Protectionism makes no winner at China's largest trade fair

10:16, October 17, 2009      

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"Last year, we exported 300,000 tyres to the United States. But this year, the order was slashed by half," said David Sun, international marketing director of the Triangle Tyre Co., Ltd, China's leading tyre maker with 40 percent of its products exporting to the United States.

The grim situation is the natural result of a decision made by U.S. President Barack Obama to levy up to 35 percent tariffs on tyres imported from China in the next three years in answer to the calls of domestic labor union.

However, the measure did not benefit the U.S. domestic industry, but left consumers higher prices to pay for their clunkers.

"Since we developed solid partnership with our U.S. distributors in years of collaboration, they promised to maintain the original retail price for our products in the U.S. market despite the shrinking profit margin after the tariff increase," Sun said at the 106th China Import and Export Trade Fair, or Canton fair, held in southern Guangzhou City, "They just want to make sure Triangle would not be forgotten by consumers".

As Triangle's second-largest U.S. distributor, Horizon plans to pay the price gap as it believes the Chinese tyres still enjoy bright prospect in the U.S. market with its competitive price and improved reliability, said Sun.

The additional tariff would affect not only the employment of 100,000 Chinese tyre workers, but almost the same number of U.S. importers and distributors, experts said.

Despite repeated pledges made by world leaders at the G-20 summit in Pittsburg, the waves of protectionism showed no signs of retreating.

China, which overtook Germany as the biggest exporter in the world in the first half of the year, also fell the biggest victim of an array of unfavorable trade policies targeted at made-in-China goods with high cost performance.

The tyre case was only a tip of the iceberg of the rampant protectionist measures against China.

Twenty days after the tyre decision, the European Union (EU) imposed five-year duties, ranging from 17.7 percent to 39.2 percent, on Chinese-made seamless steel pipes.

Days later, the U.S. government followed suit by launching anti-dumping and anti-subsidy probes into steel pipes imported from China.

China suffered the world' s most protectionist measures. More than 50 countries have imposed measures that hurt Chinese exports. Since November 2008, China has been the target of more than 100 protectionist measures, comprising one third of the global petitions.

Federico Boggio Sella, president of Sunebo, Triangle's distributor in Italy, said, in many cases, Chinese exporters fell the scapegoat of the U.S. domestic politics.

"People always make unreasonable decisions in difficult times. Nobody has foreseen that the U.S. President would take such policies," he said. Protectionism is like a black spot on white paper. It is the trend of the world to join hands together to tackle difficulties, he said.

He noted the Chinese tyres had "very good quality-price ratio" , and that was why he planned to increase the import by 50 percent next year. To avoid the escalating protectionism, he said, Chinese enterprises should focus on developing high-technology and ecological-friendly materials as well as pushing advertising strategy.

"Big brands always had stronger immunity from crisis than small OEM business." he said.

Mei Xinyu, researcher with the Ministry of Commerce, predicted that protectionist measures against China would become "regular" as the international trade conditions were getting worse.

"Why China is so sensitive to protectionism is because of its dependence on exports. But from now on, we should explore the internal engine," he said.

John Hu, head of the export and import division of the Liaoning Permanent Tyre Co. Ltd, said the assembly line originally for the production of exports to the United States had became the supplement workshop for its domestic supply.

"Domestic demand is rising steeply, which makes up for our overseas losses," he said.

Source: Xinhua
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