The number of private cars in the People’s Republic of China is constantly growing. Until the end of 2005, nearly 43 million cars were registered with private individuals, which is an increase of 20.6 percent compared to the previous year. Along with the rapid growth in the Chinese automobile market has come a notable tightening-up of the statutory provisions on product liability, which, amongst other things, has resulted in almost 400,000 vehicles having to be recalled in the past two years.
In addition, there is an increased awareness of consumer rights, particularly with the young, well-educated population in the conurbations of China. They have been sensitised to potential product liability claims and are prepared to enforce the claims through the courts. In 2005 alone, around 7000 lawsuits were filed against foreign and Chinese automobile manufacturers, suppliers and sellers on defects in quality, price and sales complaints.
The law firm Beiten Burkhardt, which has been providing legal advice to German and international companies on their activities in China for more than 10 years, has now published a study on “Product Liability for Automobiles in the People’s Republic of China”. The study gives a comprehensive overview of all aspects involved in Chinese product liability law (tortious and contractual product liability, damages, administrative liability and criminal liability), provides relevant examples from the country’s case law and furthermore gives recommendations on situations which are applicable to companies’ daily operation. In addition, the study cites the most important laws, provisions and court judgments concerning product liability and explains the competent jurisdiction applicable and alternative possibilities of dispute resolution (arbitration courts).
Although it is the Chinese manufacturers who are more likely to be sued for defects in quality, foreign producers are an attractive target to be sued for other reasons. “They are considered to be solvent and additionally have to contend with the disadvantage that they have to hold their ground in a foreign legal system which is sometimes hostile towards them,” said Dr. Bjorn Etgen, partner of Beiten Burkhardt and Head of its China Practice. “Our study is supposed to serve as a guideline for the automobile and supplier industry present in China so that it can better assess the trends and risks when selling its vehicles in China”
The study comprises 40 pages and can be ordered free of charge under http://www.bblaw.com/ or through the law firm’s Public Relations Department in Germany (Markus Kuhn, Tel. +49-89 350 65-1285, Markus.Kuhn@bblaw.com).
Dr. Bjorn Etgen
Lawyer, Head of China Practice
Tel. +852 2524 6468