The US-China tensions just became much nastier with the Asian country slapping a steep penalty on American automobile giant General Motors (NYSE:GM). Regulators in China have slapped a $29 million fine on the local joint venture of GM, which is based out of Michigan in the United States. China says the company broke antitrust rules.
The Complaint by Shanghai Authorities
According to the authorities in Shanghai, SAIC General Motors Sales had an agreement with their dealers that enforced a minimum price they could charge for the Buick, Chevrolet, and Cadillac vehicles. By doing this, they were improperly suppressing competition, China said on Friday. In fact, they are saying that the local business went as far as deducting sales commission, imposing fines, and halting the shipment of cars.
Responding to the complain General Motors said, “GM fully respects local laws and regulations wherever we operate. We will provide full support to our joint venture in China to ensure that all responsive and appropriate actions are taken with respect to this matter”. The local venture is yet to issue a comment.
SAIC General Motors Sales is the largest joint venture of General Motors in the world. GM has 49 percent stake in the business. General Motors can lose a lot in China if the problem worsens, because, in the first 11 months of this year, the business sold 3.4 million in the country. Last year in the same period they sold 8.5 percent less.
Other car makers have faced trouble in China as well. Authorities had imposed similar fines on Audi and Fiat Chrysler too following an investigation of 2014 after buyers complained that the companies were overcharging them. Many auto parts suppliers from neighboring Japan have also been fined on charges of price-fixing.
Is This a Reaction to Peter Navarro’s Appointment
These are delicate times for US-China relations. Donald Trump has been bashing China for a while now. He recently appointed Peter Navarro for leading a trade council. Like Trump, Navarro too is a critic of China. In fact, he even said that China is a “totally totalitarian” state, and “the planet’s most efficient assassin”.
Chinese editorials have mentioned that Beijing is extremely unpleased with his appointment. China Daily even said that this shows Trump’s “confrontational approach”. However, officials in China are saying that the penalty on General Motors (NYSE:GM) has got nothing to do with Trump or Navarro. “It is not a political move”.