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No Likely Winners In China TV Dumping Case

So the TV dumping case against manufacturers in China has been settled.

In the wake of a finding by the International Trade Commission (ITC) that the importation of unfairly low-priced, over-20-inch analog and digital direct-view and projection color TVs (excluding flat-panel) has injured the domestic industry (such as it is), the International Trade Administration (ITA) has assessed dumping penalties ranging from 4.35 percent of value to a whopping 78.45 percent on Chinese-made sets.

But the question is: will this bring any significant relief? History says probably not. In setting the penalties, the ITA said that as China’s economy is government-controlled, it could not use the usual standard of comparing home market pricing against export-to-United States pricing. Instead it looked to what the Chinese makers get for exports to other nations, and in this case picked what they charge for TVs sold to India.

The lowest margin was assigned to sets from Xiamen, the highest to unnamed manufacturers who did not respond to ITA questions. Most companies, including Haier Electric and Philips of Suzhou, were hit with 21.49 percent margins. Konka came in at a lower 11.36 percent. The margins represent the amount of antidumping bonds that have to be posted on imports when they enter this country. The actual final assessments cold be higher or lower.

The chief complainant in the case was Five Rivers Electronics, which purchased and runs the former Philips/Magnavox plant in Greenville, Tenn. When I visited about five years ago, it was assembling digital color TVs for Loewe and projection sets for Philips and Samsung. The petition was also supported by unions (IBEW and CWA).

The situation has a familiar ring. I spent more than 20 years covering color TV dumping cases after domestic TV and parts makers and unions pressed first against imports of TVs and chassis from Japan and later from Korea and Taiwan. The only company excused from the case was Sony, which rather than underselling U.S. producers, was getting premium pricing for its TVs.

While Taiwanese manufacturers just about dropped out of the U.S. market, the major Japanese and Korean companies reacted by setting up color assembly plants in the U.S. But rather than help resolve anything, that only further complicated matters.

The exporters were shipping chassis and subassemblies to their plants here, and that raised the question of at what stage is an assembly of TV parts the equivalent of a TV. The arguments and counter arguments raged for years before a set of standards was established. And to further protect the U.S. industry, annual unit shipment quotas, by country, were set on color TV imports.

The years of wrangling, the dragging of assessments through the courts and other complexities kept Customs from ever collecting any significant penalty duties, and despite the quotas, which were supposed to insure a fair share of the market for domestically-owned set makers, the U.S. industry collapsed.

So who, if anyone, will benefit from the China dumping case? History says that in the long run, nobody. Dutch, Korean and Japanese makers in Mexico may find competition easing a bit. But digital TVs are getting cheaper and that puts further pressure on analog pricing. Also, high volume retailers, including Best Buy, Circuit City, Sears and Wal-Mart, will continue to demand sharper deals from vendors. And you know as well as I that no matter what those key customers insist on, there will always be manufacturers willing to meet their pricing demands.