DOC cuts Section A rate to 6.65%
Powell Slaughter -- Furniture Today, January 10, 2005
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Antidumping process impacts Chinese imports
WASHINGTON -- Correcting some clerical errors, the U.S. Department of Commerce late last month reduced the duty rate on Chinese-made wood bedroom furniture for Section A companies from 8.64% to 6.65%.
The Section A rate covers about 55% of wood bedroom furniture imported from China. The reduction largely resulted from adjustments to six mandatory respondents in the DOC's antidumping investigation. Those companies, among the largest Chinese bedroom suppliers to the U.S. market, and their rate changes are:
* Dongguan Lung Dong: 2.32%, up from 2.22%.
* Dorbest Group/Rui Feng: 7.87%, down from 16.7%.
* Lacquer Craft: 2.66%, down from 6.95%.
* Markor: 0.83%, up from 0.79%.
* Shing Mark: 4.96%, down from 5.07%.
* Starcorp: 15.78%, up from 15.24%.
Another mandatory respondent, Techlane, was thrown out of the weighted average for computing the Section A rate in November, when DOC ruled the manufacturer's response to the investigation was insufficient and gave the company the all-China rate of 198.08%, which remains unchanged.
U.S. Customs agents now have begun collecting the duties. Importers have been posting bonds to cover duties since June 2004. Through October, those deposits came to just over $52 million, according to U.S. Customs.
Mike Veitenheimer, president and general counsel of The Bombay Co. and a spokesman for the Furniture Retailers of America, a group of mostly large retailers that opposed the duties, was pleased with the further reduction in rates.
"Our goal was twofold: first, to avoid duties entirely, and, second, to make sure any duties that did apply were minimal," he said. "While we didn't get the first, we did get the second."
Veitenheimer worries that the addition of $500 million to $1 billion of new Asian furniture production capacity outside China, especially in Vietnam, will increase deflationary pricing pressures.
"Because of the uncertainty surrounding the investigation, so many companies went to Vietnam and placed orders there," he said. "Those orders will be filled there, even though we can anticipate the types of quality problems you have when you shift sourcing. But the minute (Vietnam) gets it right, there's a worldwide glut of production capacity."
For their part, those who sought duties are ready to live with the investigation's results and concentrate on business.
"Our motto here in '05 is, 'Let's get back to selling furniture'," said Doug Bassett, vice president of sales and marketing for Vaughan-Bassett, one of the U.S. case goods companies that petitioned for the antidumping investigation.
Will U.S. companies target any other categories or countries for antidumping investigations? Don't look for any other actions in the wood category for now.
Vaughan-Bassett, a key supporter of the bedroom petition, definitely wouldn't take part.
"Over 90% of what Vaughan-Bassett makes is bedroom, which led us to play a leadership role in the petition," Bassett said. "Someone else may want to look into (other categories), but we're not aware of any activity at this point."
Compared to bedroom, the dining and especially occasional categories have little significant capacity remaining in the United States, so those areas are unlikely targets for future antidumping cases.
With bedroom production shifted away from Chinese plants facing prohibitive duties, and most remaining producers facing relatively low duties, no one expects the final duties to have a major impact on retail pricing. That doesn't mean the case had no effect.
"There's a tendency to dismiss this result too lightly," said industry analyst Jerry Epperson of Mann, Armistead & Epperson. "The petitioners were able to document abuses and get this done in a convincing way — all the decisions were unanimous."
Epperson also noted the high visibility of the antidumping investigation might lead more consumers to ask where the furniture they're considering for purchase is made, and what's going on in the domestic industry.
"The companies that were investigated weren't the ones creating the problem," he said. "The petitioners never mentioned those companies in their case. There were other (Chinese) manufacturers that did have problems, and they either got the 198% rate, or were put on notice. In that regard, the petition was more successful than the dollar amount might indicate."
It will be a while, Epperson said, before the industry gets over the divisions arising from the antidumping investigation.
"There were harsh words spoken, and it will take a while, but I think we'll move past this," he said.
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Section A duties cut
Jan 23, 2005
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