EU Anti-Dumping Against China Will Expire, Will Anti-Dumping Stick Fall Again?

In less than 3 months, the EU's anti-dumping measures on leather shoes will expire in two years.

For Chinese shoe companies, "exhausted" does not mean that they are "willing to come". They are always worrying about whether the EU anti-dumping "big stick" will still be on their heads. There have been reports that the EU may extend the enforcement period of anti-dumping measures.

Two years ago, the European Commission issued a final ruling on dumping of Chinese leather shoes, and imposed a 16.5% punitive anti-dumping duty on leather shoes from mainland China for a period of two years.

This has caused great impact on Wenzhou's leather shoes exports to Europe.

According to relevant statistics, in the first month after the anti-dumping duty, Wenzhou exported the EU leather shoes products compared with the same period last year, the quantity and the value of goods dropped by 48.49% and 45.90% respectively.

At present, the survival environment of Wenzhou shoe enterprises is more severe than that of two years ago. The appreciation of RMB and the rising of raw materials have forced Wenzhou shoe enterprises to find new profit margins and market space. How did the Wenzhou shoe enterprises that have experienced EU anti-dumping measures deal with the "stick" of the EU's repeated anti dumping measures?

In October 4, 2006, when the EU ended its 15 month anti-dumping investigation, it decided to impose a 16.5% anti-dumping duty on leather shoes from China in October 6, 2006.

The deadline is shortened to five years by the EU anti-dumping law.

In September 2007, the EU began to launch an anti circumvention investigation on the export of Chinese leather shoes to Macao.

According to the relevant EU regulations, if the export of leather shoes exported to the EU has been circumventing by Macao, the European Commission will impose anti-dumping duties on such products.

Some European importers have imposed provisional tariffs from the European Union, or require our export enterprises to take part of the tax rate, or gradually reduce orders in China, and turn to neighboring countries such as India, Indonesia and Thailand.

The shoe leather industry is the largest pillar industry in Wenzhou, with nearly 4000 shoe companies and about 400000 employees, producing 600 million pairs of leather shoes annually.

According to customs statistics, in 2005, Wenzhou exported 438 million pairs of leather shoes, with a total export volume of US $1 billion 584 million, of which US $534 million was exported to the EU, accounting for 1/3.

In China, the total number of leather shoes exported to Europe has accounted for more than 1/4 of Wenzhou shoe enterprises.

The negative impact of the EU's levying duty rate of nearly 20% on the footwear industry in Wenzhou can be imagined.

In the first month after the anti-dumping duty was imposed, the quantity and value of Wenzhou exported to EU leather shoes dropped sharply.

In this case, many shoe companies have taken up legal weapons to safeguard their rights and interests.

In October 23, 2006, Wenzhou AOKANG group, the largest private shoe making enterprise in China, first announced a lawsuit against the European Union Court, accusing the European Union of imposing anti-dumping duties of 16.5% on Chinese footwear enterprises.

Then, Wenzhou Tamar group, Guangdong Foshan Nanhai Golden Shoe Industry Co., Ltd. and Guangdong Huizhou new Hong Kong dollar Footwear Co., Ltd. also announced appeals one after another.

In January 8, 2007, 3 months after the EU imposed anti-dumping sanctions against the Chinese footwear industry, AOKANG joined the three other appeals companies such as Wenzhou Tamar and held a "briefing on anti dumping litigation" by Beijing footwear manufacturers, and announced the establishment of an anti trade barriers cooperation organization.

AOKANG group spokesman Zhou Wei said that the most unacceptable thing for Chinese enterprises is the EU's denial of the market economy status of Chinese shoe companies.

According to European law, the EU should conduct field inspections on each of the 1200 Chinese shoe-making enterprises, but the EU has only chosen 13 Chinese shoe companies to conduct on-site verification, and none of them has been in line with the market economy status, and then cancelled their market economy status.

"So we have to tell him that the lawsuit in 2006 was AOKANG's own prosecution of the European Union. Two years later, the lawsuit is not over yet, but whether the lawsuit is successful or failed, it is a successful attempt for AOKANG."

Zhou Wei told reporters that, as AOKANG President Wang Zhentao once said, the EU has imposed a total anti-dumping duty on Chinese leather shoes. If we simply acquiesce and tolerate, two years later, we may face higher anti-dumping duties.

The reason for the lawsuit is to let the EU hear the voice of Chinese shoe enterprises.

That is to say, if Chinese enterprises can endure these two years, they will formulate a policy of 5 years or even longer, or impose higher taxes.

"If we win, the European Commission may therefore cancel the anti-dumping duty on Chinese footwear enterprises for the next 5 years.

But the European Union did not lose because they had been taxed for two years.

Even if we lose, we can learn a lot from it. "

Zhou Wei said that in the past and in the future, AOKANG would not give up the voice of its own defense.

Stick up again?

In June 9, 2008, the chairman of the Italy Footwear Association announced in Milan that the Federation of European footwear industries has decided to extend to the European Union the extension of anti-dumping measures on leather shoes in China and Vietnam to 5 years.

