China levies record antitrust fines on foreign firms

Denso Corp. was just one of the auto parts makers fined by China.

In its latest effort to wield its power against foreign companies, China has levied more than $200 million in fines against a dozen Japanese auto parts makers for price-fixing.

German and American automakers are also being investigated. They were the largest fines placed on foreign companies in China since the government rolled out new anti-trust laws six years ago, and they're making a big impact on the world's largest auto market.

The investigation is the latest to target foreign companies within a select group of industries from pharmaceuticals to PR firms. CLSA analyst Scott Laprise says the investigation into price fixing among foreign companies in China's auto market is reasonable from a consumer perspective.

"If we look at it from a U.S.-style consumer protectionist view: What would you think if you found out your car was being sold two, three, four [or] in the case of some cars five times more expensive in another country?" Laprise asks. "Aren’t you taking advantage of that country?"

While some analysts may see this as the latest example of China's government unfairly targeting foreign firms, others point out that Chinese consumers are the fastest rising consumer group in the world, and this investigation is an effort on the part of China's government to protect them from unfair business practices.

 

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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