Administrative Regulation on the Recall of Defective Motor Vehicles

Chapter I          General Provisions

 

Article 1.     This regulationis formulated in accordance with Law of the People’s Republic of China on Product Qualityand other relevant laws, for the purpose of strengthening management of the recall of defective motor vehicles, eliminating any unreasonable risks of human injuries and property losses caused by defective motor vehicles, protecting public safety and interests, as well as maintaining social and economic order.

Article 2.     This regulation applies to any person or entity manufacturing, importing, selling, leasing or repairing motor vehicles within the territory of the People’s Republic of China.

Article 3.     Manufacturers (Importers) of motor vehicles shall perform the obligation of recalling their defective vehicles in accordance with this regulation, and shall bear costs of remedying defects and necessary transportation fees thereof. Sellers, lessors and repair agents shall assist manufacturers to implement their recalls.

Article 4.     In the event that a defect as defined in article 5 of this regulation is determined in their vehicles, manufacturers shall follow the voluntary or mandatory recall procedures as stipulated in Chapters V and VI of this regulation, to conduct recall of defective vehicles.

This regulation shall be applicable to each different category of vehicles in phases, depending on the requirements of the nation’s economic development and the administrative policies of vehicle industries.

Manufacturers are encouraged to recall their products bearing other quality problems than the defects defined hereunder in light of specifications of this regulation.

Article 5.     “Motor Vehicle” referred to in this regulation, as defined in the corresponding National Standards, stands for a road vehicle carrying passengers or goods, and driven or drawn by mechanical power.

“Defect” referred to in this regulation stands for any unreasonable risk,resulted from inadequate design, manufacture errors or any other reasons, to humanor property safetythat commonly exists in a certain serial, model or type of vehicles, and/or any noncompliance with safety requirements of relatedNationalStandards.

“Manufacturer” referred to in this regulation stands for any enterprise registered within the territory of China manufacturing or assembling motor vehicles and issuing qualification certificates itself, as well as any foreign manufacturer who has its vehicles sold into the territory of China.

“Importer” referred to in this regulation stands for any enterprise that imports motor vehicles from abroad into China. An importer shouldbe equally regarded as a manufacturer.

“Seller” referred to in this regulation stands for any enterprise that sells motor vehicles, collects sale proceeds and writes receipts.

“Lessors” referred to in this regulation stands for a natural or legal person, or other organization that leases motor vehicles to others and collecting rent for business purposes.

“Repair agent” referred to in this regulation stands for an enterprise or an individual that provides repair or maintenance services on motor vehicles.

Manufacturers, importers, sellers, lessors and repair agents referred to in this regulation shall be generally entitled as “operators”.

“Owner” referred to in this regulation stands for a natural or legal person or any other organization, who does not put resale as the purpose, but holds the legal right of owning and/or using the motor vehicle.

“Recall” referred to in this regulation stands for the process that the manufacturer (including importers, same below) follows the procedure stipulated in this regulation,by means of repair, replacement, refund, etc., to remedy defects existing in its motor vehicles that may cause human injuries or property losses.

 

Chapter II  Administration of Recallof Defective Motor Vehicles

 

Article 6.     The General Administration of Quality Supervision, Inspection and Quarantine namely AQSIQ (hereinafter referred to as competent department) shall be responsible for the organization and administration of the recall of defective motor vehicles throughout the country.

The State Development and Reform Commission, the Ministry of Commerce, the General Administration of Customs and other related departments of the State Council shall cooperate with the competent department in carrying out the administrative work on the recall of defective motor vehicles within their respective scope of responsibilities.

The quality and technical supervision authorities in each province, autonomous region and municipality, and the inspection and quarantine authorities directly under AQSIQ (hereinafter referred to as “local authorities”) shall be responsible for monitoring the recall of defective motor vehicles in their respective administrative regions.

 

Article 7.     The recall limitation of defective motor vehicles shall be from the date of their delivery to the first owners to the end of their safe use term as explicitly stated by the manufacturer. For the motor vehicle when the safe use term is not explicitly stated by the manufacturer, or the safe use term stated by the manufacturer is less than 10 years, the recall limitation shall be 10 years from the date of its delivery to the first owner.

