GM China to be penalized for monopolistic behavior, reports say

John Ruwitch and Jake Spring
autonews.com

SHANGHAI/BEIJING — China will soon slap a penalty on General Motors’ China unit for monopolistic behavior, according to media reports out of China today.

Initial reports from the China Daily newspaper didn’t name the automaker, but Bloomberg, citing people familiar with the matter, reported that GM China was the target.

News of the penalty comes at a sensitive time for China-U.S. relations after U.S. president-elect Donald Trump called into question a long-standing U.S. policy of acknowledging that Taiwan is part of “one China.”

Beijing maintains that self-ruled Taiwan is a wayward province of China and has never renounced the use of force to take it back.

Investigators found the U.S. company had instructed distributors to fix prices starting in 2014, Zhang Handong, director of the National Development and Reform Commission’s price supervision bureau, was quoted as saying in the China Daily.

In an exclusive interview with the newspaper, Zhang said no one should “read anything improper” into the timing or target of the penalty.

The article did not give further details and the NDRC did not immediately respond to requests for comment.

China, the world’s largest auto market, has become crucial to the strategies of car companies around the world, including GM and Ford Motor Co .

In a statement, GM said: “GM fully respects local laws and regulations wherever we operate. We do not comment on media speculation.”

Said Mark Truby, Ford’s chief spokesman for its Asia-Pacific operations: “We are unaware of the issue.”

Trump response

Trump’s rhetorical challenges to long-established policy toward China have rattled U.S. corporations. Relying on stable U.S.-China relations for more than 40 years, the companies have ramped up sales in China and developed complex supply chains that feed Chinese-made parts to their U.S. operations.

Jason Miller, a spokesman for the transition team, said today that members of the team were aware of the China Daily report but that it would be premature to comment. He said he expected Trump to discuss the matter with billionaire investor Wilbur Ross, who has been tapped to be commerce secretary, when the two meet today.

“The president-elect has made very clear that he’s going to get out there and fight for American companies and American jobs, and that’s something he has not been shy about doing so far and it’s not something that we’re going to be shy about going forward,” Miller said.

Unsettling companies

The penalty follows a government crackdown on what it has called monopolistic behavior by foreign automakers and dealers.

It would be the second penalty by the NDRC this month and the seventh fine issued to automakers since the commission began anti-monopoly investigations in 2011, the newspaper said.

Targeted firms have included Audi AG, Daimler AG’s Mercedes-Benz and Toyota Motor Corp., and one of Nissan Motor Co.’s joint ventures.

The NDRC’s move was not directed against Trump’s latest comments but to show it was not letting up pressure on price fixing behavior in the auto sector after a raft of fines last year, a source at a government-affiliated industry association said.

“I don’t think NDRC had only made a decision two weeks ago or a week ago. This is a long-term plan for them,” the source said.

Local media had reported NDRC officials saying a penalty would be levied against an international automotive firm this year prior to Trump’s remarks on Taiwan, although they did not specify it would be a U.S. company.

Message to Trump

In a separate editorial, the China Daily urged Trump to recognize the importance of close economic ties between China and the U.S. rather than “trying to gain an upper hand in what is essentially a win-win relationship.”

“History proves that what is good for Sino-U.S. relations is good for their economies,” it said, noting that Chinese customers bought more than a third of the 9.96 million vehicles GM sold worldwide last year.

“For the American economy to be great again … the U.S. needs to cement its economic relations with China, rather than destroy them.”

Trump’s challenges to China on trade and Taiwan have rattled American companies who have long benefited from stable relations between the two countries.

In 2011, China imposed duties of up to 22 percent on large cars and SUVs exported from the U.S. during a wide-ranging spat on trade and currencies that became a focus of criticism for U.S. presidential candidates.

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