The Chinese auto parts industry, which has not recovered from the crackdown on the United States tire protection plan, faces new challenges.
On May 11, 2010, the European Commission issued a preliminary ruling on China's aluminum alloy wheel anti-dumping case, and decided to impose a nationwide unified provisional anti-dumping tariff of 20.6% on China's aluminum wheel enterprises.
The reporter learned from the Chinese Enterprise Responsible Organization Unit of the China Chamber of Commerce for Mechanical and Electrical Importers and Exporters (hereinafter referred to as the Electromechanical Chamber of Commerce) that on May 20th, domestic relevant departments and enterprises will hold special meetings to communicate and analyze the preliminary rulings of the European Commission, and will Formed a defense opinion submitted to the European Commission.
Chen Huiqing, head of the Legal Service Center of the Electromechanical Chamber of Commerce, told reporters that in accordance with EU regulations, China must submit its defense materials before June 11, 2010, and the final verdict will be announced in mid-November 2010.
In contrast to many previous trade disputes, in this defense, China will mobilize and call for the participation of relevant multinational auto companies in opposing the EU's anti-dumping investigation.
According to a survey by the Electromechanical Chamber of Commerce, the ruling will also have an adverse effect on the global industrial division of labor, layout, and supply chain management of European automotive multinationals. According to Chen Huiqing, at present, most EU multinational companies have expressed their opposition to the preliminary ruling, and further cooperation is still under negotiation.
EU initial anti-dumping duty 20.6%
Automotive aluminum alloy wheels are the largest export volume of Chinese auto parts. The data shows that there are currently 102 aluminum alloy wheels in China. According to the data of 2008, the output of aluminum alloy wheels has reached more than 7,000, and 50% of them rely on export sales.
According to insiders, in the foreign market, the United States has always occupied a major position, but as the financial crisis caused a heavy blow to the US auto industry, the share of the EU market has increased significantly. By 2010, China's aluminum alloy wheels exported to the EU accounted for about 15% of global exports.
The European Union’s anti-dumping investigation on China’s transmission of aluminum wheels to Europe was also officially launched on August 13, 2009, when the financial crisis hit the automotive industry most seriously.
According to the materials provided by the Electrical and Mechanical Chamber of Commerce, after the case was filed, a total of 36 aluminum wheel manufacturers in China submitted sample questionnaires as responding companies, and their export volume accounted for more than 90% of the EU's exports of aluminum wheels. The European Commission has selected four companies, namely the Daica, Wanfeng, Lizhong and Youfa, which have exported the largest number of aluminum wheels to the EU as sample enterprises, and their export volume accounts for 43% of the aluminum wheels exported by the responding enterprises to the EU.
Liu Baoxing, vice president of Hebei Lizhong Wheel Manufacturing Co., Ltd., told reporters that following the filing of the case, according to the European Commission's procedures, Chinese companies including Hebei Lizhong hired lawyers in Brussels, submitted applications for market economy treatment, and Asked to submit a questionnaire to cooperate with the Commission’s on-site investigation.
However, after the European Commission conducted on-site verification of four sample companies, none of the companies obtained market economy status.
According to Chen Huiqing, the main reason is that the European Commission believes that there is state intervention in the transaction price of raw material aluminum.
After nine months of investigations, the European Commission initially rejected the market economy status of all sampled enterprises and decided to impose a nationwide unified provisional anti-dumping tax of 20.6% on my aluminum wheel enterprises.
The European Commission’s preliminary report concluded that cheap imported products from China have also caused the EU manufacturers’ market share and sales prices to suffer. [next]
According to Liu Baoxing's introduction, the products of aluminum wheels in China are mainly divided into two types: after-sale products and accessory products. After-sales products have fewer production companies in Europe, and China is only one of the global purchasing regions. European companies that produce ancillary products have increased production capacity almost entirely since the end of 2009 under the “dumping†offensive of Chinese products. The previous capacity reduction cannot explain the impact of the financial crisis but also the impact of Chinese products.
Related multinational companies will also suffer heavy losses
Under the pressure of initial anti-dumping duties, active defense has become the top priority for Chinese aluminum wheel companies.
According to Liu Baoxing, although the EU imposes an anti-dumping tariff of 20.6%, it is still a temporary tariff, and local EU agents do not have to pay the tariff in cash, and only need to provide a bank guarantee. However, the research and development of new products has already been materially affected. Many customers have chosen to wait and see before the final ruling.
Moreover, if the final ruling of the European Union in September 2010 still maintains the preliminary results, local agents must pay previously guaranteed tariffs, which undoubtedly means that the threshold for entry into the EU market has greatly increased.
What makes Chen Huiqing more worried is the emulation of other countries. "If the United States follows the European Union's anti-dumping duties on China's aluminum alloy wheels, it will be a fatal blow for China's processing companies, because China's wheel exports to the United States are equivalent to more than twice exports to the EU."
According to Chen Huiqing's introduction, among the multinational corporations in the European Union, many car manufacturers including Volkswagen, Mercedes-Benz, Fiat, and BMW have cooperation with Chinese factories. And, in order to pass European strict quality inspections, these multinationals have invested heavily in China in the early stages. Once anti-dumping duties are imposed, these multinational companies will also suffer heavy losses.
Therefore, EU multinationals have also become the main force for the second round of defense against Chinese companies.
According to the materials provided by the Electrical and Mechanical Chamber of Commerce, the domestic aluminum wheel enterprise's defense will focus on the problems existing in the European Commission investigation. For example, during the investigation process, the list of prosecution companies was not published, thus undermining the Chinese defense rights. However, some affiliates of the prosecution did not submit or fully submit the questionnaire responses, and the degree of cooperation was low.
According to Chen Huiqing, because the European Union did not recognize China’s market economy status, in the investigation, Turkey was used as a surrogate country and the data provided by Turkey was used as a benchmark for dumping of Chinese products. However, the substituting countries provided only two companies as cooperative enterprises and provided relevant data, and one of them was the affiliate of the prosecution.
The impact of the financial crisis will also be the focus of defense.
The Electromechanical Chamber of Commerce believes that the European Commission has underplayed the impact of the financial crisis in determining that the EU industry has suffered material damage.
But Stewart Baker, a long-term partner in the US-based Secoel Law Firm, told reporters that an important reason for the high trade friction is that applying for trade friction arbitration requires damaged industries to prove their actual damage to the financial sector. Under the influence of the crisis, it proved easy to damage, but no one can tell whether the loss was from the financial crisis or from imported products.
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