The recall limitation of safety-related wearing parts of motor vehicles shall be the safe use term explicitly stated by the manufacturer. The recall limitation of tires is 3 years from the date of their delivery to the first owner.

Article 8.     Any one of the following situations shall be deemed as a defective motor vehicle:

(1)                 A noncompliance with safety-related requirements in technical regulations and/or National Standards is determined in motor vehicles as a result of an inspection carried out by an inspection agency; and/or

(2)                 Human injuries or property losses occurred to owners or other people due to the inadequate design and/or manufacturing errors; and/or

(3)                 Though no human injuries or property losses have ever occurred, on the bases of testing, inspection or verification, such defects may potentially cause human injuries or property losses under certain circumstances.

Article 9.     Two applicable procedures shall be adopted on the recall of defective motor vehicles, namely voluntary recall by manufacturer themselves and mandatory recall imposed by the competent department.

In case that a manufacturer discovers by itself or acknowledges the defects via its internal information system, or via the reports and complaints submitted by sellers, repair agents, owners and/or any other parties, or via notifications by the competent department, it may conduct the voluntary recall following filing the recall plan with the competent department, according to the provisions on the voluntary recall in this regulation.

 

In case that a manufacturer is aware of a defect but rejects toconduct a voluntary recall, or isrevealed to disguise the fact of the defect, or handles the defect in an inappropriate manner, the competent department shall request the manufacturer to conduct a recall according to the provisions on the mandatory recallin this regulation.

 

Article 10.  The competent department in conjunction with the departments concerned of State Council shall establish an information system with the function of collecting, analyzing and processing information on defective motor vehicles. Operators shall submit information on defects of motor vehicles to the competent department and theinformation system.

Article 11.  The competent department shall invite experts and setup a panel. The function of the panel is to carry out necessary investigation and make determination ondefects of motor vehicles.Upon recommendation of the panel, the competent department may entrust an accredited quality inspection agency to conduct tests on defects of motor vehicles. The panel shall report to thecompetent department.

Article 12.  The competent department shall supervise the process of recall. It can also delegate local authorities to carryout relevant supervision work if necessary.

Article 13.  Manufacturers or the competent department shall publicize the information on defects and recall via the media appointed by the competent department.

Article 14.  The information on defects and recall provided by the information system and the appointed media shall be objective, impartial and integrative.

Article 15.  The competent department, the local authorities, the panels, the inspection agencies, as well as their staff involved in the work of investigation, verification and inspection shallobserve the principles of impartiality, objectiveness, fairness and legality. They should also keep confidential about the information on technologies of the relevant enterprises, and on the relevant defects investigated and tested. The relevant information shall not be released without permission of the competent department.

 

Chapter    III    Obligation of Operators and Related Parties

 

Article 16.  The manufacturers shall, according to requirements of the National Standards Road Vehicle Identification Numbers (VIN)(GB/T16735-16738),mark the permanent VIN on each vehicle manufactured, and shall create and keep the records on the vehicle and itsowner. The above-mentioned materials shall always be filed at the agency appointed by the competent department (See Appendix 1).

Manufacturers shall set up a management system tocollect information on quality problems of their products and to analyze defects. The relevant records shall be maintained as well.

Manufacturers shall set up a system of launching motor vehicle technical service bulletins, on which methods on vehicle trouble-shooting, maintenance and repair shall be described, so as to offer services to owners, sellers and repair agents. These technical service bulletins shall be submitted to the agency appointed by the competent department for filing.

Manufacturers shall cooperate with the competent department in the investigation on any potentialdefects in their motor vehicles. They should provide related materials required, and assist in carrying out necessary tests.

Manufacturers shall report to the competent department defects of their motor vehicles, and shall not be allowed to handle defects in any inappropriate manners.

Manufacturers shall provide owners, sellers and lessors with documents prescribed in Appendix 3 and 4 of this regulation, so as to enable them to report when defects appear.

Article 17.  Sellers, lessors and repair agents shall report to manufacturers and the competent department information on any suspect defects. They should cooperate with the competent department to carry out relevant investigations, provide necessary materials and work together with themanufacturer in recall of the defective motor vehicles.

