Product safety and liability

Safety and environmental

What are the most relevant automotive-related product compliance safety and environmental regulations, and how are they enforced? Are there specific rules for product recalls?

Automobiles and automotive-related products are among the most highly regulated in the product quality or liability regime of China. China Compulsory Certification (CCC) must be secured before whole vehicles and applicable automotive parts (either domestically manufactured or imported) can be sold in the Chinese market. Under the current version of the CCC Catalogue, promulgated by the Certification and Accreditation Administration of China (CNCA) on 22 April 2020, whole vehicles including passenger cars, trucks, trailers and motorcycles, and components including tyres, vehicle windows, rear-view mirrors, safety belts, seats and door locks, all require CCC prior to sale in China. CCC-related regulations are actively enforced by the CNCA. Manufacturers securing CCC must apply CCC marks to their products (including applicable modifications) and are subject to routine CNCA inspections once a year.

For whole vehicles, however, CCC is only the first regulatory step before entering into the market. For consumers to be able to actually drive the cars on the road, the products must also receive emissions type approvals according to the standards set by the Ministry of Ecology and Environment (formerly known as the Ministry of Environmental Protection) (MEE) as well as its local and regional counterparts. As vehicle emissions are regarded to have a major impact to its air quality, China has recently taken action to strengthen its vehicle emissions standards. From 1 July 2021, all types of motor vehicles (including heavy-duty vehicles) imported into, distributed in and registered in China must comply with the Stage VI Motor Vehicle Emissions Standards (Stage VI), replacing the previous Stage V motor vehicle emissions standards implemented in 2018. The timeline above is the national standard, while local governments have discretion to move the date forward. Several cities, such as Shanghai, Chengdu, Guangzhou and Shenzhen already enforced Stage VI in 2019.

Apart from the above, manufacturers, sellers and other parties in the distribution chain – such as the parties that provide transportation, warehouse services, and repair and maintenance to automotive products, among others – are also subject to various post-sale product quality and safety monitoring and reporting obligations pursuant to the Product Quality Law, the Consumers’ Interests and Rights Protection Law, and the Civil Code. If a product is determined to contain a defect, the laws require primarily that manufacturers, or their domestic importers if the car is foreign-made, conduct a public recall, pursuant to guidelines and procedures set up in the Regulations for the Administration of Recalls of Defective Automotive Products (the Recall Regulations) effective from 1 January 2013 and the implementing rules of the Recall Regulations effective from 1 January 2016. The Recall Regulations cover both motor vehicles and trailers and apply to automobiles produced or sold within China. The requirement to recall is triggered when automotive products are determined to contain unreasonable risks endangering personal and property safety, or when the products fail to comply with mandatory national or industrial standards that safeguard personal and property safety. Under the Recall Regulations, manufacturers are also required to promptly evaluate and investigate potential defects when they become aware of them, and the State Administration for Market Regulation (SAMR) will also notify the manufacturers about potential defects when they come to its notice through reports or its own investigation. Manufacturers or operators in the distribution chain refusing to cooperate with SAMR during the defects investigation and recall process will be subject to penalties, and automotive manufacturing permits may be revoked in serious circumstances. Moreover, the Provisions on the Administration of Motor Vehicle Emissions Recalls promulgated by SAMR and MEE, effective from 1 July 2021, have extended the product recalls from safety recalls to emissions recalls as well. Similar to the Recall Regulations, motor vehicles with substandard exhaust emissions must be recalled. 

Moreover, on 15 March each year (World Consumer Rights Day), SAMR publishes a report regarding product recall for safety and environmental issues. And it appears that the safety issue for new energy vehicles (NEVs) has been a major focus of SAMR in recent years. According to the report of 2021, SAMR intends to establish a NEV defect investigation mechanism driven by big data, develop an OTA (Over-the-Air Technology) big data platform for NEVs, and implement a supervisory sandbox in due course.

Product liability and recall

Describe the significance of product liability law, and any key issues specifically relevant to the automotive industry. How relevant are class actions or other consumer litigation in product liability, product recall cases, or other contexts relating to the automotive industry?

The Part III Contract and the Part VII Tort Liabilities of the Civil Code, the Product Quality Law, and the Consumers’ Interests and Rights Protection Law are the primary legislation setting out the bases for product liability in civil law cases, which generally are divided into contract actions and tort actions. A potential breach of contract claim exists between a consumer and the party that directly sells the automotive product to such customer. By comparison, a cause of action under torts can be asserted by anyone who has allegedly been injured by a defective product against any party in the distribution chain that allegedly caused the damage. In extremely serious product liability cases, the government may also pursue criminal charges pursuant to the Criminal Law.

The civil procedures of China recognise a ‘joint action’ or ‘representative action’, but this is substantially different from a class action under many common law jurisdictions, such as the US. A joint action allows for more than one claimant who share the same legal relationship against the defendant or defendants. The court’s decisions in such cases apply only to parties acknowledging the proceedings. Moreover, we are not aware of any large-scale joint or representative action ever being brought for consumer or product liability claims.

Apart from this, the 2013 amendments to the Civil Procedure Law also allow qualified parties, such as national or provincial-level consumer interests and rights protection organisations, to represent groups of consumers in 'public interest litigations' against defendants of product defect claims. In practice, neither joint actions nor public interest actions for automotive product defects are commonly seen. Claims involving numerous consumers are primarily settled through public recall actions under the supervision of the Chinese government, or filed against manufacturers and sellers on a case-by-case basis.