Friday, November 6, 2015

Opinion: Don't panic, Volkswagen!

Despite the harsh criticism threatening Volkswagen in Europe and America, DW columnist Zhang Danhong, in an open letter to VW, expresses confidence that Chinese car buyers will stay loyal to the brand.
Symbolbild Autos deutscher Herstellung in China
Dear Volkswagen Group,
I know you're having a tough time right now. At the moment, you're the bad guys, the target of concentrated media attention of the least desirable kind: You're the scandal of the day. Journalists are working overtime on articles, op-eds and analyses, covering the full gamut of speculation about what the implications of your diesel emissions scam might prove to be.
And there's plenty to speculate about. Even the company's possible bankruptcy has been mooted! Two things could lead to your demise: Car buyers could boycott your brand, or class-action lawsuits in the USA could wipe out your balance sheet. As a side effect, the cherished reputational capital of "Made in Germany," built up over generations, could be dragged into the abyss along with VW's brand. I can well understand the doom-and-despair mood in Wolfsburg at the moment.
But: Chin up, VW! You won't go over a cliff. Your salvation has a name: China. First, because the Chinese market - your most important market - is hardly affected by the diesel emissions scam. Second, because as a German company, you've been profiting for years from the grand mythos of Germany that prevails in China, and you'll continue to do so.
I've explored in a previous column the reasons why Germany is economically successful - and why many Chinese idealise Germany as a nearly corruption-free political-economic nirvana. Scandals like the interminable delays and screwups associated with the construction of BER, the new Berlin airport, haven't tarnished Chinese faith in German virtues. On the contrary: Some Chinese actually see the controversy around such phenomena as a sign of the strict supervision and sense of responsibility of the country's supervisory boards.
VW-Werk in Shanghai, China
This time around, you'll be able to count on the Chinese once again. The auto industry expert Zhong Shi, who is very well known in China - he's Ferdinand Dudenhöffer's Chinese equivalent - indirectly expressed his empathy for your emissions scam. As he sees it, VW overtook Toyota as the world's biggest-selling automotive group in the first half of this year, a corporate goal it achieved three years ahead of VW's target date for that marvellous milestone. To keep its nose ahead, VW, according to Zhong, had to drastically increase sales of diesel automobiles in North America. This explained, in his view, why the Germans sought to achieve a sales breakthrough with a bit of trickery. The means justified the ends: The fact that VW absolutely wanted to become Number One in the world - and stay Number One - impresses the Chinese hugely. After all, anything else would be second-class - and Germans don't do second-class.
It's the Americans' fault
Zhong also came close to suggesting the strict emissions standards in the USA were co-responsible for your disaster. He said: "Even though VW has advanced emissions control technology, it's nevertheless difficult to meet California's clean-air standards. That's why VW came up with the idea of using software to manipulate emissions test results."
Others were more direct. "If the Germans can't meet the standards, then the standards are simply unrealistic," wrote a Chinese commenter.
For many Chinese, Americans are the incarnation of evil. In the same way they've been trying to trip up China on its way to world leadership, they've also been using underhanded methods to undermine their competition. "Last year they weakened Toyota; this year it's VW's turn," wrote a commenter on Weibo, China's version of Twitter, referring to a 2014 controversy in the US alleging sticky throttles on Toyotas.
Zhang Danhong
DW columnist Zhang Danhong was born in Beijing and has lived in Germany for more than 20 years.
Once VW has been cast in the victim's role, all restraints on the sympathy of the Chinese for Volkswagen are unbound. An editorialist from the respected Caixin Group, a financial and business media service, rejected the use of the term "swindlers" in reference to VW, used the word "cheating" in reference to your scam only in quotation marks, and went on to say that if you did indeed "cheat", then surely it will turn out that everyone did so.
I expect you'll be so moved you'll break out in grateful tears when I reveal his concluding remarks: The US Environmental Protection Agency, he pointed out, had actually only asked for an explanation from your company asking why the diesel emissions test results measured in the laboratory were different from the emissions measured under road-driving conditions. But Volkswagen immediately admitted the existence of the deceitful software: "That's how honest the Germans are!"
This distortion of the facts went too far even for some Germany-loving Chinese. "Quite honestly, they (VW) committed a fraud on the world," a commenter posted in response to the Caixin piece.
The Japanese shouldn't get their hopes up
Yes, the image of honest and trustworthy Germans may have taken something of a hit even in China. But Asians' deeply rooted preference for German products won't change much, in the view of auto industry observer Zhong Shi. Your cars are unavoidable in the Middle Kingdom: in the first eight months of this year, six VW models were among the top 10 highest-selling cars in China. You needn't worry that large numbers of Chinese will turn away from your brand because of the emissions scandal. They'll stay true to you - not least because of a lack of plausible alternatives, because for many Chinese, buying a car from the despised Japanese simply isn't an option.
With China in the bag, you've already won half the upcoming battle. With the money earned there, you'll be able to pay the American lawyers attacking you with class-action lawsuits, and deal with the outlandish settlements they'll demand. Beyond that, you know from the experience of the tobacco companies that the German state won't allow a major tax revenue source to dry up.
The moral outrage will ebb away as well - after all, the media will soon discover some other scandal or controversy to hype and obsess over. And so I repeat: Chin up, Volkswagen! Things will work out after all.
Zhang Danhong
Zhang Danhong was born in Beijing and has lived in Germany for more than 20 years.
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