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

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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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.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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