Asbestos in cars exported to Australia: China’s notorious ‘quality fade’

3 min read

Some mistakes are understandable. Others seem to defy explanation.

Earlier this week, two leading Chinese car companies, Great Wall Motor and Chery Automobile, confirmed they are recalling 23,000 cars and trucks they’ve sold in Australia because asbestos was discovered in their engine and exhaust gaskets.

This is a genuine setback for the companies and yet another blow to the image of Made in China.

After first reading the story headline, my reaction was puzzlement. Leading executives at Great Wall and Chery take product quality seriously, spending millions of dollars every year for better results. Improved vehicle reliability at Chery and Great Wall helped to ignite a 50% jump in exports to markets like Australia, Russia and Brazil last year.

How could these two proud Chinese car companies permit such a senseless error, one that is certain to damage their brand names?

Let’s consider the possibilities. First, were they simply unaware of the existence of the cancer-causing asbestos — or of the fact that asbestos is banned in 50 countries, including Australia? The answer would seem to be no on both counts.

According to a report by Bloomberg, Great Wall and Chery had signed letters to their distributor in Australia, Ateco, guaranteeing that the vehicles were asbestos-free. Further — and this is where things get strange — representatives from Great Wall said that they had conducted their own in-house testing and concluded that the asbestos was not a danger to “human bodies.”

Chery, for its part, offered the implausible excuse that cars meant for the domestic market (China does not ban asbestos) were “accidentally” shipped to Australia.

If not an innocent mistake, what else could be the cause?

The most likely culprit is a China manufacturing phenomenon, vividly described in the book Poorly Made in China, known as “quality fade.” Companies deliver initial product samples that pass inspection tests with flying colors. In time, however, the quality begins to deteriorate as the manufacturer – often under pressure to preserve profits – introduces cheaper or non-standard product materials.

The more the material is hidden from plain view, the more likely it is to be replaced. Result: Yesterday’s good-looking high-quality sample fades into today’s good-looking-but-flawed offering.

Chinese independent car companies like Chery and Great Wall are under pressure in the home market. Since 2010, they have been losing market share to the more powerful joint-venture companies. This places enormous financial pressure on the companies — the kind of strain that could lead people act a little less carefully, or even shoot themselves in the foot by shipping asbestos-laden engine gaskets to Australia.

Chinese automakers saw Austrialia as a small but strategic test market where they could prove their worth and win over some of the world’s more discerning customers. Entry into America, Europe and Japan was supposed follow soon. But this untimely blunder shifts Chery, Great Wall and the reputation of China’s auto industry backwards onto precarious ground.Wall Street Journal

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Tony Simon

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