In July 2005, the European Commission decided to initiate anti-dumping investigations on some leather shoes originating in China. It is the demand of shoemaking enterprises in Italy, France and Spain.

The Italy Footwear Association said that the implementation of anti-dumping measures in the past two years was effective. In 2007, the total volume of shoes imported from China and Vietnam still maintained a two digit growth rate of 16% and 14.7%, but had dropped by 16.5% and 9% respectively compared with 2006.

Perhaps it is because of the sweetness and the 4 months before the two years of anti-dumping in October 6, 2008, the EU has become "impatient".

In May 31, 2008, the European footwear Federation held a proposal to extend the deadline in Italy.

In June 3rd, the European footwear Federation said publicly that it would start formulating new anti-dumping measures to reduce the export of Chinese leather shoes. It also said that 40% of the EU shoe manufacturers would support it.

In fact, the European Commission has also issued a notice in March 26, 2008 to remind enterprises that the anti-dumping measures against leather shoes in China and Vietnam will expire in October 6th this year. The EU related enterprises may apply for "sunset review" in written form 3 months before the expiration date, and the European Commission will examine whether to extend the original anti-dumping measures accordingly.

Responding positively to the idea that the European Union may extend the enforcement period of anti-dumping measures, many shoe bosses in Wenzhou expressed their disappointment: "it is hard to wait until the anti-dumping duty is about to expire."

Xie Rongfang, Secretary General of the Wenzhou shoe leather industry association, said that everything is hard to predict now. But from the information she gets, the EU has the possibility of extending the time limit for anti-dumping to China. The leather shoes enterprises in Wenzhou have made the worst plan, but before the result has come out, we still need to actively mediate and lobby.

Xie Rongfang told reporters that at the beginning of this year, the Wenzhou shoe leather industry association had communicated with the light industry and Commerce Association under the Ministry of Commerce, and hoped that the Ministry of commerce could take the lead and jointly organize personnel from Wenzhou shoemaking enterprises and associations to lobby in Europe.

In addition, they have asked Wenzhou shoe manufacturers to make joint defences in European distributors, hoping that the EU can hear the voices of Chinese shoe companies expressing their views.

Last month, Xie Rongfang led the team to Italy to meet with the vice president of Italy footwear industry and the head of Asian affairs of Italy footwear industry. The two sides came to discuss the issue of joint cooperation. Second, we hope to strengthen communication and mutual interest.

"On July 3rd, when the Minister of Commerce Chen Deming led a delegation to the seminar on Wen research, on behalf of the Wenzhou shoe leather industry association, I also talked about how to deal with the EU anti-dumping measures. We hope that the Ministry of commerce can set up the threshold for leather shoes exported to China by the European Union, so as to exert pressure on the EU anti-dumping."

It is understood that before the expiration of anti-dumping measures, the EU will initiate anti-dumping sunset review procedure.

Therefore, Wenzhou shoe enterprises will defer to the European manufacturing industry at that time.

At the same time, in the face of the dilemma of extending anti-dumping duties, many shoe companies believe that improving core competitiveness is the foundation of enterprise development.

Zhou Wei said in a reporter's interview that the impact of the EU's extension of anti dumping measures on Wenzhou shoe makers will be long-term, for which AOKANG has made several adjustments.

First of all, adjust the focus of the international market and actively expand overseas markets.

Last year, AOKANG began to set up a sales company in the United States and India.

According to authoritative figures, the world consumes more than 2 billion pairs of leather shoes in the world in 4 markets, namely the United States, Europe, India and China.

Therefore, to actively occupy the overseas markets of the US and India is an important step for AOKANG's internationalization strategy.

Second, borrow chicken and egg.

In January 8th of this year, AOKANG bought the global brand agency management rights of Italy shoe brand Wanli Wei.

By borrowing the brand of Italy Wanli wade to produce its own shoes, AOKANG's shoes exported to the EU will not be affected by anti-dumping measures in the future.

"He's against him. I'll do mine."

Zhou Yaohua, vice president of Dongyi Footwear Company, confidently stated that enterprises should not rely solely on the European Union's list to eat. The key is to rely on their core competitiveness.

"Now it is a global sourcing and sales network, and EU buyers are sourcing all over the world to buy leather shoes in China. Therefore, the EU's anti-dumping duties may not affect buyers, and we can also develop other markets."

As the largest number of leather shoes exported to Wenzhou in 2007, Zheng Shili, vice president of Jindi shoes, said that since the EU anti-dumping measures against China can not be changed, what enterprises can do is to adjust the product mix.

"As early as 2006, when the EU began anti-dumping duties on Chinese leather shoes, we began to adjust the product mix of enterprises, from exporting leather shoes to making leather shoes.

Because the EU is against high-end leather shoes, there are no restrictions on leather shoes.

Liao Yue, chairman of Wenzhou's Tamar footwear industry, also said that enterprises will do their best to improve their internal structure, adjust their product structure and respond to changes in the international political and economic situation at any time.