Anti-dumping duties in Europe force shift in export market

A Lastest News about Sourcing in China

Last updated: 26 Apr 2011

China suppliers in affected industries are diverting their focus from the EU to countries not likely to launch anti-dumping investigations.

Instead of finding ways to battle EU anti-dumping duties, many small and midsize China manufacturers are shifting their focus to other markets and implementing alternative measures to circumvent the levy. Although the majority of these suppliers do not join larger enterprises in filing countersuits against anti-dumping investigations, the fact that very few claims are won is discouragement enough.

In the bicycles industry, makers have had to contend with anti-dumping duties for the past 17 years. The levy started at 30.6 percent and has since escalated to 48.5 percent. Many companies were very active in defending their prices, but not one has won even after six appeals.

As a result, exports of finished bicycles to the EU began dwindling in recent years. Many suppliers are targeting the US, Canada, Japan and South Korea instead. Among these are Tianjin Feita Bicycle Co. Ltd and Hangzhou Great Bicycle Co. Ltd. Tianjin Feita diverted its focus to Japan and South Korea in 2000. Hangzhou Great, meanwhile, exports to South America, the Middle East, East Asia and Africa.

Those that continue to cater to the EU charge higher prices or export bicycle parts and components instead. A few manufacturers also work with their buyers to source more than 40 percent of parts and components from the EU to qualify for exemption from anti-dumping duties.

Although small and midsize companies contribute only 30 percent to China's total overseas sales, they account for about 80 percent of the country's export manufacturing base.

Counter measures

Regardless of product or initiating country, trying to prove China's prices do not hurt the local industries in the affected market is the primary step suppliers take when responding to anti-dumping investigations. Companies fill out questionnaires and provide financial data to prove there is no basis for the allegations.

The ceramic industry, for instance, is facing another round of anti-dumping investigation from the EU committee. These came after five consecutive cycles of being sanctioned with duties. Lan Wei Bing, director of China Ceramic Industry Association's Foshan office, said 30 companies attended the hearing in June and answered the questionnaires.

The committee will then determine whether the respondents will be slapped with the full duty or be levied with a weighted average tax rate.

Proving prices of China-made products are based on market forces sans governmental and any other external interference is another counter measure. At present, China is still not granted market economy status and so export prices are compared with domestic prices at a third country. For the EU, this often means the US is used as the reference country.

For the ceramics industry, this practice can result in anti-dumping duties reaching 430 percent. As such, suppliers have to prove their prices are not kept artificially low. By doing so, the EU committee would then be able to assess export prices against the company's financial data and cost structure, and not with a reference country.


This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

Posted: 11 October 2010, last updated 26 April 2011

See more from Sourcing in China

Expert Views    
How to Speed Up Your China Business   By Sara Cheng, Consultant
Hot Tips    
How To Get Your Money Back From Clever China Cheaters...   By China Fraud Patrol
Due diligence on Chinese Companies   By Sara Cheng, Consultant
Latest News    
Makers unperturbed by weaker euro   By Global Sources
Solar panel makers boost polycrystalline silicon industry   By Global Sources