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Akio Toyoda’s China visit: Has he put out or stoked the fire?

by Ma Lianhua

 

After testifying before the U.S. Congress, Akio Toyoda, president of Toyota Motor Corporation, flew directly to China to apologize to customers of the world’s biggest auto market.

His visit won understanding and approval from a considerable number of people in China. On the day following Toyoda’s press appearance in Beijing, someone commented on the media that Toyoda’s visit to China shows that Toyota pays top attention to the China market and that Toyoda’s apology is timely and well intentioned.

But Chinese consumers were not too happy about Toyoda’s brief stay and his measures for handling faulty cars in China. On the evening of March 1, when Akio Toyoda apologized four times to Chinese consumers in a conference room of the Beijing Marriott Hotel City Wall, two groups of Toyota car owners were distributing leaflets outside the hotel, protesting against quality problems of Toyota cars and requesting a response from the Toyota boss.

This dramatic scene indicates that the effect of Toyoda’s lightning visit deserves pondering. Increasing critical voices after Toyoda’s press appearance show that Toyota needs to come up with more effective measures to win back trust from Chinese consumers.

 

Chinese consumers deserve compensation, too.

“Toyota’s global recall has caused a lot of worries and confusion among Chinese consumers. We want to apologize sincerely,” Toyoda said before bowing in front of hundreds of journalists. On the three issues of problematic floor mat, gas pedal and braking system, which triggered the massive recall of Toyota cars in the United States, Akio Toyoda said that, since Toyota uses different suppliers in China and the United States, floor mat and brake problems do not involve cars sold in China, that the gas pedal problem involves just the 75,000 RAV4 vehicles produced by FAW-Toyota and that, therefore, Toyota’s recall will be limited to these 75,000 RAV4 vehicles.

Toyoda’s sincere apology won approval and sympathy from many. But as many other people maintain that Akio Toyoda’s apology was just a show of attitude. He has not given Chinese consumers substantive compensation. In the United States, Toyota has promised to provide door-step recall services, give transportation compensation to those who drive their defective Toyota cars to recall stations and provide owners with corresponding vehicles for use while their defective cars are being repaired.

In China, however, Toyota merely notifies car owners by telephone or through advertising, nor has it offered a compensation plan for Chinese owners while parts of their faulty RAV4s are being replaced. A survey shows that most consumers are not satisfied with the big difference in the number of recalled cars and compensation in China and the United States.

Akio Toyoda’s China visit was an easy ride compared with his trip to the United States. In China some complaining consumers were barred from the hotel. The relevant administrative agency did not summon Akio Toyoda, nor has it imposed a fine on Toyota. The administrative agency just gave a warning on February 26 that some Toyota vehicles have quality problems.

In the United States motorist Rhonda Smith said: “Shame on you, Toyota, for being so greedy.” Members of the U.S. Congress gave Toyoda a rough grilling on safety problems of Toyota cars. An industry official says: “Compared with accusations of the U.S. motorist, the grilling of the U.S. Congress and a huge amount of fine, the Chinese consumer is too kind-hearted and China’s relative administrative agency too magnanimous. Even so, Chinese consumers have not got the compensation they deserve. They continue to benefit indirectly from what U.S. consumers have won.”

On compensation differences, Miao Wei, vice minister of Industry and Information Technology, says: “We hope that Toyota would treat Chinese consumers the same as it does American consumers. It should’t apply double standards.” A legal expert says: “In legal terms, a business should offer compensation for losses resulting from time spent by the consumer when he or she assists the business in solving safety problems.”

The legal expert says that problems with China’s legal system also explain why Chinese consumers are short changed. According to domestic regulations on the recall of defective cars, the State Administration of Quality Supervision, Inspection and Quarantine shall impose a fine of ¥10,000-¥30,000 ($1,471-$4,412) on a manufacturer for intentionally concealing serious defects. In the United States, by contrast, the perpetrator shall be sentenced to 15 years in prison and the manufacturer fined millions of dollars. In Japan, fines can reach 200 million Japanese yen.

