China Fines Ford Over Supposed Antitrust Violations, Assembles List of 'Unreliable Entities'

Matt Posky
by Matt Posky
china fines ford over supposed antitrust violations assembles list of

China has fined Ford Motor Company’s main joint venture in the country, Changan Ford Automobile Co., over antitrust violations. However, the more likely scenario is that the People’s Republic is trying to flex some muscle after the Trump administration declared a ban on doing business with Huawei, the world’s largest telecommunications provider, on national security grounds.

The oversimplified gist of the situation is that America doesn’t trust a telecom firm with direct ties to the Chinese Communist Party that could easily be tapped by the Chinese government for espionage. Several countries banned Huawei equipment earlier this year after the U.S. Justice Department unsealed a raft of indictments, included 23 counts pertaining to the alleged theft of intellectual property, obstruction of justice, and fraud relating to sanctions against Iran.

Claims exist that researchers have found hidden backdoors in Huawei equipment that could be used for spying. Meanwhile, the Chinese company has repeatedly denied any corporate wrongdoing, launching a sugary sweet marketing campaign as rumors swirl that its staff is temporarily forbidden from attending meetings in the United States.

It’s a lot to unpack, but China’s response to America’s suspicions appears to involve faulting companies like Ford and FedEx with minor infractions.

According to Bloomberg, Changan Ford will be fined 162.8 million yuan (about $23.6 million) for allegedly restricting retailers’ sale prices in the southwestern city of Chongqing since 2013. Confirmed by the State Administration for Market Regulation, China said the fine is equivalent to 4 percent of Ford’s annual sales in Chongqing.

From Bloomberg:

The announcement comes just days after China said that it’s investigating FedEx Corp. for “wrongful” deliveries, a move framed by the state news agency as a warning by Beijing after the Trump administration declared a ban on business with telecommunications giant Huawei Technologies Co. China has also threatened to blacklist foreign firms that damage domestic companies’ interests and on Tuesday warned its citizens against travel to the U.S.

Though China didn’t spell out any links between the fine and the U.S. tensions, “it’s hard to see it as not related,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. “At this stage I think our baseline assumption should be that there are no coincidences.”

It’s relatively small potatoes for Ford, but warning lights are likely going off inside every automotive HQ on the planet. As tensions grow between China the United States, the People’s Republic is busy assembling a list of “unreliable entities” that the country could simply decide to stop doing business with at the drop of a hat. This could prove a pretty powerful tool in the trade war, encouraging more businesses to play ball — especially if they make said list.

And yet distrust lingers. While most carmakers are hungry to burrow themselves deeper into China, most probably remember the fines levied on General Motors’ venture with SAIC Motor for similar antitrust violations in 2016 and the seemingly intentional customs holdup of Mercedes-Benz SUV assembled on U.S. soil in 2018.

[Image: Ford China]

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  • Vent-L-8 Vent-L-8 on Jun 06, 2019

    EXACTLY. Growing up in ohio and Michigan in the 70s and 80s we were hit with a devastating series of plant closing and were told there wasn't a blessed thing we could do about it. I frankly love watching these companies squirm. Free trade only works where both countries have the same standard of living. This kind of trade is good for everyone - the competition benefits the buying public etc... Open trade with a country that has a lower stand of living only serves to trade your manufacturing base for cheap goods. In the meantime I'll enjoy the chicken roosting festivities.

    • See 5 previous
    • Raevoxx Raevoxx on Jun 06, 2019

      @Robbie That includes the absolutely ginormous, impenetrable SWARMS of Chinese and Korean hopefuls, and tourists.

  • Robbie Robbie on Jun 06, 2019

    The US has lost low value added manufacturing jobs. This is a bit like hiring someone to paint your house when your income goes up. Your time has become more valuable. I suggest that we all dread the day when sowing T-shirts is done in the US again. That means that Bangladesh can focus on high tech activities, and is letting us do the cheap manual labor.

    • See 4 previous
    • Onyxtape Onyxtape on Jun 07, 2019

      @JimZ "Chicoms"/red menace fits well with the 70s / 80s economic and fiscal viewpoints that are all the rage around here and in DC these days. Blame automation. Even in the early 90s, I remember reading a story about how Sony laid off a bunch of people and consolidated their physical CD media plant to one factory in New Jersey. Apparently, it took fewer than 300 workers to supply 70% of the world's CD media needs. Automation is the job killer in a scale that cannot be compared to any other country. My engineer peers at Amazon have the kind of robots in development that will probably lay off a huge load of warehouse workers within the next 5 years - and they're already probably 5-10 years behind the Chinese e-tailers in their technological development.

  • Vatchy If you want to talk about global warming, you might start here: https://en.wikipedia.org/wiki/Darvaza_gas_crater
  • 28-Cars-Later $55,218 for a new GR Corolla: https://www.reddit.com/r/COROLLA/comments/zcw10i/toyota_needs_to_know_the_demand_is_there_but_this/"But if OTD prices get beyond 50k there are better options"That's what people were arguing in that thread.
  • Lou_BC "The Oldsmobile Diesel engine is a series of  V6 and  V8  diesel engines produced by  General Motors from 1978 to 1985. The 350 cu in (5.7 L) V8 was introduced in 1978, followed by a 261 cu in (4.3 L) V8 only for the 1979 model year. In 1982, a 263 cu in (4.3 L) V6 became available for both front and  rear-wheel drive vehicles. Sales peaked in 1981 at approximately 310,000 units, which represented 60% of the total U.S. passenger vehicle diesel market. However, this success was short-lived as the V8 diesel engine suffered severe reliability issues, and the engines were discontinued after the 1985 model year."I'd say one would be best off finding a gasser to plunk in there or take a loss and re-sell it.
  • ToolGuy GM Buying Guide:• Body on frame• V8 engine• Gasoline engine• Longitudinally-mounted engine• Normally-aspirated engine• Rear wheel drive (or 4WD)That's 6 items. Aim for 4 out of 6 or higher. (My two GM vehicles score a 6 and a 3.) This vehicle is a 1.
  • 28-Cars-Later Based on what people were posting, its going to debut with enough ADM to buy a CPO Porsche so why bother (Unless HMC can bring the hammer down somehow)?
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