Foreign Auto Makers Under Attack In China

Published on Author heardd16

This past Sunday, China’s government-run television broadcasting station slammed a number of foreign automotive producers on a day known as Consumer Rights Day.  The Wall Street Journal cites Tata Motors (Jaguar), Volkswagen, Daimeler (Mercedes-Benz), and Nissan as bearing the brunt of accusations.  The broadcasting station, CCTV, alleged these automakers gipped gypped Chinese consumers with unfair pricing and poor quality products.  The auto producers in question have for the most part issued public apologies and launched investigations into the allegations.


Coincidentally (or maybe not), 5 of the top 10 best selling cars in China are produced by this list of accused producers.  As we know, domestic consumption in China has grown in recent years, diverting from years of strictly production and exportation.  Perhaps these severe and abrupt accusations are a part of a government marketing scheme intended to increase consumption of domestic automobiles, the manufacturers of which are predominantly controlled by the Chinese government.

3 Responses to Foreign Auto Makers Under Attack In China

  1. Public apologies imply truth in the allegations. I am interested to know the degree to which the Chinese government knew about (and allowed) the price controls and sub-par quality production. It seems the gov’t may be projecting its regulatory shortcomings onto the companies themselves.

  2. Though the broadcasting might contain some truth, it still should be noted that this specific program, Wan Hui, has annually criticized only foreign markets, Nikon in last year and Apple in 2013.

  3. Beating up on foreigners is a pastime in all cultures; at one time, this included taking sledgehammers to Japanese products. Jingoism can and does get out of hand, I can relay multiple incidents in the US and interacted first-hand with students in China who had been fed the official line on WWII that, well, diverged quite a bit from my understanding of what happened. (No, the Chinese Communist Party were not heroes in all times and places, and while the Japanese villainy is magnified in each retelling, akin to agricultural production reports during the Great Leap Forward.)

    Some models are older, no longer produced elsewhere, and so may not be as advanced technically or designed with quite as much quality. Pricing is … well, set to what producers judge the market will bear. See an earlier post on this, demand is less elastic in price in China than in the US or Europe, and margins are correspondingly fatter. It’s not however a cartel, and all of these firms are 50:50 joint ventures in which their Chinese partners are glad to have the well-padded profits to shore up their own money-losing “indigineous” brands.