Ceramic producers agree to floor price with Brazil

Updated: 2014-02-10 05:54

By Zhang Fan in Beijing (China Daily Latin America)

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Major Chinese ceramic dinnerware producers can enjoy a floor price of $3.20 per kilogram for the next five years when exporting their products to Brazil, as a result of six months of negotiations with the Brazilian government and companies, China's industry watchdog said.

According to the China Ceramic Industry Association, to avoid an anti-dumping duty as high as $5.14 per kilogram, 126 Chinese ceramic companies, which account for 50 percent of China's total ceramic dinnerware exports to Brazil, participated in the negotiations.

"The duty of $5.14 per kilogram is too high for Chinese ceramic companies to survive in the Brazilian market. The CCIA supported these companies during the negotiations and we are satisfied with the result," said an official from CCIA, who declined to be identified, recently.

Along with the duty, the Brazilian government has newly limited the export amount of Chinese ceramic dinnerware to Brazil to 25,000 tons per year, much lower than the previous level.

Such limits will influence the market share of Chinese ceramic products in Brazil but the total profit can be maintained at an "acceptable level", according to the official.

An anti-dumping investigation was initiated in 2012 when Oxford Porcelanas SA, the largest Brazilian ceramic manufacturer, claimed Chinese ceramic products were being dumped in the Brazilian market at the price of $1.35 per kilogram, much lower than the "normal" price.

The 126 companies of more than 1,000 ceramic companies influenced by the investigation decided to use their counterargument rights in the case to protect their interests.

"The investigation is the largest of its sort in history. We and the Brazilian industry association managed to reach a middle point that can both reduce local companies' pressure and protect our market in Brazil," said Wang Tao, legal adviser for the negotiations and a senior partner of Ray Yin & Partners law firm in Beijing.

"It is not my first time to negotiate with the Brazilian government representing the interest of Chinese export companies. The 126 companies have a high legal awareness of protecting their interests, which I think is very necessary now," he added.

The export value of Chinese ceramics reached $7 billion in 2013, most of which goes to European and North American markets, according to the Ministry of Commerce. The Brazilian market accounts for about $80 million.

Some observers worry that the anti-dumping duty will reduce the competitiveness of Chinese ceramic products. Some predicted that Chinese ceramic companies will "move their business to other markets such as in Africa and the Middle East".

"There is no doubt the anti-dumping duty will reduce our market share in Brazil and largely influence the small- and medium-sized companies, but we will not give up the Latin American market," said the official from the CCIA.

The Brazilian government initiated another anti-dumping investigation into China's ceramic tile exports in July 2013. The CCIA has established a negotiations group for further discussions with Brazil but no agreement has been reached yet.

"Frequent anti-dumping investigations targeting Chinese ceramic products show the pressure of Brazil's local industries when facing competition from Chinese companies,"said Sun Hongbo, a researcher on China-Latin American relations at the Chinese Academy of Social Sciences.

"Chinese ceramic products are usually of good quality at lower prices and are preferred by the local market. The large trade amount hurts the profit of local ceramic companies who choose to press the Brazilian government to apply anti-dumping policies on us," he added.

Sun said it is very important for Chinese companies to learn to use the regulations of the World Trade Organization and international laws when faced with anti-dumping duties and try to improve their "cooperation pattern with local society" at the same time.