Chinese Automaker Future Uncertain After Asbestos Detected

By Matthew Askari | August 16, 2012
The backbone of the Chinese economy has proved to have an unparalleled ability to produce goods effectively, and often on the cheap, but sometimes there's a catch. More than a few times, Chinese goods have been recalled for containing unsafe and hazardous chemicals, ingredients, or components. There have been well documented cases of lead in toys, and poisonous ingredients detected in pet food and milk, with fatal consequences. This week Chinese automakers were reported to issue an Australian recall, as some cars were found to contain asbestos, a harmful fiber that is banned in Australia and 55 countries around the world. We've now learned a recall wasn't issued, but that the cars do have engine gaskets containing asbestos. The gaskets will be replaced when the car is serviced, or at the owner's request. In a recent Bloomberg report, Michael Dunne, head of industry researcher Dunne and Co., said the asbestos incident is a big blow to the Chinese auto industry. "It's a significant setback for the individual companies and development of the industry. Chinese car companies will continue to push overseas, but you can bet that the other countries they are moving into, or are exporting to, are going to take a closer look on what's on offer." Cherry Automobile Co. and Great Wall Motor Co. are China's two biggest exporters of cars, and the two saw Australia as a test-market for the larger American and European markets. Great Wall's chairman had said before the incident that the automaker was looking to double the number of overseas plants in the next three years, but if China is looking to export beyond the developing world, those plans could be in flux. If Chinese automakers ever want to be competitive players in foreign markets, shaking the poor quality and safety reputation must be priority one. The best way to do that of course is to make a good, safe product.
Source: Bloomberg