Article 18.  Owners are entitled to complain or report to the competent department and relevant operators any suspectdefects in motor vehicles, and to make recommendations on carrying out a defect investigation.

Owners shall positively co-operatewith the manufacturer in the recall of defective motor vehicles.

Article 19.  Any organization or individual is entitled to report to the competent department and/or local authorities suspectdefects in motor vehicles.

Relevant organizations and individuals shall offer their cooperation when investigation on apotentialdefect is carried out by the competent department.

 

Chapter IV      Defect Report, Investigation and Determination

 

Article 20.  Manufacturers shall submit a report in written form (see Appendix 2) to the competent department upon the determination of defects in theirmotor vehicles within 5 working days. Meanwhile, the manufacturers shall within 10 working days informtheir sellers in an effective way to stop sales of defective motor vehicles, and inform them contents of the report. For manufacturers located outside the territory of China, they shall within 10 working days inform their importers to stop importing the defective motor vehicles, and inform the Ministry of Commerce and the importers contents of the report.

Sellers, lessorsand repair agents shall immediately submit a report in written form (see Appendix 3) to manufacturers and the competent department upon being aware of any suspect defect, or receiving any owner’s complaint on suspect defects.

Owners may submit a complaint or a report (see Appendix 4) in an effective way to sellers or the competent department when suspect defects are found in their motor vehicles.

Other organizations or individuals should submit a report to the competent department upon being aware of suspect defects taking reference of the above-mentioned contents and format.

Article 21.  Upon receiving of the report on defects of motor vehicles submitted by the manufacturer, the competent department shall handle the case according to the voluntary recall procedure stipulated in Chapter V, premised that the report meets the requirements in Appendix 2.

Article 22.  Based on the analysis, reports and suggestions provided by the appointed information system, the competent departmentwhen considers necessary, may convey the information on defects to the manufacturer in written form and request the later to confirm the defects and the necessity to conduct a recall within a limited time of period.

Article 23.  Upon receiving the notice from the competent department as describedin Article 22 and determining the existence of defects in motor vehicles, the manufacturershall submit a report (as set out in Appendix 2) within 5 working days to the competent department and conduct a recall in accordance with the voluntary recall procedure stipulated in Chapter V.

In casethe manufacturer is able to testify that itsmotor vehiclesneed not to be recalled, itshall provide the competent department witha detailed report of evidence.The competent department shall continue the follow-up investigation.

Article 24.  In case the manufacturer cannotprovide adequate evidentiary materials in their reports as stated in Article 23, orthe materials provided cannot fully prove that no defect exists inits motor vehicles, and the manufacturer is not willing to conduct a voluntary recall, the competent departmentshallorganizean expertpanel to conduct an investigation and verification, while the manufacturer maysendits representative for explanation.

The competent departmentmayentrusta quality inspection agency to conduct test and inspectionon the motor vehicles concerned when it considers necessary.

Once the competent department confirms that a defect is existing based on the report of the expert panel and the testresult, it shall notify the manufacturer in written form of conducting a voluntary recall. The corresponding costs for verification, test and inspection shall be covered by the manufacturer. If the manufacturer refuses to conduct a voluntary recall, the competent department shall demand the manufacturer to initiate a recall according to the mandatory recall procedure stipulated in Chapter VI.

 

Chapter V         Procedures for Voluntary Recall of Defective Motor Vehicles

 

Article 25.  Upon determining the existence of a defect on motor vehicles and deciding to implement a voluntary recall, the manufacturer shall report to the competent department in accordance with Article 20 or 23, anddevelop a recall plan containing the following basic contents,and have it filed with the competent department:

(1)                 effective measures to stop producing the defective motor vehicles;

(2)                 effective measures to notify sellers to stop the wholesaling and retailingof the defective motor vehicles;

(3)                 effective notification to relevant vehicle owners of the actual details of defects, and time, place and measures for handling the defects;

(4)                 objective and fair evaluation of the recall results.

Overseas manufacturers shall provide specific ways on how they will inform the importers to stop importing the defective motor vehicles.

