New guideline set to focus on e-commerce, parallel imports

The emerging online auto trading and parallel import car sales are expected to be focuses of the upcoming antitrust guideline for the auto industry currently being drafted by the National Development and Reform Commission.

As the first rule relating to the auto industry in the country's Anti-Monopoly Act, which came into effect in 2008, the new guideline will cover traditional auto part production and supply chain, auto sales and after-sales services.

Delegates from automakers, industry associations, officials and lawyers, took part in a closed-door meeting to discuss the issues.

Part of the discussions was to work out how to include the controversial and booming sectors of e-commerce and the parallel car import business into the new guideline, which is expected to benefit consumers, sources told China Central Radio Station.

A market insider said the e-commerce channels are "actually controlled by the general auto dealers", as current online platforms don't have the capacity to sell directly to buyers.

"So in fact, it's hard for consumers to get their dreamed fair prices," he said, "The dealers are 'manipulating' the prices and exercise their monopoly."

Consumers expect cheaper imported vehicles from the long-anticipated parallel import car sector, which is also influenced by some "shadow" monopolies from some foreign automakers.

In China, imported vehicles with emissions of more than 3 liters per 100 kilometers are charged 25 percent consumption duty, while those with between 2.5 to 3 liters per 100 kilometers are charged 12 percent.

"Some foreign automakers maliciously increase the emissions of some of their products made in their home countries to above 3 liters per 100 kilometers, which then costs Chinese parallel auto importers extra duties," said Zhu Kongyuan, secretary-general with the China Auto Dealers Chamber of Commerce.

He said this often results in even more expensive final price tags on imported vehicles in parallel import car shops compared to those in ordinary import car shops.

Zhao Xinzhi, director of Nielsen China Auto Vertical, said: "The parallel import car owners are feeling the pinch in their quality warranty and after-sales service. They expect a long-term reliable service system."

Su Hua, a researcher with the Chinese Academy of Social Sciences and a panel member of the guideline drafting group, said, "It's hard to avoid the recognition and assessment on such new market phenomena, and hard to learn from the experience of other countries. So our panel members are making more measured and discreet efforts to such sectors."

He advised, "The companies involved in the emerging businesses to be more active in their antitrust actions and create strategies with more foresight."

Shi Jianzhong, deputy president of the China University of Political Sciences and Laws, expects that the new guidelines will boost the positive influence of China's new parallel import car sales policies.

Su said the new guidelines will focus on the channel limits and price differences and make assessments of the current market.

Currently, there are no statistics available on total auto sales through e-commerce websites and as parallel import car shops only opened eight months ago, no figures are available, according to authorities and market associations in China.

Contact the writers at yangcheng@chinadaily.com.cn and haoyan@chinadaily.com.cn