Furniture makers are seeking market oriented industry (MOI)
status in response to an anti-dumping case initiated in the United
States, according to Jia Qingwen, director of the China National
Furniture Association. About US$1.2 billion in business is at
stake, the largest amount involved in a case against Chinese
companies.
"We expect them to investigate us for potential MOI status as
soon as possible," Jia said.
Jia said that the issue has been discussed with James Jochum,
the US Commerce Department's assistant secretary for import
administration. Jochum visited China last month and promised to
give an early response.
The nation's non-market economy status is the Achilles' heel
once again for Chinese furniture manufacturers.
By defining China as a non-market economy, the United States
uses the cost of production in a surrogate country, where material
and labor costs are much higher than in China, to calculate the
normal value of Chinese exports.
China has requested that the United States recognize it as a
market economy and the two countries have set up a group to study
the issue.
However, rejecting statistics provided by China, US officials
said in June they will impose preliminary tariffs of as much as 198
percent on some imported wooden bedroom furniture.
"MOI is the most practical choice for now as market economy
status will take years," said Jia.
The MOI test requires that there be virtually no government
involvement in production or pricing. The industry must have
private or collective ownership that behaves in a manner consistent
with market considerations, and producers should pay
market-determined prices for all major inputs and for all but an
insignificant proportion of minor inputs.
Jia believes the Chinese furniture manufacturers will pass a
fair test.
"China's furniture industry has been completely market oriented.
Some 90 percent of the companies are private, shareholding and
foreign-funded," he said.
Chinese TV makers have also requested MOI status, but the US
Department of Commerce said the data provided by the respondents
strongly suggested that the Chinese TV industry does not satisfy
the second MOI requirement.
An investigation team sent by the US Department of Commerce has
visited furniture makers in Shanghai, Tianjin and Guangdong
Province.
A final ruling is expected by November 20 this year.
Liu Shande, a manager from Guangdong's Jixiang Wood Products
Co., said that the firm will export to other countries if the US
dumping tariff lowers its profit margin. Liu indicated that the
average profit margin for exports is as much as 30 percent,
significantly higher than for domestic sales.
Professor Li Zuoxin of the China Forestry University said, "Even
with the high duties imposed, no jobs will be created for US
industry." He stated that orders would simply shift from China to
other countries like Indonesia, Malaysia, the Philippines and
Vietnam.
Jia said that US furniture retailers have voiced their strong
opposition to the anti-dumping cases and support the Chinese
move.
On July 30, Hooker Furniture formally withdrew from the petition
filed in October 2003 by the American Furniture Manufacturers
Committee for Legal Trade. The petition sought duties as high as
440 percent on bedroom furniture from China.
Hooker representatives said that the petition was doing more
harm than good in its relationship with customers. Three other
major US furniture manufacturers -- Ashley Furniture, Furniture
Brands International and Standard Furniture Manufacturing -- had
already expressed their opposition to the petition.
In a press release issued by the US Furniture Retailers
Association (FRA), spokesperson Mike Veitenheimer said, "There is
still time for those manufacturers who blindly supported this
petition, which blatantly distorts the market, to wake up and do
something to stop the damage that is unfolding. American workers
and American consumers should not have to bear the brunt of
protectionist acts."
(China Daily, China.org.cn August 31, 2004)