Chapter 8 Xinhai: A report from an old case

In March 1997, the Chinese government promulgated the Anti-dumping and Countervailing Regulations. On November 10, 2001, the Fourth Ministerial Conference of the World Trade Organization (WTO) reviewed and approved China's application for joining the WTO. On December 11, China officially became a member of the WTO. In June 2002, at the request of the European Federation of Lighter Manufacturers, which represents the disposable refillable lighter industry in the EU, the European Union officially announced an anti-dumping investigation on the export of disposable fully pocketable (plastic shell) lighters from China, and at the same time produced metal shells The Wenzhou lighter manufacturer of lighters was involved.After the national lighter industry held a meeting to discuss the response to the anti-dumping case, 4 Ningbo companies and 16 Wenzhou companies decided to respond to the EU's anti-dumping case according to different situations.

In July 2003, Wenzhou lighters responded to the EU's anti-dumping case and finally ended in the victory of the Chinese lighter company.This victory became China's first victory in dealing with the EU's anti-dumping lawsuit after joining the World Trade Organization. In November 2006, at the "WTO and China: Beijing International Forum", the Wenzhou lighter anti-dumping case was selected as one of the fifteen major events in local WTO affairs selected by authoritative departments due to its far-reaching impact and significance. In the above several paragraphs of words such as time, "anti-dumping" and "EU", we can roughly see that for many years, in international trade, anti-dumping from abroad has always been like a lingering shadow and China's export companies are entangled together, and what this article is going to talk about is not the anti-dumping incidents of Wenzhou lighters, nor the recent anti-dumping incidents. What I want to talk about here is an old case, a case related to the four companies mentioned above. Responding to an old case related to one of the Ningbo enterprises.

As we all know, China is the largest lighter manufacturing base in the world, and it is said that the annual output accounts for 2/3 of the total lighter sales in the world.Ningbo Xinhai Electric Co., Ltd. (hereinafter referred to as Xinhai), which ranks first among the "Top Ten Famous Brands of Chinese Lighters", is a leading enterprise in China's lighter industry, and more than 80% of its products are exported to more than 80 countries and regions such as Europe, the United States, and Japan. , has ranked first in the export sales of China's lighter industry for six consecutive years.It should be said that from the perspective of the industry, this is an excellent company, but in the summer of 2002, the life of Xinhai, which produced lighters, was not so easy.

The incident happened on May 6, 2002. The EU lighter manufacturers accused China, Malaysia, Vietnam, Indonesia and other countries of dumping lighters at low prices, and asked the European Commission to initiate anti-dumping procedures and impose a 150% levy on lighters exported to the EU from the above regions. anti-dumping duty rate.However, Xinhai’s situation at that time was that the export share of the company’s products accounted for more than 90% of the company’s total sales, and the EU market accounted for nearly 50% of the company’s export share. If the EU market imposed a high dumping tax rate of 150%, Xinhai would lose its international half of the market.Once the EU takes practical measures, the serious consequences of the situation can be imagined, and this is just the beginning.

The situation is developing further. On June 27, 2002, the European Commission decided to conduct an anti-dumping investigation on lighters from the above regions. On July 8, the EU selected the Philippines as a surrogate country for China and Vietnam to launch an anti-dumping investigation. The further development of the situation began to make Xinhai people nervous, and the company is facing unprecedented challenges.Facing the EU's anti-dumping investigation, Xinhai faced a dilemma: if he did not respond to the lawsuit, he could only sit and wait for death; if he responded to the lawsuit, the result would be unpredictable.To respond or not to sue, this is a big question for Xinhai.

After repeated consideration by the company's decision-makers, Xinhai decided to respond to the lawsuit. At the same time, it established a five-person anti-dumping leadership team headed by Chairman Huang Xinhua, who was fully responsible for the anti-dumping response work, and hired a lawyer from the famous European Belgian VBB law firm to act as a lawyer. Acting lawyer, under the guidance of the Fair Trade Bureau of the Ministry of Commerce and the Chamber of Commerce for Import and Export of Machinery and Electronics, Xinhai Company applied to the EU for market economy status and adjudicated the zero-tax rate according to its own characteristics of large scale, strong strength, and standardized management. Litigation target.

