Furniture makers seek MOI status
By Dai Yan (China Daily)
Updated: 2004-08-31 08:43

Chinese furniture markers are seeking status as a market oriented industry (MOI) in anti-dumping cases initiated by United States.

Jia Qingwen, director of the China National Furniture Association, said the industry is asking for the qualification with the US departments.

"We expect them to investigate us for potential MOI status as soon as possible," Jia said.

Jia said they have talked about the issue with Jim Jochum, assistant secretary of US Commerce for Import Administration, who visited China last month and promised to give an early response.

The nation's 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 labour costs are much higher than in China, to calculate the normal value of Chinese exports.

Ignoring Chinese-provided statistics, US officials said in June they will impose preliminary tariffs of as much as 198 per cent on some imported Chinese wooden bedroom furniture.

China is requesting market economy status with the United States and the two countries have set up a group to study the issue.

"But MOI is the most practical choice for now as market economy status will take years," Jia said.

The MOI test requires the following: There should be virtually no government involvement in production or pricing; the industry should 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 believed the Chinese furniture manufacturers will pass a fair test.

"China's furniture industry has been completely market oriented. Some 90 per cent of the companies are private, shareholding and foreign-funded," he said.

The Chinese TV makers also had asked for the MOI treatment but the United States said it failed to meet its MOI test.

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 test point, though the local companies do not agree with the answer.

The furniture case involved as much as US$1.2 billion, the largest amount at stake against Chinese companies.

A final ruling is expected by November 20 this year.

An investigation panel sent by the US Department of Commerce has visited furniture makers in Shanghai, Tianjin and Guangdong Province.

The US officials have been sent there to check the production costs of local TV makers, requiring original certification of production costs, commodity prices and staff salaries.

Liu Shande, a manager from Guangdong-based Jixiang Wood Products Co, said the firm will export to other countries if the US dumping tariff lower its profit rate.

Liu said its products can sell at higher prices by exporting and the average profit for exports is as much as 30 per cent.

Li Zuoxin, a professor from the China Forestry University, said the US manufacturing industry will not receive any benefit from the dumping charges.

"Even with the high duties imposed, no jobs will be created for the US industry," he said.

Orders will simply shift from China to other countries like Indonesia, Malaysia, the Philippines and Viet Nam, he said.

Jia said US furniture retailers have voiced their strong opposition against the anti-dumping cases and support the Chinese move.

Mike Veitenheimer, the US Furniture Retailers Association (FRA) spokesperson, said there is still time for those manufacturers who blindly supported this petition, which blatantly distorts the nature of 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," he said.

Hooker Furniture recently announced the withdrawal of its support for a petition filed in October 2003, requesting duties as high as 440 per cent on bedroom furniture from China.

Hooker representatives said that the petition was doing more harm than good in its relationship with customers.

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