Failed four time presidential candidate and hero of all product liability lawyers Ralph Nader has found a new enemy: China. The Center for Auto Safety, founded by Ralph Nader with part of the $425K court settlement paid by GM in 1970 for invasion of his privacy, has been researching recalls of Chinese auto parts. Those recalls are now posted on the safety center’s Web site. The New York Times took the bait, and ran a long story under the headline “Recalls of Chinese Auto Parts Are a Mounting Concern.”
"There are so many automotive products coming in from China that American safety officials can't keep track of them," said Clarence Ditlow, executive director of the Center for Auto Safety, to the New York Times. The Center for Auto Safety went to the trouble of tracking failed Chinese products down.
After an exhaustive search, Nader’s Center for Auto Safety found 24 recalls of Chinese products, listed in the National Highway Traffic Safety Administration’s (NHTSA) records for the years 2007 and 2008. The 24 incidents involve a total of 1.2m product. The high numbers were caused by three companies: Eagle Eyes Traffic Industrial Co., Ltd. imported 404.546 replacement headlight assemblies which "do not contain required amber side reflectors." Foreign Tire Sales, Inc. became infamous by importing 255,000 (some say 450,000) Chinese tires which were in danger of tread separation. Harbor Freight Tools imported 295,000 fuses which took too long to blow.
In an interview with the New York Times, Ditlow said his review convinces him that “too many Chinese companies are unfamiliar with — or don’t care about — safety standards” in the United States and thus don’t meet them. According to Ditlow, automotive equipment made in China is less likely to comply with safety standards than the same product made in the United States. “The companies in North America know that process,” Ditlow said.
A quick analysis of the NHTSA database shows that Mr. Ditlow is wrong. It also proves that if companies in North America know the process, then they show a disturbing disregard for it.
And here is why:
The NHTSA database lists 76,525 recalls since 1966. From 2007 to date - the period analyzed by the Center for Auto Safety - a total of 13,482 recalls are listed in the NHTSA database. The database indentifies the manufacturer or importer of the recalled product. It does not identify the country of origin. Painstakingly tracing back the NHTSA recalls to the country of origin, the Center for Auto Safety found 24 products that were made in China. That amounts to 0.18 percent. Which is not reported by the New York Times. The NYT also did not found newsworthy that “China” is the only country listed on Nader’s website under “Import Recalls.” The countries of origin of the remaining 13,458 recalled products remain unmentioned.
Also overlooked and underreported was the fact that for the same period, the database lists 419 recalls by Chrysler LLC, 678 recalls by Ford Motor Co, and a whopping 1,410 recalls by General Motors Corp.
Dan Smith, associate administrator for enforcement at the National Highway Traffic Safety Administration, says Chinese manufacturers clearly want to comply with federal safety regulations. They just need to understand what is required. The onus for creating a solid understanding sits squarely on the importer. United States federal law puts responsibility for the safety of the product on the American importer. The importer has to specify the factors that bring the product in compliance with U.S. regulations, usually FMVSS. The importer must verify that the regulations are complied with. Before the NHTSA and the courts, the importer is liable, not the manufacturer.
Sean Kane, director of the consulting firm Safety Research & Strategies, agrees with Dan Smith: In the U.S., “anybody can be an importer.” It is usually the small or first-time U.S. importers who are unfamiliar with — or don’t care about — the safety standards of their own country. Often, they lack the funds for an orderly recall.
U.S. Senator Sherrod Brown of Ohio introduced a bill last year that would require importers to have insurance to cover a recall. These insurances are available and common. However, the insurance is routinely denied if the applicant ticks the “Yes” box next to the question “Will the product be sold in the United States or Canada?” The reason: Highly unreasonable product liability awards, caused by the ambulance chasing lawyers which revere Ralph Nader.
It is very easy to import auto parts to the United States and Canada. Some say, much too easy. The US and Canadian auto safety regulations operate on the principle of self-certification. The manufacturer or importer of a vehicle or item of motor vehicle equipment certifies that the vehicle or equipment complies with all applicable Federal or Canada Motor Vehicle standards. No prior verification is required by a governmental agency or authorized testing entity before the vehicle or equipment can be imported, sold, or used. If reason develops to believe the certification was false or improper, then authorities may conduct tests and, if a noncompliance is found, a recall can be ordered.
The rest of the world operates mostly on the principles established by the World Forum for Harmonization of Vehicle Regulations, a body of the United Nations. 58 countries, from Azerbaijan to New Zealand, are signatories to a common set of ECE Regulations for type approval of vehicles and components. Other countries, even if not formally participating in the agreement, recognize the ECE Regulations and either mirror the ECE regulations content in their own national requirements, or permit the use and importation of ECE-approved vehicles or parts. More than 120 ECE regulations cover most safety-relevant aspects. The big difference: Each part or vehicle must successfully be tested as part of the type approval. The tests are performed by accredited, independent labs. In most countries that signed the agreement, use of a non-certified part or vehicle is illegal. This is one of the reasons why one hears very little noise about Chinese quality from European countries.
More about the importance of the ECE rules, also known as “E-Mark” in my article next Monday.
About the author: Bertel Schmitt, Gasgoo's colunmist, is CEO of Hong Kong based parts sourcing company Sinamotive. Before founding Sinamotive, with the assistance of U.S. venture capital, Mr. Schmitt was a marketing consultant to Volkswagen AG.