An invisible gunpowder enveloped Xinhai. Responding to the lawsuit is a war, and there is no gunpowder in this war, but the tension it brings to the responding party is undoubtedly the same as the suffocation brought by war. At the beginning of July 2002, Xinhai received the sample survey form from the European Commission, and under the guidance of lawyers, the company immediately started the anti-dumping response work, and Xinhai's EU anti-dumping response work officially kicked off. The specific work has entered the substantive operation stage. What Xinhai needs to do is to first fill in the sampling survey form (commonly known as the small form) according to the procedure, then fill in the market economy status application form (commonly known as the small form), and finally fill in the anti-dumping questionnaire (commonly known as the big watch).Afterwards experience shows that if the basic work is done well when filling in small and small forms, the filling of large forms will be much smoother.

After working day and night, Xinhai submitted the sample survey form, market economy status application form and anti-dumping questionnaire to the EU on July 12, 18 and 28 respectively. On September 16 and 17, EU officials went to Xinhai to conduct on-the-spot inspection of the market economy status application form. Xinhai greeted the EU officials with a conference table filled with more than 100 documents. Nearly three months later, Xinhai's efforts finally came to fruition. On October 8, Xinhai's application for market economy status was approved, which means that the company will occupy a very favorable position in subsequent investigations.

On November 20-22, 2002, EU officials came to "Xinhai" again to conduct anti-dumping inspections, but they did not find any "flaws" they needed. The originally planned 3-day inspection ended in only 2 days. In February 2003, news came from the European Union: to abandon the preliminary ruling on the Chinese lighter dumping case.Quoting the words of the lawyer at the time: If we speculate on the bright side, the case is likely to be concluded with the victory of the Chinese company, and even not only the responding company wins the lawsuit, but all Chinese lighter companies will benefit from it.

On July 15, 2003, Xinhai received a fax from Brussels, where the headquarters of the European Union is located. The sender was Xinhai’s anti-dumping litigation agent VBB Law Firm. The main content was: The European Lighter Manufacturers Alliance represented the European lighter industry in 2003 On July 14, a letter was sent to withdraw the appeal against anti-dumping.According to the law, the anti-dumping process will be terminated when the complaint is withdrawn, unless this termination will harm the interests of the industry.Since there is no investigation showing that this termination will cause losses to the industry, it can be concluded that the current anti-dumping investigation should be terminated.