“Thanks to the high cost of law violations, businesses in foreign countries cannot but choose recall when a recall is due. In China a simple apology often quiets things down. The government should amend the recall legislation to help consumers,” the legal expert says.

 

Doubtful effect

When he came to China, Akio Toyoda brought apologies but not concrete measures to deal with problems. As a result, some consumers question his motive. Auto.sina.com.cn has conducted an Internet poll on the question “Do you accept Toyota boss’s apology?” Of all respondents to the question, 5,676, or 86.71 percent, say “I do not;” 714, or 10.91 percent, choose “I do;” and 156, or 2.38 percent, say “I do’t care.”

Su Hui, former general manager of the Asian Games Village Auto Mart in Beijing, says that, while Akio Toyoda’s apologizing visit to China is a positive step, he disappointed many Chinese consumers by announcing the recall of a limited number of cars and by offering no follow-up measures. Su says: “At the Asian Games Village Auto Mart, Toyota cars used to be sold at a premium. These days no premium prices are offered and fewer customers visit Toyota dealerships. Consumers take a wait-and-see attitude.”

A source inside the auto industry says: “When the U.S. Congress summoned Akio Toyoda, Chinese media and consumers sympathized with Toyota, some of them believing that the U.S. uses the recall as a protectionist ploy to punish the Japanese automaker. But Toyoda’s lightning visit to China and inadequate measures to deal with defective products has inflated the Toyota Recall issue here. It is’t wrong for Akio Toyoda to visit China but Toyota’s hurried decision for the China market is a mistake.”

 

Are regulators too tolerant?

During the 65 hours he was in China, Akio Toyoda reportedly talked successively with the head of the State Administration of Quality Supervision, Inspection and Quarantine, Chen Deming, Minister of Commerce, and representatives of Toyota’s two Chinese partners. Toyoda’s trying itinerary has evidently paid off.

Says Isogai Masashi, general manager of Toyota Motor China Investment Co.: “The Chinese government has not issued compulsory requirements on Toyota. We are grateful for the government for the stand it has taken. We’ll readjust and solve problems as soon as possible.”

Financial Times of Britain says China’s consumer market seems to be more tolerant than the American one. Not until February 26 did the State Administration of Quality Supervision, Inspection and Quarantine issue a risk warning on defective Toyota vehicles, it reports. An industry official says, “Domestic administrative agencies have given Akio Toyoda too much face. In the United States, he was summoned to the U.S. Congress and was questioned as if on trial. In China Akio Toyoda was arranged in a short time to meet the Minister of Commerce.”

A source within the auto industry says: “Relevant administrative organs should improve rules for supervision over the quality of cars. At present, when a car has quality problems, the burden of citing proof is on the consumer. Since we do not have a well-functioning supervisory system, consumers ca’t get authoritative quality inspection reports and find themselves very vulnerable in disputes over defective autos. It is high time that the government set up a quality supervision system.”

Luo Lei, deputy secretary-general of China Automobile Dealers Association, says that there are laws in the United States, Europe and Japan on the recall of defective products but that in China regulations on the recall of cars are just rules of a government department, which clearly lack legal power. “Why did Akio Toyoda go to the United States? Because he might be punished by U.S. law,” Luo says.

There are also loopholes in supervision over the safety of cars, Luo says. Though it did alert consumers of some defective Toyota vehicles, the State Administration of Quality Supervision, Inspection and Quarantine failed to look into causes of the defects, nor did the traffic administration department conduct an in-depth analysis of related accidents. The automaker took advantage of the loopholes and is not at all worried about the cost of breaking rules.”

Says Su Hui: “On the issue of recall, since consumers are the weak lot, the government should speak up on their behalf. Chinese consumers should be treated the same as U.S. consumers.”

Rewritten by Raymond Chen based on

author’s article carried by www.qiche.com.cn

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