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China’s Asbestos Exposure

Two top-notch Chinese car companies are recalling 23,000 vehicles from Australia due to the presence of asbestos in the engines and exhaust gaskets—this, after explicitly stating that the cars would not contain the cancer-causing chemical.

As Michael Dunne reports in the WSJ, this this may be an example of a “quality fade”: Prospective buyers initially receive impressive samples of goods, and shoddier ones well after the contract is signed (the company itself claims that the shipment of flawed cars was accidental, but few are buying this explanation).

Domestic economic pressures within China may explain why normally trustworthy companies are looking for ways to corners:

Chinese independent car companies like Chery and Great Wall are under pressure in the home market. Since 2010, they have been losing market share to the more powerful joint-venture companies. This places enormous financial pressure on the companies — the kind of strain that could lead people act a little less carefully, or even shoot themselves in the foot by shipping asbestos-laden engine gaskets to Australia.

Chinese automakers saw Austrialia as a small but strategic test market where they could prove their worth and win over some of the world’s more discerning customers. Entry into America, Europe and Japan was supposed follow soon. But this untimely blunder shifts Chery, Great Wall and the reputation of China’s auto industry backwards onto precarious ground.

The fact that even internationally respected Chinese companies are now reneging on promises says something important about the present and future state of Chinese industry. While these companies loose their foothold, automation technology and rising costs in China have also made foreign companies seriously consider ‘reshoring’ back to North America. Even something as apparently small as a compromised car part can be an unwelcome sign of China’s economic slowdown.


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  • Luke Lea

    Not sure why but the Chinese are not nearly as fastidious as the Japanese, especially under communism. (Well, I think I know why under communism, but bad habits are hard to change.)

  • Mick The Reactionary


    “economic pressures within China may explain why normally trustworthy companies ”

    Trustworthy companies? In China?

    Mr Mead, I know a supremely trustworthy Chinese company with a no-asbestos bridge for sale, real cheap.

  • Ed

    This in sharp contrast to the Japanese auto companies, that have not only maintained their excellent quality but even improved it during their 25 years of economic miasma. The Chinese have much longer to go to reach world class status than the conventional wisdom may have thought.

    Is this a sign we can drop our level of alarm regarding their military prowess just a notch?

  • Eric

    The Chinese may have also suffered because of a poor understanding of Australian car history. In the mid ’80’s the Soviets tried to export cars to Australia. The Lada Samara is fondly remembered. So we’re still quite cautious of new car companies trying to sell cheap cars here.

  • Sam L.

    I have read before that Chinese companies producing goods on contract must be closely watched for instances of not meeting specifications. They will cut corners and try to slip them by, so constant monitoring is needed. And that was in the knife industry.

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