The GAC Effect: Imported Chinese Automobiles Face Fierce Criticism From U.S. Politicians
At this very moment, Chinese-based automaker GAC has a massive booth in the very center of the North American International Auto Show in Detroit. The company has expressed its intent to start importing its vehicles into the United States in 2019. However, 536 miles away (by car), Washington is bemoaning Chinese trade practices — a topic which might be extremely relevant for Guangzhou Automobile Group in the coming years.
On Wednesday, Democratic U.S. Senator Chuck Schumer and President Donald Trump separately criticized China’s trade policy. For automobiles, this translates into Chinese-built cars incurring a maximum 2.5 percent import tariff upon entering the United States, while U.S.-built cars sent East are hit with an average 25 percent tax.
One way around this is for American manufacturers to partner with a Chinese automaker and assemble vehicles in-country. Of course, this doesn’t bolster U.S. jobs, and it gives the locals a front-row seat on exactly how to build an American car. Unfortunately, there really is no other alternative. Chinese law stipulates that foreign subsidiaries must operate as a 50-50 joint venture with an established Chinese firm.
Trump told Reuters in a Wednesday interview that “we have helped to build China because they have taken out so much money in terms of trade deficits with this country.” He continued by saying “when China or another country charges us 50 percent tariffs — more than that in some cases — and we charge them nothing, that’s not fair. That’s not fair.”
Schumer was in agreement. While he and the president have very little in common politically, they seemingly reached the same conclusion in regard to China’s trade policies. Specifically referencing to GAC’s plants coming to America, Schumer took to the Senate floor on Wednesday to condemn Chinese automotive trade rules as “manifestly unfair, and a typically unfortunate example of China’s rapacious trading policies.”
This could spell fierce opposition for Chinese-based manufacturers hoping to sell in the West. But how critical of an issue it will be in the near future is debatable. While GAC appears more ready than ever to make a move to North America, the company previously stated it wanted to begin selling vehicles in the United States in 2017. Obviously, that earlier goal went unmet.
However, it’s showing at the Detroit Auto Show for this year was a no-nonsense affair — rivaling the likes of Hyundai and Subaru in scale. In 2017, GAC Motor established its North American R&D center in California and hosted job fairs in Silicon Valley, Detroit, and Boston. This year, it announced it will commence another round of recruitment programs in America to attract talent, with a plan in place to attend the annual convention of the National Automobile Dealers Association for the first time in its history.
The automaker has even announced plans to change the name of its flagship Trumpchi brand i n the Western market to avoid confusion with the president. While we felt the move was overkill, the company is very serious about it. In Detroit, we referenced the Trumpchi name aloud and a GAC PR representative came over, hands waving, to politely inform us that the name will be altered.
“We look forward to the increasing attention and support worldwide,” said GAC President Yu Jun in a recent announcement. “In our pursuit of the North American market, GAC Motor stands ready to share our high-quality products and work with all of you to create a better life of mobility.”
Are China’s trade-practices unfair to the United States? Yeah, probably. However American-based manufacturers are unlikely to gripe too much, as they don’t want to be shunned from the global car market. That leaves politicians to do the dirty work, and it looks as if they’ve already begun.
[Images: GAC Group]
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