Chinese Regulators Fine GM $29 Million
(CNN MONEY) General Motors has a China problem.
Chinese regulators have fined the U.S. automaker's local joint venture the equivalent of $29 million, saying it broke antitrust rules.
GM (GM)said in a statement that it "will provide full support to our joint venture in China to ensure that all responsive and appropriate actions are taken with respect to this matter." SAIC could not immediately be reached for comment.
Shanghai authorities said the venture, SAIC General Motors Sales Co., struck agreements with dealers to put a floor under the price they could charge for its cars. It punished dealers who didn't stick to the agreements "by halting shipments of popular models, imposing fines and deducting sales commissions," the investigators said.
GM has a lot to lose in China, where it sells more vehicles than it does in the United States. Chinese consumers snapped up 3.4 million GM cars in the first 11 months of the year, up 8.5% from the same period last year.
The move against its joint venture comes at a delicate time for U.S.-China relations. Earlier this week, U.S. President-elect Donald Trump tapped economist Peter Navarro, a vocal China critic, to head up a new trade council. Like Trump, Navarro believes China does not play fairly on trade.
Editorials in state-run media indicated Navarro's appointment has rattled Beijing. China Daily called the pick a sign of Trump's "confrontational approach" to China relations, and Global Times said it was a likely indication that the president-elect will "adopt reckless trade protectionist policies in future."
During his campaing, Trump threatened to slap tariffs of 45% on Chinese imports to the U.S. to correct a trade imbalance. Chinese retaliation against American companies is not out of the question.
Chinese officials had previously played down the idea that punishing the automaker was a political move. When the news came out last week that Chinese authorities were going to fine an unidentified U.S. carmaker, the Foreign Ministry said that China welcomes foreign investment but companies have to abide by local regulations.
The fine also impacts a Chinese company, SAIC, as well as an American one. SAIC has a 51% stake in the venture with GM holding the rest.
China has launched price-fixing investigations into other international automakers in recent years and imposed multi-million-dollar fines.
The Chinese fine closes out a grim week for GM. The company announced on Tuesday that it is cutting 1,300 jobs at its Detroit plant, a sign of slowing auto sales in the U.S.