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Anti-dumping Ruling Drags down Exports

Although the final judgment is due only in April, a preliminary anti-dumping ruling by the United States against Chinese television makers has led to a stiff decline in China's TV exports.

Passed by the US Department of Commerce in November, the preliminary ruling announced anti-dumping duties of 28-46 percent on TV sets exported by four Chinese TV makers - Sichuan Changhong Electric Co, Xiamen Overseas Chinese Electronic Co (Xoceco), Konka Group Co and TCL Holding Co.

Fearing cost hikes, local TV makers exported significantly fewer color sets in recent months.

South China's Guangdong Province, which manufactures about half of the country's TV exports, has been the preliminary ruling's biggest victim.

The province exported a total of 210,000 sets in December, the month immediately following the announcement of the preliminary ruling. That is in stark contrast to the 450,000 exported in September.

"The export decline comes as a matter of course," said Xoceco spokesperson Sun Guangrong, adding that the ruling increases export costs for manufacturers.

To minimize losses, some experts have advised Chinese TV makers to step up efforts to enter the US high-end TV market and pointed to Hisense's recent success in doing so.

Hisense, China's major digital TV (DTV) producer, remains optimistic as its mainstay products, DTVs, are excluded from the US anti-dumping ruling.

The Qingdao-based company recently started to export another 10,000 digital televisions to the United States, which is said to be the largest batch of TVs exported by domestic TV manufacturers this year.

Company sources said the firm will push sales of its DTV sets and equipment in hopes of gaining a bigger presence in China's fledgling, but rising, DTV sector and tapping international markets.

"We will continue to concentrate on developing and marketing DTVs, which we believe are more profitable than traditional CRT (cathode ray tube) ones,"Hisense spokeswoman Han Weifan told China Daily.

Long-time price wars have eaten away at profits in the low-end TV business, market observers have suggested.

"It is the high-end markets that are of interest to us," Han stressed.

She added that Hisense has done a good job in this regard, referring to the company's approximate US$100 million exports of DTV products in 2003.

"Hisense made big inroads into the world DTV market beginning last year," Han said. "Our products sell well at BestBuy and K-mart chain stores in the US."

And Hisense's confidence of becoming a DTV giant has been boosted by its success in signing a cooperative deal with US Digital Television (USDTV) a month ago.

According to the financing and manufacturing agreement, Hisense will export more than 400,000 receivers to USDTV every year. Hisense said the agreement did not set a time limit for the cooperation, adding that the scale of exports may be further adjusted to meet demand.

"The first batch of 100,000 digital terrestrial set-top boxes will soon be exported to the US," Han said.

The "victory," as Hisense terms the deal, came after "years of efforts," company sources said.

The 35-year-old TV manufacturer established a research and development center in Silicon Valley three years ago, and has been tracing US market changes for years.

"Finally, Hisense won the deal with its strong technological power," Han said.

However, a senior observer cautioned, this "high-end" approach cannot help Chinese TV makers shrug off the current slump "completely."

"Domestically, the demand for DTVs is still very low," said Luo Qingqi, senior director of Pully Consulting, which has long been monitoring the household electric appliance industry.

"We will have to wait until the sector becomes mature as a set of uniform DTV standards are still pending, and DTV programs are poorly supplied now," Luo said.

In fact, he explained, "internationally, our products, like DTVs, are not as competitive as many have imagined."

In the long run, Chinese TV makers should attach greater importance to industrial restructuring and technological innovation in meeting strong competition and anti-dumping rulings, he said.

(China Daily February 9, 2004)




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