Chery and Great Wall hit a snag over asbestos gaskets

Chery Automobile and Great Wall Motor, China's two largest vehicle exporters, recently began recalling the majority of their cars sold in Australia after authorities found potential cancer-causing asbestos in several models.

The first recall by Chinese carmakers overseas includes 20,555 of Great Wall's Haval SUVs and Wingle pickups, as well as 2,445 Chery Tiggo SUVs and A3 compact sedans.

The Australian Competition and Consumer Commission said in a statement that asbestos bound into gaskets in the engine and exhaust systems does not present a risk during operation of the vehicles, but consumers should not "perform do-it-yourself" maintenance that might disturb the gaskets.

The use of asbestos has been banned in Australia since 2004. Its market with annual sales of about 1 million units is dominated by US and Japanese brands.

The recall reflects the bumpy road Chinese carmakers face when expanding in international markets, although both Chery and Great Wall said it will not have a major impact on their overseas businesses.

Jia Xingguang, a Beijing-based independent auto analyst, said Chinese brands will likely encounter a range of standards and regulations in Western markets that are stricter than at home in such crucial areas as quality, safety and environmental impacts.

"Chinese carmakers have to make their products abide by different standards and regulations in different countries if they want to have a sound foothold globally, especially in developed markets," Jia stressed.

Five years ago, a phalanx of Chinese carmakers including Chery and Geely had ambitious plans to enter the US market, but failed because their products could not meet the mature market's standards.

In 2007, the Zhonghua sedan by Brilliance China, the partner of German luxury brand BMW, made headlines in Germany when it managed a rating of only one star out of five in a crash test by the nation's ADAC auto club. The result forestalled plans by Brilliance to sell 158,000 of its own-brand sedans in Europe by 2011.

Both Chery and Great Wall said that they have learned lessons from the recall and also stressed that they will press ahead with overseas expansion plans.

Shang Yugui, spokesperson for Great Wall, said the company is "steadily" implementing its export strategy for Europe.

"Exporting to the US is also under preparation," he added.

In the first seven months of the year, overseas sales by Great Wall, which is based in Baoding, Hebei province, surged by 47 percent to 57,900 units.

Chery, headquartered in Wuhu, Anhui province, said in a statement that it will check its exports to other markets carefully to find if they have similar problems.

"If yes, we will decide whether to recall them according to local regulations," the company said.

Chery delivered 112,014 cars abroad in the first seven months, an increase of 26.1 percent from a year ago.

Boosted by domestic brands' increasing efforts to explore international markets, China's total vehicle exports jumped by 27 percent to 577,000 units in the first seven months of this year.

Full-year exports are projected to hit 1 million units.

gongzhengzheng@chinadaily.com.cn