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Chinese carmakers like BYD, Chery and Geely must now play by new rules in export markets like Australia.
The Chinese government is cracking down on alleged anti-competitive behaviour from its automakers overseas, according to reports.
The European Union has imposed extensive tariffs on Chinese electric cars imported and sold in the region over the past few years.
The EU made this move to stop suspected Chinese government subsidies from heavily undercutting local carmakers in showrooms.
Export markets have become crucial for Chinese carmakers, with an oversaturated local market squeezing out profits.
Chinese brands have relied on low prices to establish global market share, which has left some domestic automakers scrambling to survive.
These rules are designed to ensure Chinese brands won't be pushed out of export markets by tariffs and other penalties from domestic governments.
It could also make new markets like the United States more open to Chinese brands.
What are the new rules?
The Chinese government wants to prevent price wars for its brands in overseas markets that harm its reputation.
- Carmakers must price cars based on production costs and market dynamics, not aggressive price cuts to drive out established competitors
- They should avoid steep or frequent price fluctuations, like heavy discounts that destabilise foreign markets
- They must avoid activities that trigger trade disputes or damage the image of Chinese brands
- They must not force overseas dealers to set a certain price for cars, instead creating clear price gradients for different model grades.
- They must follow host-nation regulations and implement anti-corruption safeguards
- All marketing and advertising must be truthful, with no misleading claims on vehicle specifications or performance
- Carmakers must follow local information protection and privacy laws
What do the new rules mean for Australian buyers?
These new rules set out clear obligations for Chinese carmakers in their export markets, including Australia.
It is unclear if the rules will have a material impact in Australia in the short term.
Australia does not have a domestic car industry to protect, so it doesn't need to impose the same heavy tariffs as Europe. This is one reason there are now so many new automakers drawn to Australia.
The new rules could potentially see prices of Chinese cars increase, with many models on sale some of the cheapest on the market currently, and extremely competitive with established brands.
However recently Chery, one of the most aggressively priced Chinese brands in Australia, dismissed the idea that its pricing was based on outside support, with local boss Lucas Harris saying its current price structure is "sustainable" and that the brand wasn't engaging in activities like dumping cars into our market.
"I'd love to see some actual evidence" he said, "I'd love a subsidy, it would really help us out."
