The U.S. Department of Commerce has imposed preliminary antidumping penalties on certain color television sets imported from the People's Republic of China (PRC).
The ruling came after a petition was filed last May by Tennessee-based television manufacturer Five Rivers Electronic Innovations and two labor unions, and it imposes antidumping duties between 28 percent to 46 percent, effective Dec. 1. The petition sought antidumping duties on tube-based direct-view color televisions 21-inches and larger of up to 84 percent for certain Chinese manufacturers and up to 46 percent for certain Malaysian TV makers.
The Commerce Departments' preliminary ruling omitted duties on imports from Malaysia but targeted the largest Chinese manufacturers, including Sichuan Changuhong Electric Co., TCL International Holdings Ltd and Konka Group Co.
In the ruling, the department said Sichuan was exporting at a dumping margin of 45.87 percent, TCL at 31.35 percent and Konka at 27.94 percent. Others included: Starlight (40.84 percent), Philips (40.84 percent), Haier (40.84 percent) and Hinenser (40.84 percent).
The news was not surprising to a number of vendors of Chinese goods contacted by TWICE.
"We have been preparing for this since June," said Lee Schoenfeld, sales and marketing VP for Prima Technologies, which handles sales for Advent/Jensen-branded sets produced at China's Xoceco factory, which was cited with a 31.7 percent dumping margin. "All of our Advent and Jensen CRT HDTV ( 27-34 inches) and future projection HDTV, will be produced in the U.S.A. We have already begun the process of prototype testing in the U.S.A. factory, and will be shipping to the mass market in May or earlier, in synch with our retailers' transition plans."
A spokesman for Thomson, which recently announced a merger with TCL International Holdings to form the TCL-Thomson joint venture, said the decision "changes nothing" with regards to Thomson's strategy in China. He added, "Thomson strongly supports the development of international trade, and is opposed to any practices that would hamper this goal. We therefore do not see anything positive for Thomson from the preliminary ruling."
Thomson's agreement with TCL gives the Chinese manufacturer access to Thomson's factories in Mexico and other locations, which it could use to build TV sets for the U.S. market to skirt the dumping measures.
Jay Srivatsa, principal analyst for consumer electronics with iSuppli/Stanford Resources, said the dumping measure would likely have Chinese manufacturers scrambling to seek out partnership alliances with other CE company's, in a fashion similar to the Thomson/ TCL joint venture. That's because companies that build TVs in Mexico and other sites are not subject to tariffs.
Through the preliminary ruling, U.S. importers of Chinese television sets will have to start depositing money in an escrow account with the U.S. government equivalent to the margins of dumping.
The Commerce Department defines dumping as the sale of products at a price below the home-market or a third-country price, or below the cost of production. The dumping margin is the price difference expressed as a percentage of the export price.
In its procedure, the Commerce Department first announces preliminary antidumping duties and then follows with final duties. The department is expected to issue a final ruling April 12, 2004. If the ruling is maintained at that time, and the U.S. International Trade Commission also finds evidence of damage to the U.S. manufacturer, the antidumping penalties will be finalized.
According to a statement from Five Rivers, the International Brotherhood of Electrical Workers (IBEW), and the Industrial Division of the Communications Workers of America (IUE-CWA), PRC and Malaysia TV manufacturers have been unfairly dumping goods in the U.S. market, "severely undercutting the U.S. television manufacturing industry and its workers."
According to the petitioners' statement, Commerce investigators found that "critical circumstances" exist, making the duties retroactive 90 days. A finding of "critical circumstances" refers to import surges that occur prior to the announcement of antidumping duties in an attempt to "beat the clock" and avoid the duties.
"We are pleased that Commerce's investigation concurred with what we have observed in our market for the last few years with respect to China," Five Rivers' president Tom Hopson said in a formal statement. "We expect that Commerce's further investigation and final determination will result in duties on CTVs from Malaysia."
According to Five Rivers, its unfair trade petition tracked imports between 2000 and 2002. "The data reflect that total CTV imports from both countries between these years skyrocketed from 209,887 units to 2,656,456 units in 2002, an explosive 1,166 percent," the company's statement said. Import penetration rose 10-fold during the same period.