Article 26.  While providing the plan for filing with the competent department, manufacturers shall immediately notify the relevant importers, sellers, lessors, repair agents and owners of the defect, any damage that may cause, measures of prevention and the recall plan. They shall also notify the sellers to stop sales of and the importers to stop import of the defective motor vehicles.  Manufacturers shall furnish a hotline telephone service to answer queries from the public, and publicize information on the defect at the website designated by the competent department.

Article 27.  Within one month following the submission to the competent department the report as set out in Appendix 2, the manufacturer shall draw up a notification based onAppendix 5, and submit it to the competent department for filing, at the same time circulate it to the sellers, the lessors, the repair agents and the owners, so as to start the implementation of the recall plan.

Article 28.  Within one month following the fulfillment of the recall of defective motor vehicles, the manufacturer shall submit a summary report of the recall to the competent departmenton the basis ofAppendix 9.

Article 29.  The competent department shall supervise the voluntary recall actions taken by the manufacturer, and evaluate the recall results.

In case that the competent department considers the recall conducted by the manufacturer has not achieved the predicted results, it can urge the manufacturer to repeat the recall campaign, or to take other legal remedy measures.

 

Chapter VI                  Procedures for Mandatory Recall of Defective Motor Vehicles

 

Article 30.  In case that a defect is confirmed inmotor vehicles following an investigation, inspection and verification, and the manufacturer refuses to conduct a recall,  the competent departmentshall immediately issue a mandatory recall notice to the manufacturer (see Appendix 6). The State Administration for Supervision of Certification and Accreditation shall urge the certification body to suspend or withdraw the certificate of mandatory certification of motor vehicles. For defective motor vehicles produced overseas, the competent department shall,in conjunction with the Ministry of Commerce and the General Administration of Customs, issue a circular for the suspension of import. The customs administration shall cease customs clearance for the defective motor vehicles. For defective motor vehicles that already on the way to China or have already arrived at the customs of China but haven’t completed customs clearance at the time when the suspension notice is issuing, the importers shall go through the shipment reject procedures in accordance with the relevant customs regulations.

The competent department shall decide on the basis of severity of defects and the degree of urgency of elimination of defects, whether a public notice should be issued relating to the defects existing in the motor vehicles, the method of avoiding damagesin case of emergency, as well as other relevant information.

Article 31.  When receiving the mandatory recall notice from the competent department, the manufacturer shall within 5 working days, notify the sellers to stop selling thedefective motor vehicles, and then within 10 workingdays, inform thesellers and the owners about the competent department’s notice concerning defects in the motor vehicles.Overseas manufacturers shall with 5working days, inform the importers to stop importing the defective motor vehicles as well.

In case of disagreement withthe competent department on its specific administrative actions including its decisions, the manufacturer may submit an application for  anadministrative reconsideration or appeal. During the period of theadministrative reconsideration or appeal, the recall actions stated in the competent department’s notice may notbe temporarily conducted. However, obligations specified in the previous clause shouldbe implemented by the manufacturer.

Article 32.  Within 10  working days from the date of receiving the mandatory recall notice from the competent department on defective motor vehicles, themanufacturer shall submit a plan as required in Article 25 to the competent department.

Article 33.  The competent department shall, within 5 workingdays from the date ofreceiving the manufacturer’srecall plan for the defective motor vehicles, notify the manufacturer result of the review.

In case that the recall plan is approved by the competent department, the manufacturer shall, within one month from the date ofreceiving the approval, draw up a recallnotification on the basis of Appendix 5 in accordance with the recall plan approved,and have it circulated to the sellers, lessors, repair agents and owners, as well as have it filed with the competent department. This recall notification shall be publicized on newspapers and periodicals designated by the competent department for three consecutive issues, and keptavailable onthe websites designated by the competent department during the whole period of the recall campaign.

In casethat the recall plan is not approved by the competent department, the manufacturer shall make amendments in consideration of the opinion made by the competent department, and submit the amended recall plan to the competent department within 10working days from the date of receiving the disapproved notice,  until finalapproval by the competent department.

Article 34.  The manufacturer shall commence the recall of the defective motor vehicles from the date of issuing the recall notification, and complete it within the planned period of time.

