China Clamps Down on Westernised Monopolistic Practices
Industry News
Audi and Chrysler have annoyed their Chinese hosts by deploying Westernised values of greed and market manipulation and the bureaucrats are seeking to take vengeful action by saying punishment will be exacted to those companies found guilty. The list also includes around 10 Japanese spare-parts, together these companies are accused of violating the country’s anti-monopoly law. The NDRC, (National Development and Reform Commission), responsible for taking action against anti-competitive practices, ruled that Chrysler and Audi were engaging in monopolistic behavior. Investigations into 12 Japanese auto-parts makers have also been found to be conducting monopolistic practices but the NDRC did not identify the spare-part makers and did not say how many of them would be punished. The punishment for Chrysler or Audi was not specified, however it is believed the NDRC can impose fines of between 1 and 10 percent of a company’s revenues for the previous year. Automakers are believed to wield too much leverage over car dealerships and parts suppliers, which enables these companies to control prices on the forecourts and this is considered as a violation of China’s anti-trust laws. The NDRC is going after luxury auto brands first because they say monopolistic practices “is most severe in this area”. Imported luxury cars cost 2-1/2 to three times the cost in the the United States, car makers argue this is due to higher import duties and other taxes. State run media has raised the issue of overpriced imported cars selling for a much higher rate than in other markets, the NDRC has also begun investigations into Mercedes’ Shanghai office after it was raided by local NDRC officials. It seems that the pressure exerted by the Chinese state is having an effect, Chrysler is cutting prices on 145 components by 20 percent as well as what it charges customers for two Jeep sport-utility vehicles. Audi’s Chinese joint venture said in late July that the brand would lower replacement costs of its parts by as much as 38 percent on Aug. 1. Jaguar Land Rover said last month it cut prices on three models by an average of 200,000 yuan ($32,400) from this month. BMW has already begun to reduce what it charges in China for spare parts in the first half of 2014. China is also investigating other industries who it says is engaging in monopolistic behavior, from the milk powder to the jewelry industry including pharmaceticals and electronic manufacturers.  Leonardo-Di-Caprio-dailycarblog
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