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Tariffs on Chinese Products: Fair and Square?

May 31, 2012
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A lively discussion is taking place in our LinkedIn group regarding the affects of various countries’ tarrifs on products produced in and exported from China. Yiying Huang, senior sales manager of Mainland Ceramics in China, got the ball rolling with:

Anti-dumping – Bitter for Chinese Ceramics Producers and Exporters in 2012

Due to the influence of anti-dumping investigation, the export-oriented ceramics companies are living bitter days now. From last March, the ceramics products have been under investigation from different countries. The resulting high import tax has led to retreat from markets for many factories and companies. And they are suffering bankruptcy or painful transformation.

In 2012, it has become a normal situation for the producers with 10 kilns just run 6-7 kilns due to poor sales. To survive, some factories are thinking to move the production facility out of China to avoid anti-dumping taxes and to reach out the markets far way such as Africa, east Europe etc.

But both ways are not easy. Moving facilities requires big investment which is not affordable for SMEs. Also many markets have been quite fully developed after 30 years penetration for Chinese companies. 

In 2011, European Union has levied 73% anti-dumping tax against Chinese ceramics tiles. South Korea also end up its case by taxing Chinese ceramics producers and exporters at 9.14% to 29.41%. In addition, Brazil is expected to launch the new anti-dumping investigation against Chinese unglazed tiles at the latter half of 2012.

Andrew Mountford, director of AMR Ltd., has posted several comments, including: “It is a complex issue - 5 companies in China are being used as 'samples' in the comparison of the prices of their tableware in the domestic market compared to the EU. This is based on price per Kg so is utterly ridiculous. Making products (or part making) in other countries, Bill Switching, using incorrect HS codes etc are not always legal or practical. The ADD misses the main point that the retailers in the EU use the equally unfair practice of Loss Leaders to 'dump' in the market.”

Ralph Ruark of Ruark Engineering Inc. (who also serves as CI’s senior technical editor), has also made several comments, such as: “I'm clearly not unbiased here, so take my comments in this context. But over the past ten years I have seen many of my US colleagues lose their jobs, and their lives totally disrupted as much lower cost products arrive here in the US. Our cost structure is not competitive, for a variety of reasons--stringent environmental costs, high labor costs, lack of governmental subsidies, and patent and intellectual property protection, limited or no import tariffs--while manufacturers of other developing countries do not have anywhere near these cost associated with production. So while I sympathize with the pain of a general decrease in output that others are going through, in my country we have endured the progressive decline for a few decades…”

These are just snippets from a sampling of the many insightful comments in this discussion. (To see the full discussion, please visit the Ceramic Industry magazine LinkedIn group page.) What are your thoughts on this topic? Is it time for manufacturers in China to face some of the challenges that are so prevalent in developed regions? 

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