VW row sparks China trade warning

19 June 2002
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20 June 2002 | David Arminas

British companies entering into partnerships or joint ventures with Chinese businesses in mainland China must be vigilant about where their products end up, or they could find them in someone else's supply chain.

Peter Cooke, professor of automotive industry management at the Nottingham Business School, Nottingham Trent University, said the Chinese business ethic did not yet widely accept brand ownership, and if a company can sell on branded parts, it will do so to make a profit.

His warning comes after Volkswagen patched up its relationship with its Chinese joint venture company Shanghai Automotive Industry Corporation (SAIC) over a parts dispute.

The German car maker found some original VW parts in the Chery, a best-selling car made by a rival company part-owned by SAIC.

The Chery is a direct competitor to VW's Jetta and Polo models made by VW's own joint venture with SAIC.

The Chery is made by SAIC Chery Automobile, China's first fully owned domestic car maker.

SAIC claimed the parts were bought on the open market, but agreed with VW to stop using them in the Chery.

Cooke told SM: "UK firms should always ask what is happening to spare parts or excess parts, because in China it's a case of 'waste not, want not'.

"This Chinese attitude will change one day, but at this stage western companies need to be constantly monitoring their Chinese partners."

SMjun2002

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