China fined Ford Motor Co.'s main joint venture in the country for antitrust violations, marking the latest action toward a U.S. company as tensions between the two nations escalate.
Changan Ford Automobile Co. will be fined $23.6 million for restricting retailers' sale prices in the southwestern city of Chongqing since 2013, according to a statement on the State Administration for Market Regulation's website. The fine amount is equivalent to 4% of Changan Ford's annual sales in Chongqing.
One large U.S. company was already feeling pressure from China. Beijing reportedly is investigating FedEx over the misrouting of some packages destined for Huawei Technologies Co. addresses in Asia.
The move was framed by the state news agency as a warning by Beijing after President Donald Trump's administration declared a ban on business with telecommunications giant Huawei. China has also threatened to blacklist foreign firms that damage domestic companies' interests, and on Tuesday it warned its citizens against travel to the U.S.
Though China didn't spell out any links between the Ford fine and the U.S. tensions, "it's hard to see it as not related," said Andrew Polk, co-founder of research firm Trivium China in Beijing. "At this stage, I think our baseline assumption should be that there are no coincidences."
Ford said in a statement that it respects China's decision and that the venture will regulate operations in the country. Representatives at Changan weren't immediately available to comment.
With the dispute over trade and technology escalating, more companies risk being caught up. China is drawing up a list of what it called "unreliable entities," opening the door to target a broad swath of the global tech industry, including U.S. giants like Google, Qualcomm Inc. and Intel Corp. and non-American suppliers that have cut off Huawei, such as Toshiba Corp. and SoftBank Group's ARM Holdings.
A Chinese official said Sunday that the government is firmly against the U.S.' "long-arm" jurisdiction on Huawei but downplayed concerns that the list of unreliable entities will be used to target foreign companies as a retaliation tool in the trade war.
It's not the first time China has lashed out at an American automaker during geopolitical tensions. In 2016, China levied a $29 million fine on General Motors' venture with SAIC Motor Corp. for antitrust violations. At the time, China-U.S. relations were strained after President-elect Donald Trump proposed tariffs on Chinese goods, questioned the one-China policy regarding Taiwan and accused the country of stealing an American naval drone in international waters in the South China Sea.
The fine adds to Ford's woes in China after sales at its Changan venture dropped 54% in 2018. But going after carmakers could be awkward for China as foreign automakers typically team up with local partners.
After a monthslong pause in escalations, Trump ramped up the trade war by accusing China of reneging on commitments. He has since imposed tariffs on more Chinese products and intensified the crackdown on Huawei. The escalations raise the possibility of China using other tools of pressure at its disposal, such as boycotts and regulatory push-back for American companies active in the world's biggest consumer market.
As for FedEx, which is based in Memphis, it had already felt the effects of China's slowing economy because of trade tensions, and the company apologized for what it described as errors involving Huawei packages. China's biggest tech company said it's reviewing its relationship with the U.S. delivery service. Two packages containing documents being shipped to China from Japan were diverted to the U.S. without authorization, Reuters reported.
China opened an investigation because FedEx violated Chinese laws and regulations and harmed customers by misdirecting packages, the official Xinhua news agency reported. Vice Commerce Minister Wang Shouwen said Sunday that "there's no grounds to blame China" for starting the investigation into FedEx. China Central Television said in a commentary that the investigation will be a warning to other foreign companies and individuals "that violate Chinese laws and regulations."
Meanwhile, Boeing Co. has been negotiating with Chinese airlines on one of the largest-ever orders of wide-body jetliners even as tensions between Washington and Beijing escalate, say people familiar with the talks.
The discussions center on about 100 twin-aisle jets: 787 Dreamliners as well as 777X planes, the newest long-range aircraft in Boeing's lineup, said one of the people, who asked not to be named because the talks are private. Negotiations have focused in particular on the 777-9 variant, the plane-maker's costliest jet with a $442.2 million sticker price, ahead of the model's expected first flight later this month.
No deal is imminent, the people cautioned, and the trade war is seen as a complication for all involved.
Boeing declined to comment. China's Civil Aviation Administration didn't immediately respond to a request for comment from Bloomberg News.
Information for this article was contributed by staff members of Bloomberg News and by Raymond Zhong of The New York Times.
Business on 06/06/2019