In Focus
Regulator moving to ratchet up recall rules
By Han Tianyang (China Daily)
Updated: 2011-04-19 14:02
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In mature markets, the concept of after-sales services stretches beyond routine maintenance. [Photo / China Daily]
Consumers might not expect complete perfection, but they do value honesty from automakers in after-sales services
BEIJING - With the record numbers of cars sold in China in recent years, it's not surprising that some have been recalled by manufacturers due to known or potential defects - but much remains undone.
Last year automakers announced 123 recalls involving a total of 1.18 million vehicles in the world's largest auto market, where 18 million vehicles were sold during the period.
Yet in the United States, 20 million vehicles were subject to recall in 2010, far more than the total 11.5 million that were sold.
Of course China's auto industry started much later and has fewer vehicles on the road than the US, but surely that doesn't mean the quality is higher in China.
A recent report in the Southern Metropolis Weekly newspaper said US carmaker General Motors recalled 36,509 cars in China last year, but all of them were imports. None were made at its Chinese joint ventures.
In 2010, the automaker recalled about 4 million cars in its home market, which incidentally ranked as its second-largest for the first time ever - more GM cars were sold China.
And even among the cars that were recalled in China last year, only a tiny fraction - about 39,000 - were domestic brands.
The vast majority were the 176,000 imported and 962,000 Sino-foreign joint venture cars.
Some Chinese manufacturers have never recalled a single product in their company's history.
Even the most ardent supporter of China's auto industry would not likely argue that domestic carmakers make perfect cars. A more likely answer is the lack of supervision.
Tiny fine
The country's current regulation formulated in 2004 holds automakers liable for a maximum fine of 30,000 yuan if they are found to hide product defects - a penalty generally considered far too light to restrain potential cover-ups.
Some analysts think reluctance to impose stricter rules was consideration for once-nascent domestic automakers, whose products were not as good as foreign brands.
But protection does not always mean progress, so a much more stringent regulation governing vehicle recalls will be implemented this year, according to a senior official at the national quality watchdog.
"We have continued to hold special meetings on auto recalls and our current plan is to issue the regulation this year," Liu Pingjun, deputy director of General Administration of Quality Supervision, Inspection and Quarantine, said in a press conference in March. He noted that the State Council's Legislative Affairs Office places great importance on the issue.
As early as last July a draft of the new regulation was released to solicit public opinion.
It said automakers that cover up problems to avoid recalls will face a maximum fine equal to 50 percent of the total value of affected products - so if an automaker hides a problem and fails to recall 1,000 defective cars each worth 100,000 yuan, it would be fined up to 50 million yuan, not the current levy of 30,000 yuan.
Another important change is that parts suppliers are also obliged to recall problematic products, according to the draft.
Although no recall law currently covers parts, the country just saw its first recall of tires, one of a vehicle's most important safety components.
South Korea's Kumho Tires announced a recall on more than 300,000 tires in China beginning this month after a China Central Television program disclosed that the company's Tianjin factory used excess recycled rubber. The report said the practice could cause bulges or even burst tires.
Korean carmaker Hyundai and Kia's joint venture in China as well as domestic manufacturer Great Wall Motor also began a recall of some vehicles equipped with the affected Kumho tires.
But although it's a beginning, consumers can't solely rely on media power to pressure companies.
Difficulties remain
There are still many difficulties for consumers defending their rights with automakers or parts companies.
The burden of proof and inconvenience in finding an independent testing organization are among problems that should be addressed in the new regulation.
According to a recent survey by market research firm Ipsos on consumer attitudes towards Kumho after its recall, about 71 percent of respondents said they intend to switch to other brands, about 23 percent said they will continue to use Kumho tires and the remaining 6 percent were hesitating to make a choice.
Which brings up another question - can recalls ruin a company? For Kumho, we will have to wait and see if the company rebuilds customer trust.
But an existing example is Toyota, the world's largest automaker, whose reputation suffered from a massive global recall last year on vehicles with possible brake problems.
It might be the worst recall in recent years. The number of vehicles affected is huge and the potential problem is fatal - brake failure is probably the most worrying single problem to consumers.
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Three Toyota models were listed in the top 10, while seven other brands each had a single model. According to the magazine, these cars are the most reliable on the market today.
The lesson is that if you make really good products - even if mistakes were made - people will still trust you.
A car is made of tens of thousands of parts and components and it is simply impossible for all of them to be always perfect. Too many recalls are bad, yet too few are not good either over the long run.
More recalls should take place in China, not because quality is decreasing, but because auto manufacturers should have the courage to face their mistakes, be more honest with Chinese consumers and regard recalls as an inevitable part of responsible after-sales services.
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