Glamor Economics

Chapter 196

Chapter 24 Section 7 Why the Spaniards Burned Wenzhou Shoes——Dumping and Anti-dumping
Elche, located in the east of Spain, is a small city famous for its shoe industry.Beginning on September 2004, 9, some anonymous leaflets appeared on the streets of Elche, which has always been calm, and some slogans even appeared in the business district where there are relatively dense shoe stores.The content of these flyers and slogans is similar, which is shocking-"Stop worrying about our shoe stores, get up and do something real. Let's pour out those Asian shoes that enter our city and burn them!" In addition, The leaflets also encouraged local shoe merchants to hold a demonstration in the Carus business district at 14:16 pm on the 7th.

Although most of the slogans on the street were torn down by some well-meaning citizens, by the afternoon of the 16th, four to five hundred local shoe factory owners, shoe dealers and workers had gathered in the Carus business district.They held up the slogan "Pour out the Asian shoes and burn them" and chanted slogans, and rushed to several Chinese shoe stores in the area.

At this time, a truck carrying a container of shoes was parked at the door of the warehouse of Chinese businessman Chen Jiusong and was about to unload the goods. Seeing this, the marchers immediately surrounded them.They threw stones at the truck and cursed viciously.Then, some extremists in the crowd brought gasoline and set the truck on fire.The raging fire not only engulfed the entire truck, but also ignited the warehouse next to it.Local firefighters and riot police rushed to disperse the rioters and spent several hours extinguishing the blaze.However, a container of Wenzhou shoes and the warehouse on that truck were burned down, causing a direct economic loss of 80 euros.

Spain's "shoe burning incident" is an extreme civil anti-dumping behavior.In recent years, incidents of Chinese companies being accused of dumping by foreign countries have occurred frequently, and China has become the country that has suffered the most anti-dumping in the world.When paying attention to anti-dumping incidents, we should first be clear about what kind of economic behavior dumping is?
Dumping is a trade practice in which a manufacturer or exporter in one country exports a product to another country at a price lower than its normal value. Article VI of the 1994 General Agreement on Tariffs and Trade stipulates that if, in the normal course of trade, a product is exported from one country to another, the export price of the product is lower than that of the same product consumed in its own country. comparable price of the product, i.e. entering the channels of commerce of another country at less than its normal value, the product will be considered dumped.

It can be seen that dumping usually has the following characteristics:

First, dumping is an artificially low-price sales measure.According to different markets, the exporter sells the same commodity at a price lower than the market price of the commodity in the exporting country.

Second, the motives and purposes of dumping are diverse.Some are to sell surplus products, some are to compete for foreign markets and expand exports, but as long as they cause substantial damage, substantial threat or substantial hindrance to the establishment and development of an industry in the importing country, they will be punished by anti-dumping measures.

Third, dumping is an act of unfair competition.Under the government's export incentive policy, producers often sell their products at low prices in order to obtain government export subsidies; at the same time, producers sell their products in foreign markets at dumping prices, thereby gaining a competitive advantage in another country's market and further Eliminate competitors, and then increase prices to obtain monopoly high profits.

Fourth, the result of dumping often causes damage to the importer's economy or the interests of producers, especially predatory dumping disrupts the importer's market economic order and brings a devastating blow to the importer's economy.

Judging from the characteristics of dumping, the export of Wenzhou shoes to Europe does not constitute dumping.The reason why Wenzhou shoes are so cheap is that Chinese products have a cost advantage.The shoe industry is a typical labor-intensive industry, and cheap labor makes China's labor-intensive products have obvious comparative advantages.The hourly salary of Chinese manufacturing industry workers is about $1/hour.Correspondingly, the highest rate in the former Federal Republic of Germany reached 28.28 US dollars / hour, and the lowest value was 0.5 US dollars / hour in Sri Lanka.In this regard, China's labor costs are indeed very advantageous.

Under what circumstances can anti-dumping be made?The "Anti-dumping Agreement" of the World Trade Organization stipulates that a member must comply with three conditions in order to implement anti-dumping measures:
First, to determine the fact that there is dumping.

Second, it is determined that it has caused substantial damage or threat to domestic industries, or has caused substantial obstacles to the establishment of related domestic industries.

Third, to establish a causal relationship between dumping and injury.

Although the "General Agreement on Tariffs and Trade" has made clear regulations on anti-dumping issues, in fact, countries are doing their own thing and still use anti-dumping as one of the main means of trade wars.

[links to related words]

Accidental dumping is because the peak sales season has passed, or the company has switched to other businesses, and the remaining products are sold abroad.

Intermittent dumping is to dump in foreign markets at a price lower than the market price or even cost, and then raise the price after monopolizing the market.

The long-term dumping products are sold at a price lower than the domestic price, but the export price is higher than the production cost, and economies of scale are used to expand production and reduce costs.

(End of this chapter)