‘San Bao‘ or Three Guarantees is part of a consumer protection plan that was set down by the government to protect consumers, it gives protects consumers with three simple guarantees: ?? (Bao Xiu – Repair) ?? (Bao Huan – Exchange) and ?? (Bao Tui – Return), the consumer and the manufacturer have the right to choose from one method when dealing with defective goods, except until October 1st 2013 the automotive industry was not covered by the San Bao guarantee.
Stories of defective automobiles from all manufacturers involved in China, both domestic, international and imported have been commonplace over the past decade with consumers left with little choice but to repair their cars at their own cost if manufacturers believe that the cars are not defective, under the new rules consumers will be given a greater level of protection within 60 days of purchasing the said vehicle.
Demands for consumer protection within the auto industry have long been talked about since the automotive industry became a pillar industry for the Chinese economy. On January 1st 2013 the long winded General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) announced its outline for the San Bao framework:
1. Change of Vehicle
If the same error/issue with the car appears more than five times after repair, then consumers are entitled to swap for a new car which is within a 2 year or 50,000km period, if the total time of repairs goes over a combined 35 days then consumers are entitled to a new vehicle.
2. Return of Vehicle
If the engine has been changed more than two times, consumers can return the car, or if a serious safety issue arises or if the engine and transmission been changed more than 2 times or if issues with the steering, braking, suspension, front/rear axle, which include changing the said parts more than two times then consumers are entitled to return their vehicles. If the manufacturer does not have the same vehicle to offer, then they are indebted to the consumer and must settle via other means.
If the period of repair exceeds 5 days, the manufacturer must be offer a back up vehicle for use. If issues appear during the San Bao period consumers have the right to free repair, including parts and labor costs.
The Chinese automotive media seems to be reporting on two clear angles with regards to San Bao implementation, on one hand they are almost giddy about the protection offered to consumers on big ticket items and on the other hand they are reporting on the damage this could do the Chinese auto industry, especially domestic manufacturers that do not have the highest quality or highest levels of services.
Manufacturers have been rushing to promote their support of the new San Bao measures with GM announcing last week that they would offer extended warranties to all cars made within a certain time period in China and would offer unlimited mileage warranties to Cadillac buyers. Volvo’s orignal offering of 4 years, 80,000km warranty has been updated to 4 years lifetime warranty. BYD, Chery and other domestic manufacturers have all been seen to promote improved warranty conditions ahead of the official implementation on October 1st this year.