Manufactures need to beware when dealing within the Chinese economy, as Audi and Chrysler are about to find out. They have been accused of “pursuing monopoly practices” by the relevant authorities and at those we do not know a fragrant breach has been made or whether it is normal competition practices we would accept here in the west.
In a statement emailed to the BBC, Audi’s office in China said: “We can confirm that the Hubei Price Bureau is investigating the dealership network of the FAW-Volkswagen Audi Sales Division Audi in Hubei province.
The accusations appear to be around the cost of the vehicles, against what you can by them for in the west. Although Audi along with other manufacturers argue it is down to expensive import taxes.
According to the BBC, many richer Chinese are buying direct from Europe, to cut costs, but the they believe the strength of the brand means many will pay the higher prices. It raises the question about how free western manufacturers really are when it comes to dealing with a communist power. However there is no doubt, that this is an important growing market, now the largest in the world, that is extremely valuable to Audi and others.
But being reigned in may affect profitability and you can’t help feeling the communists want to be seen as 21st century, but at the same time want to control what money leaves the country.
It is likely that all non national brands may be affected by this investigation in some way, which will be held internally and with little influence to defend to appeal against any decisions.
Unlike the west where competition keeps prices, down such is the demand for the right brand in China, that cost seems to be of secondary important and could in fact be seen a prestige factor.