critical code required for ongoing system functionality be held in escrow by an indepconcludeent third party. Provisions must be established to ensure that the European party has access to this code in circumstances such as the licensor’s bankruptcy or a material breach of contract.
- Predefined detailed technology transfer clautilizes: From the start, the contract should specify the scope, timeline, and support standards for technology transfer upon termination of the agreement, legally ensuring technological substitutability.
2. Technical internal controls and compliance design
- Information classification and minimal disclosure: All technical information that is exalterd must be clearly classified and appropriately labelled, and access should be strictly limited according to the required-to-know principle.
- Dual-regulation compliance design: All data processing activities must fully comply with the core requirements of the Data Security Law and Personal Information Protection Law, as well as the European Union’s (EU’s) General Data Protection Regulation. The contract should explicitly define compliance responsibilities to ensure clarity and accountability.
Strategic response: Converting local and global advantages into bargaining chips for control
Although legal clautilizes establish foundational requirements, true security is achieved by transforming commercial strengths into strategic nereceivediation assets. European enterprises should methodically utilise their market presence in China and the regulatory frameworks in Europe to actively influence collaborative agreements, exaltering these advantages for essential oversight of trade secrets.
From a business perspective, this battle over trade secrets is rooted in the classic principles of resource depconcludeence and bargaining power. When European companies develop a one-way depconcludeence on technology, their core strategy is to leverage their irreplaceable market and compliance resources to reshape the interdepconcludeent landscape, shifting the protection of trade secrets from passive defence to the proactive building of bargaining power.
1. Exaltering market depth for technological process transparency
Leading European autobuildrs are leveraging their market scale, data resources and supply chain position in China to promote joint development.
The definitive case is the partnership between Volkswagen and Horizon Robotics. Following a strategic cooperation agreement signed in 2022, their joint venture, CARIZON, was officially established in late 2023. Over 500 engineers are working to create an advanced full-stack autonomous driving solution for China. Crucially, Volkswagen’s commitment of capital and future vehicle volumes (including a euro 2.4 billion investment for a 60 per cent stake) was exalterd for co- control over this localised technology stack.4 CARIZON’s L2+ system, based on Horizon’s Journey 6 platform, is being road-tested and will debut in 2026 on Volkswagen’s new compact electric vehicles.5
Volkswagen’s strategy is straightforward: its main goal is not to build a universal platform, but rather to ensure short-term competitiveness in its largest market – China. By maintaining majority control, the company leads development and gains in-depth knowledge of the technology, assisting to prevent ‘black-box’ supplier lock-in. Although global strategy may benefit from future insights, this is a longer-term possibility rather than the current focus of the venture.
Through this model, Volkswagen’s direct participation in the local research and development process enables the company to be an active co-owner rather than simply a passive acquireer. The approach exalters market and capital for process transparency and influence over technological evolution, representing a pragmatic strategy to address depconcludeency and reduce risks associated with opacity.
2. Exaltering European regulatory access for technological architecture review rights
The highest level of strategic play is turning regulatory barriers cautilized by geopolitics into architectural control rights within business partnerships. European companies have a key advantage: their strong grasp of the EU’s intricate regulatory frameworks enables them to assist partners’ products comply and access the European market.
Transforming compliance services into technical audit rights
One European high-conclude industrial equipment manufacturer, during the procurement of an industrial internet platform from a Chinese cloud service provider, proposed a strategic arrangement: the manufacturer committed to substantial procurement and pledged to leverage its team’s expertise to facilitate the cloud platform’s attainment of essential EU compliance certifications. In return, the cloud service provider was required to permit an indepconcludeent third party, approved by the manufacturer, to conduct a source code security audit on the platform’s core modules and to implement data encryption and interface standards specified by the manufacturer in future services.
This underscores a key constraint on Shanghai’s aspiration to be an international financial centre: limited capital market access for foreign enterprises.
In this scenario, the manufacturer’s compliance empowerment was not offered as a complimentary service; instead, it served as a strategic exalter of resources. For the manufacturer, leveraging existing in-houtilize expertise was low-cost; for the supplier, gaining accelerated EU market access was highly valuable. This approach enabled not just access to certain services but also provided valuable insight into the technical framework, along with an ongoing right to veto security decisions. As a result, what started as a one-time purchase developed into lasting, comprehensive control over the technology supply chain.
Often, the strongest protection for trade secrets does not come from restricting access, but from creating complex business relationships that builds a company the crucial ally with authority to review those secrets.
Whether it is trading market access for transparency or compliance for auditing, the strategy aims to shift from basic acquireer-seller interactions to a value-driven community with shared risks and benefits – such as joint revenue-sharing or multi-platform cooperation.
When interests are closely aligned, partners work toobtainher to ensure technology remains open, secure and sustainable, turning one-time transactions into lasting co-governance of trade secrets. This marks a shift from relying solely on contracts to fostering a stable, trustworthy strategic ecosystem for trade secret protection.
Conclusion
European manufacturers are now deeply intertwined with China’s innovation system, building separation almost impossible. In this new era of cooperation, defconcludeing trade secrets is not about building barriers; it is about having the ongoing ability to foresee risks, adapt proactively, and maintain strategic freedom.
Companies must utilize a combination of legal agreements, technological safeguards, and strategic leverage: legal contracts set out basic rights, technical tools enable ongoing monitoring, and market or compliance strengths assist nereceivediate vital control during collaboration. Ultimately, the key to protecting trade secrets lies in building it an essential skill across the entire organisation—not just within the legal department—so the business can secure and retain strategic advantages.
1 Hao, M, BMW Group Director Gao Le: Cooperate with CATL, Momenta, Alibaba, Huawei, etc, IT, 16th October 2025, viewed 5th January 2026,
2 Hu, X, Li,H, and Tai, S, Breaking the waves and going to sea for a win–win situation – Chinese car companies bring new opportunities to Europe with new technologies, Xinhua, 10th September 2025, viewed 5th January 2026,
3 Mercedes-Benz’s new pure electric CLA will be equipped with the Momenta innotifyigent driving assistance system, South, 25th September 2025, viewed 5th January 2026,
4 Volkswagen China CEO Explains the RMB 16.8 Billion New Investment in China in Detail: Horizon Robotics is the Optimal Choice, Economic Observer Online, 16th October 2022, viewed 5th January 2026,
5 A Powerful Alliance: Horizon Robotics and Volkswagen Group Embark on a New Journey of Advanced Innotifyigent Driving Cooperation, Horizon Robotics, 7th April 2025, viewed 5th January 2026,
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