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Chinese car-makers take global asbestos action

Against the Wall: Australian Customs and Border Protection says importers are liable if caught bringing in banned asbestos, meaning importer Ateco could face big fines if prosecuted.

Australian asbestos alert prompts Chery, Great Wall to take action in export markets

Great Wall logo21 Aug 2012

OFFICIAL statements from Chinese vehicle manufacturers Great Wall and Chery have shed a little light on how almost 24,000 vehicles and a number of spare parts were shipped to Australia containing the banned and potentially lethal substance asbestos.

Chinese news service Xinhua published a statement from Chery, attributing the existence of asbestos in 1700 J11 compact SUVs and 550 J3 light cars to “mislabelling parts in China, which led to mix-ups in logistics”.

Great Wall, which sent 21,500 vehicles containing asbestos to Australia, published a statement on its Chinese website saying it has “made serious introspection and understand the problem comes from the negligence of local ‘customs (prohibited imports) regulations 1956-4c’”.

The company says it has stopped using the gaskets for domestic and export markets and begun informing its global distributors to “strictly implement the local national and regional related requirements”.

Great Wall has also pledged to “take the responsibility for the customers” in Australia.

Chery claims to have “always followed local laws and regulations in a strict way”, but the number of its vehicles affected in Australia exceeds the number sold so far (1546 J11s and 375 J3s).

 center imageFrom top: Great Wall SA and X200 Chery J3 and J11.

The company, which has exported more than 700,000 vehicles since it was founded, has promised to undertake an inspection of vehicles it has sold in other countries and will “consider issuing recalls in accordance with local laws and regulations”.

It first transpired that Chinese cars sold in Australia could contain asbestos when customs in Western Australia intercepted a batch of spare parts that were found to contain asbestos, which led to an investigation that turned up the same components in fully assembled vehicles.

A spokesperson for Australian Customs and Border Protection told GoAuto importers are responsible for ensuring the goods they import are free from asbestos – which could put Sydney-based Chery and Great Wall distributor Ateco Automotive in the firing line should the authorities decide to prosecute.

Importers who breach regulations can face a penalty of up to $110,000 or three times the value of the goods (whichever is greater), but the customs spokesperson said not all cases lead to prosecution.

“Any decision to prosecute an importer for breaching the prohibited import regulations will be taken after considering all circumstances related to the importations, and in accordance with the prosecution policy of the Commonwealth,” the spokesperson said.

The spokesperson cited the example of a company in WA that was fined $64,000 for importing machinery gaskets containing asbestos to replace items previously seized by customs.

Australia has been treated as a developed nation test bed for Chinese vehicle brands as they look to sell their products in the West, but the asbestos issue, which has been reported around the world, is not helpful to their expansion plans.

The Australian Competition and Consumer Commission (ACCC) last week ruled that the asbestos exhaust and engine gaskets can remain in vehicles until they need replacing during routine maintenance, but that warning labels must be applied to affected vehicles.

Sydney-based Chery and Great Wall importer Ateco Automotive has withdrawn affected vehicles and spare parts from sale and instructed dealers to do the same, but says it has enough stock of unaffected vehicles to keep sales going.

Letters have been sent to the owners of affected vehicles, reassuring them that there is “negligible risk” to vehicle occupants while warning them off carrying out DIY maintenance in case they disturb and potentially release asbestos fibres from the affected gaskets.

The letters include a copy of a risk assessment report by occupational health and safety consultancy Hibbs and Associates, which found the presence of asbestos in gaskets to “constitute a negligible asbestos related health risk to the driver and passengers”.

“Even if carried out in an uncontrolled way, handling and removing these gaskets constitutes a very low asbestos related health risk,” says the report, which also points out the small amount of asbestos in the gaskets.

Vehicles sold in Australia before asbestos was banned at the end of 2003 are likely to contain the substance, so the maintenance sector has safe handling protocols in place, but these were unlikely to be adhered to by workers not expecting newer vehicles to contain the hazardous substance.

As a result, WorkCover has issued guidance that all Chery and Great Wall vehicles be treated as containing asbestos gaskets “unless testing has indicated the gaskets are asbestos free, or service records are verified to determine that the gaskets have been removed”.

The Hibbs and Associates report concludes there are “negligible” health risks if recommended handling and removal procedures are followed when exposed to the affected gaskets and a “very low” risk if handling and removing them “in an uncontrolled way”.

Australian Manufacturing Workers Union (AMWU) acting national secretary Paul Bastian expressed concern for the workers who may have already been exposed, calling the ACCC’s action “inefficient”.

“Why have a rule banning the importation of asbestos in any form if you are not going to police it and if you are not going to enforce it, so our position is the ACCC has not gone far enough,” he said.

“It doesn’t answer the problem that people may have already worked on these vehicles on engine repairs or exhaust pipe repairs. It doesn’t answer the question about those at home who might have done their own mechanical repairs.”

That two unrelated vehicle manufacturers both ended up exporting cars to Australia with gaskets containing asbestos suggests a wider issue with the Chinese supply chain.

Jon Thompson, spokesman for WMC Group, the Australian importer of Chinese Higer buses, JAC trucks and upcoming LDV vans, told GoAuto “questions have been asked already and assurances have been given” that no asbestos components have been used.

“We use an international driveline in the (Higer and JAC) vehicles,” he said.

“Cummins is an international company, so all the gaskets and so-on would be of an international standard. They are manufactured in a Cummins engine plant.”

Mr Thompson suggested the same would be true of the British-designed but Chinese-built LDV vans, which will launch in Australia in October, as these use engines sourced from Italian diesel specialist VM Motori.

Both Great Wall and Chery also export vehicles to South Africa, which banned asbestos in 2008.

According to South African news site Independent Online, Chery and Great Wall importers are taking action, including removing potentially affected spare part gaskets from stock and offering to replace affected gaskets for customers during routine servicing.

A South African Chery representative told GoAuto a press conference will be held in a few days.

Great Wall was also recently established in the UK market, where its V-series ute is sold as the Steed, but a spokesperson for the British distributor said its Chinese-built vehicles were unaffected “as they have had the parts in question replaced”.

Chery and Great Wall are among China’s top vehicle exporters, having respectively sold 112,000 and 57,900 vehicles outside their domestic market in the first seven months of this year.

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