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Air conditioner makers must strengthen self-regulation to ensure fair competition, the Ministry of Commerce (MOFCOM) told China Daily yesterday.
Action is needed to avoid possible dumping charges against Chinese firms operating in the United States.
"Any enterprise found to have conducted bad practices will be punished with relevant laws and regulations of foreign trade," said an official at the Bureau of Trade for Imports and Exports under MOFCOM.
The ministry has requested industrial associations to keep an eye on exports to the US, and report back to the bureau in good time. After holding talks with representatives of associations and air conditioner makers, MOFCOM decided something had to be done.
"This issue is still expected to be solved without an anti-dumping suit," said Jiang Feng, secretary-general of the China Electronic Appliance Association.
She said the association has kept in regular touch with enterprises since April, asking them to be disciplined when setting export prices.
The US has agreed not to file a petition if a mutually satisfactory solution is found.
"We believe the government and associations will solve this problem properly," Jiang said.
A group of air conditioner manufacturers in the US has complained to their domestic industrial associations about Chinese firms selling products at a price less than cost.
Experts say the complaint was mainly levelled at LG Electronics, whose manufacturing base in North China's Tianjin exported more than 2 million units valued at nearly US$150 million to the United States.
LG has reduced its exports of low-priced air conditioners to the US market and its average export price has increased.
The United States is one of the most important markets for domestic manufacturers, so any case brought against them could potentially be very damaging, according to Jiang.
China Electronic Appliance Association statistics show China exported 6.45 million air conditioners to the US last year, accounting for nearly 10 per cent of the country's total output.
As China has not been granted market economic status by the US Government, domestic firms would have to strive for such conditions so as to gain favourable final rulings, said Yu Xiaochang, a senior official at Guangdong-based Galanz Group.
It may be easier for LG, a joint venture, to find a positive environment in the United States. In any case, Yu said it would be easy for the multinational company to transfer its manufacturing base to other countries, to beat dumping charges.
Jiang fears the effects of charges against Chinese firms may be felt in other overseas markets. Further trade barriers may be thrown up if enterprises expelled from the US by high punitive tariffs swarmed into other markets.
A dumping charge was levelled against air conditioner manufacturers in Trinidad and Tobago in 2003. Chinese firms were hit with an average duty of 141 per cent as the Caribbean country claimed they had damaged the national industry.
"Low price competition can only result in a disordered market," Jiang said. "It will eventually hurt the whole industry."
National air conditioner output topped 66.5 million units last year, accounting for nearly 60 per cent of the global total.
(China Daily June 28, 2005)
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