If for legitimate causes the manufacturer failed to complete the recall within the planed period of time, it shouldsubmit an application to the competent departmentforpostponing the deadline of recall.The competent department mayconsider the request of the manufacturer and grant a permission of postponement.

Article 35.  From the date of issuing the recall notification, the manufacturer shall submit a phase report to the competent department concerning the recall progress once every 3 months according to the requirements specified in Appendix 7. The competent department may, on the basis of the actual result of the recall, determine whether or notthemanufacturer needs to take more effective measures to conduct the recall.

Article 36.  For each recalled defective motor vehicle,the manufacturer shall make and maintain a record as specified in Appendix 8. Suchrecord shall be made in duplication, one for theowner, and the other for the manufacturer.

Article 37.  The manufacturer shall submit a summary report (see Appendix 9) to the competent department  within one month following completion of the planed recall.

Article 38.   The competent department shall review the summary report on the recall submitted by the manufacturer, and notify the latter in written form the conclusion of the review within 15 working days. This conclusion shall be open to the public.

In casethe competent departmentconsiders that the recall conducted by the manufacturer does not achieve the expectedresult, it may urge the manufacturer to take remedy measures and conduct the recall again.

In case of disagreement withthe competent department on its conclusion of the review, the manufacturer may submit an application for an administrative reconsideration or appeal. During the period of theadministrative reconsideration or appeal, the manufacturer may temporarily not implement the decision of the competent department.

Article 39.  The competent department shall timely publicize the information concerning the defective motor vehicle recalls conducted by manufacturers in the territory of China and the conclusions of the review on the recalls, and make the information availableon designated websites.

The competent department should convey related messages concerning recalls of imported defective motor vehicles to the Ministry of Commerce and the General Administration of Customs.

 

Chapter VII       Penalties

 

Article 40.  For thosemanufacturers who violate the provisions in clauses 1, 2, 3 and 4 in Article 16 and fail to undertake the relevant obligations, the quality supervision, inspection and quarantine departmentsshallurge themto correct their actions and give warnings thereof.

Article 41.  For those sellers, lessors orrepair agents who violate the provisions in Article 17 and fail to undertake the relevant obligations,  the quality supervision, inspection and quarantine departmentsmay consider togive themwarnings and urge them to correct their actions depending on the violation situations. Where the situation is serious,  a penalty from RMB1,000 to RMB5,000 may be fined.

Article 42.  In case of any of the following situations, the competent department may urge the manufacturer to repeat its recall, andmay issue a circular of criticism and ask the quality supervision, inspection and quarantine departmentsto impose a penalty of fining RMB10,000to RMB30,000:

(1)                 The manufacturer intends to conceal the severity of the defect;

(2)                The manufacturer attemptsto escape from the supervision of the competent department in any inappropriate manner.

(3)                 Damages or injuries occurred repeatedly due to the manufacturer’s faults causing the failure of achieving the expected objective of the recall.

Article 43.  Administrative agencies and their employees engaging in management of defective motor vehicle recalls, as well as personnel entrusted by these agencies to make defect investigations, inspections and determinations, who practice favoritism and conduct malpractices, or violate confidentiality obligations, shall be subject to an administrative sanction. For those persons who bear direct responsibilities, and practice favoritism, conduct malpractices, take bribes, bend the law andcommit crimes,criminal responsibilities shall be investigated in accordance with law.

For those experts who make false testimony, or inspectorswho provide false testing reports, or those who fabricate and spread false information, their corresponding qualifications shall be revoked. Compensation shall be borne for any damage resulted thereof. Where a crime is committed, criminal responsibilities shall be investigated in accordance with law.

 

Chapter VIII     Supplementary Provisions

Article 44.  The recall conducted by manufacturers will not exempt them from their other legal liabilities requested by owners or victims for damages or injuries caused by defects of motor vehicles.

Article 45.  This regulation shall be interpreted by the General Administration of Quality Supervision, Inspection and Quarantine, the National Development and Reform Commission, the Ministry of Commerce and the General Administration of Customs respectively in their respective scope of responsibilities.

 

Article 46.  Thisregulationshall enter into force as of October 1, 2004.