China’s Negative Publicity Fails To Dent Foreign Automakers

Jaguar recalled almost 1,200 models in China this week. (Jaguar) Foreign automakers have certainly been getting a hard time from Chinese authorities in recent weeks with news of product recalls, environmental criticisms, and price-fixing accusations, but new developments show that the government’s plan is likely focused more on bad PR than on actual policy. In addition, even this slightly less ambitious goal seems to be failing, as it's clearly not convincing consumers that a foreign car would be a worse choice than a domestic one. On Tuesday, an ongoing PR assault against foreign automakers picked up where it left off last week: China’s General Administration of Quality Supervision announced that Jaguar Land Rover would be recalling 3,196 models, and deputy secretary-general of the China Automobile Dealers Association (CADA) Luo Lei stated that the organization had been conducting research on price-fixing for the National Development and Reform Commission (NDRC) since last year. This news heightened earlier worries that the Chinese government is ready to turn up the heat on foreign car companies. Over the past weeks, foreign automakers have seen additional ominous signals: Xinhua ran an op-ed criticizing them for "unfair" pricing policies, a Chinese environmental regulator denied BMW permission to expand a plant in Shenyang, and a Chinese regulator announced that BMW would be recalling 140,000 vehicles. These actions are almost certainly intended to give bad publicity to foreign automakers, possibly in hopes of giving a boost to lagging domestic brands, and recent developments show that this seems to be the only goal. Today, Luo told Bloomberg that in actuality, “there has been no specific anti-monopoly investigation targeting the auto industry.” Meanwhile, China Daily quietly reported on Monday that BMW’s “denied” plant expansion is going ahead as planned, and experts have said that product recalls are unlikely to have much of a detrimental financial effect. This leads to the question of whether or not all of the trouble taken to give the companies a bad image has been worth the government’s efforts, and the answer is that it is likely not. Many Chinese reactions to both the BMW and Jaguar recalls have actually been supportive of the companies’ willingness to put safety over profits. In a sad revelation, it turns out that many Chinese consumers are so jaded when it comes to product safety concerns that a company’s admission of a defective product is considered an example of good service. “I’m not scared of cars with problems; I’m scared of car companies that conceal their problems,” said one QQ user. Others noted that that they still think foreign companies are better than domestic ones. “I wouldn’t want a domestic car anyway,” said Sina Weibo user @Miss_Ruo. If Chinese authorities really want to go up against foreign companies, it looks like they have their work cut out for them, considering the lackluster effects of this recent effort, as well as this spring's bungled anti-Apple campaign. Oujia Wang contributed to this article.

China’s Negative Publicity Fails To Dent Foreign Automakers

On this page

Published August 14, 2013

Sectors

Insights

Company

China’s Negative Publicity Fails To Dent Foreign Automakers