How to properly conduct an auto recall in China

January 07, 2016 | BY

Katherine Jo

Foreign auto brands including Volkswagen, BMW and Daimler have recalled thousands of vehicles in China amid tightening quality and safety rules. Carmakers need to comply with AQSIQ requirements on monitoring, filing and recalling defects to avoid costly investigations and penalties

Although China has become the largest automobile market in the world, the legal framework in key relevant sectors is still composed of sub-statutory – and often local and patchy – provisions, especially in terms of market supervision.

Various corporate law restrictions have been in place for years. However, German auto manufacturers have generally been satisfied with their double-digit sales growth rates; in 2014, Volkswagen broke a new sales record in China. The sales volumes of Chinese manufacturers, in contrast, have lagged behind.

But the market is now likely to take a turn as foreign carmakers are facing increasing challenges, especially as concerns over product safety and consumer protection have been rising in China. As a result, in the beginning of 2013, the State Council issued a much-noticed national regulation to address defective automobile product recalls. This has recently been supplemented by implementing rules that came into effect on January 1 2016.

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