A saleswoman demonstrates the features of a Samsung washing machine at a store in Nanjing, Jiangsu province.(Photo/China Daily)
Industry insiders fear Whirlpool's petition for U.S. anti-dumping duties on made-in-China washing machines of Samsung and LG could have wider implications
China's washing machine manufacturers should mount a pre-emptive defense in the United States to minimize any potentially damaging impact of the ongoing anti-dumping investigation against imports of large residential washers made in China, industry experts said.
The U.S. Commerce Department had initiated the investigation earlier this month in response to a petition by the Michigan-based Whirlpool Corp, a home appliance maker.
Whirlpool alleged that the products made in China by South Korea's Samsung Electronics and LG Electronics were sold below the fair value of such products in the U.S. market. So, Whirlpool pleaded that anti-dumping duty on such made-in-China products be raised from 68.92 percent to 109.04 percent.
Xu Dongsheng, vice-president of the Beijing-based China Household Electrical Appliances Association, said even though the U.S. investigation seemed to be aimed at the two South Korean brands, it could have a financial impact on Chinese washer makers as well, if the plea for higher anti-dumping duty is considered tenable by the U.S. trade authorities.
Industry insiders said Whirlpool's move appears to be an attempt to safeguard its position in the U.S. market in the wake of the changing market share pattern in the global home appliances industry.
With their superior technical features, user-friendly designs and competitive prices, South Korean and Chinese home appliances makers have been captivating US consumers for some time now, spooking U.S. home appliances makers.
"Under such circumstances, they try to resort to anti-dumping measures and invoke other trade rules to protect their position in the U.S. market. They accuse foreign companies of dumping without concrete evidence," Xu said.
China's washer industry is the "one of the predominant global contributors to the world market but is confronting trade protectionism", he said. "It does not solve the difficulties facing the industry and does nothing to promote healthy development of the home appliances market."
Whirlpool had filed its petition with both the US International Trade Commission and the Commerce Department. Whirlpool makes both top-loading and front-loading washers, and some components for large residential washers, like cabinets, tubs, baskets and drums.
With the advent of advanced technologies that Asian companies use, consumers the world over have been steadily upgrading to higher-end household electrical appliances. Such a trend is inevitable in the washing machine industry too where high-end, large capacity washers have been acknowledged as products for the future, experts said.
But, any anti-dumping duties now on Chinese companies could not only bar access to the US market but jeopardize their growth prospects, they said.
Xu said any anti-dumping duties by the U.S. could encourage other countries to follow suit, sparking a wave of protectionism. From China's perspective, worse things could entail, like Samsung relocating its washing machine factory from Suzhou and LG shifting its Nanjing plant to other countries.
Such a course of events would have implications for the local economy and employment. Samsung and LG currently employ 20,000 workers at the two factories.
To address the situation, the heads of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, and the Trade Remedy and Investigation Bureau at the Ministry of Commerce, met earlier this month.
Zhou Nan, deputy secretary-general of the household electrical appliances branch of the CCCME, said the domestic industry should proactively mount a pre-emptive collective defense in the U.S. It should coordinate its resources and gather information from the government departments, associations, manufacturers and retailers to prove that made-in-China washing machines do not harm the U.S. washer industry.
"Such a defense could help end the ongoing anti-dumping investigation as well as other related probes. Even if the U.S. International Trade Commission rules in favour of anti-dumping duties, Chinese companies can appeal against the ruling lawfully to protect their interest," said Zhou.
In 2012, the U.S. slapped duties on Samsung and LG washers made in South Korea and Mexico after Whirlpool accused that their products were much cheaper in the US or benefited from unfair levels of government support.
Zhi Luxun, deputy director-general of the department of foreign trade at the ministry, said China is increasingly becoming a victim of trade protectionism. Measures by various countries against Chinese products rose significantly between January and November of last year, he said.
As many as 73 trade disputes were filed against Chinese companies between January and November, including 58 anti-dumping cases. These were mainly against the country's steel, household electrical appliances, garment and shoe-making industries. They came amid an overall slowdown in the number and value of trade friction cases.
Twenty-one countries and regions, mostly G20 members, initiated investigations against Chinese products, down 24 percent year-on-year.
"Chinese manufacturers from both the State-owned and private sectors have to not only overcome cumbersome issues such as currency exchange rate fluctuations, rising financing costs, fierce competition with emerging countries in low-end product markets, but tackle various cases generated by trade protectionism," said Zhi.
