A lesson from VW scandal for Chinese manufacturers

By Ye Tan
0 Comment(s)Print E-mail Beijing Review, October 14, 2015
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In 2009, the National Highway Traffic Safety Administration, the Department of Transportation and the National Aeronautics and Space Administration of the United States conducted an intensive investigation into Toyota, leading the public to believe that there were fatal defects in the electronic systems of Toyota cars and plunging the automaker into a crisis of consumer confidence.

In February 2011, the U.S. Department of Transportation published the investigation results, admitting that no defects were in fact found in the electronic systems of Toyota cars. But after the incident, General Motors resumed its place at the top of the global auto market, toppling Toyota.

Currently, China-EU relations are in good shape, with frequent contact being made between the two sides. Benefiting from its sales performance in China, Volkswagen became the world's largest auto maker by sales volume in the first half of 2015. But now, the United States has allegedly dealt the same deadly blow to a German company that it formerly inflicted on a Japanese company.

By the end of the first half of this year, the market value of Volkswagen had reached $75 billion. If the scandal persists, the results could have serious consequences for the company.

However, the theory of conspiracy cannot change two painful facts: China still has a long way to go in protecting the rights of its consumers, and the manufacturing industry in Germany will inevitably suffer crippling repercussions.

The quality standards of the Chinese manufacturing industry are not widely acknowledged across the global market; therefore, China must learn from the developed markets in protecting consumers' rights.

When faced with such accusations, Chinese companies often describe the surrounding circumstances as a "conspiracy." The German Government, however, has never tolerated such scandals, because they clearly know this is the only way to redeem the reputation of their country's brands.

Whether the conspiracy theory is grounded in reality, it cannot help consumers and manufacturers win more respect, nor can it establish--or reestablish--the reputation of a brand. To refute this theory, the most powerful method is to focus on product quality above all other considerations.

This is an edited excerpt of an article written by financial commentator Ye Tan and published in National Business Daily

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