So far, Xinhai’s response to the EU’s anti-dumping case, which lasted more than a year, was finally settled with Xinhai’s victory. Xinhai not only won victory and respect for itself, but also made decisive contributions to Chinese lighter companies breaking through EU trade barriers. After responding to the victory of the EU anti-dumping investigation, Xinhai made a report summary of its own practices, matters that need to be paid attention to and the victory achieved, that is, "report from Xinhai". Report 1: Fill in the data to ensure that it is true, accurate, and well-documented, and the on-site inspection has a clear division of labor and a consistent caliber. Questionnaires and questionnaires are the complete basis for on-site inspections by EU officials. When filling out the questionnaires, they must be authentic, accurate, and well-documented. During the inspection, the EU will go to the bottom of the content related to the inspection, so it is required to answer the questions on the spot. One person mainly answers, and if the professional questions related to the relevant functional departments are answered by the person in charge of the relevant department, "We conducted an on-site drill in advance on the questions that may be asked during the inspection, so that the division of labor is clear and the caliber is consistent. The inspection officials In the process of this investigation and evidence collection, our staff in all lines did a very good job, there were no obvious mistakes when answering questions, and the supporting materials and materials provided were also impeccable, accurate and reliable.” At that time, Xinhai had a total of 12 In the branch factory, the accounting vouchers and documents of all the branches were piled up in a large conference room, and more than 20 people participated in the investigation in the conference room.During the two days of inspection, in order to provide the most effective data and materials from the vast amount of information in the fastest time, "our rear staff did a lot of preparatory work, and before the inspection, under the guidance of lawyers, we also carried out In a comprehensive exercise, the extraction time and accuracy of each data were assessed to ensure that the information provided during the verification is foolproof." Report 2: Obtaining market economy status is the prerequisite for successful anti-dumping response. When Xinhai encountered anti-dumping in June 2002, although my country had joined the WTO for more than half a year, the European Union had not yet fully recognized my country as a country with market economy status, so Chinese companies were allowed to apply for market economy status to them. Acquisition is very important in anti-dumping investigations. This is because the company can only recognize a series of financial information provided by the company if it is qualified for market economy status. If it is not qualified for market economy status, even if your financial management It is more market-oriented and not recognized by the EU. It is often necessary to compare the cost of the surrogate country with the cost of the manufacturer, and the determination of the surrogate country is often determined by them. The surrogate country for this anti-dumping investigation is the Philippines. It is extremely unfavorable to domestic enterprises, because in fact, such a low manufacturing cost is relatively difficult to find internationally. On July 12, Xinhai received a questionnaire for market economy status application.Under the guidance of lawyers, after all the staff of the anti-dumping team worked day and night, they collected a lot of basic data and materials to ensure the accuracy of the data and the perfection of the materials. On July 18, they officially reported to the European Commission. The application form for market economy status, and the anti-dumping questionnaire was submitted to the EU on July 28. "During the arrival of the inspection, our anti-dumping team made detailed preparations and improvements for each item reported in the questionnaire. That is to say, we must devote ourselves to our work with a very professional spirit, and pay attention to every point on the questionnaire. Relevant materials must be prepared, otherwise, a small negligence may lead to the failure of all previous efforts and all losses.” From September 16th to 17th, 2002, EU officials inspected Xinhai, “With the joint efforts of all staff, The original two-day inspection schedule ended in one day, and the EU officials are quite satisfied with the materials we prepared.” On October 8, Xinhai finally received the news that the company had obtained market economy status. Report 3: 3 key points in the anti-dumping investigation questionnaire verification process. In the process of filling in the questionnaire and preparing materials for the market economy status application, there are mainly the following key points that need to be paid attention to: 1.The statistics of domestic and foreign sales and the division of product management codes are a key point in the calculation of dumping margins. Since Xinhai is an export company, domestic sales account for a small proportion of its sales. According to regulations, only domestic sales account for more than 5% of EU sales, and it can be compared with EU sales as a normal value during verification. Calculate the dumping margin; otherwise, calculate the dumping margin using the company's structural costs as a reference price to compare with EU sales. "If this is the case, the initiative is not in our hands, because the lighters we produce are small products with dozens of products, and the total domestic sales account for 7.7% of EU sales, reaching the standard of more than 5%. , but it is difficult to say whether the domestic sales of each product model can exceed the standard of 5%. Therefore, we have made appropriate adjustments to the PCN codes of the products in the financial statistics and product classification, so that the PCN codes of various products The division is beneficial to us, and we have repeatedly calculated the dumping margin by ourselves, so that we know what to expect, and we have prepared sufficient materials to prove that the figures we provided are well-founded during the inspection.” In the end, EU officials accepted the new seafood PCN code Division, and based on this as the basis for calculating the dumping margin. 2.Statistics on EU sales volume and prices during the investigation period are another key point. Xinhai had a heated dispute with the verification officials on the issue of whether the EU officials verified whether the sales volume of Xinhai was accurate, whether the sales price was true, and whether there was any suspicion of dumping at low prices: For example: the financial caliber is to reflect sales by customer, while EU sales require sales to be reflected by destination, which cannot be directly obtained in finance. It is quite a workload to find out each sale by destination. of. Another example: the issue of red and blue letters about sales is another headache encountered in this inspection. As a normal sale, sales contract, sales invoice, proof of payment, certificate of origin, bill of lading, packing list , production task list, customs declaration form, customs clearance form, and insurance policy should be consistent, but due to various reasons, several orders may not be completely consistent. The reasons are as follows: (1) The number of boxes theoretically calculated at the time of customs declaration is inconsistent with the number of boxes that can be packed in actual boxes, which may lead to a situation where a few boxes are missing and will be added in the next shipment, so red and blue appear. word sales; (2) Due to busy production or quality reasons, all orders cannot be completed on schedule, and the customer does not agree to postpone the shipping schedule. In order to meet the customer's requirements, only some products will be shipped less, and they will be replenished in the next shipment, so there will also be problems Sales in red and blue characters; These situations are often unavoidable in general foreign trade operations, but EU inspection officials do not think so, "We have been entangled with the inspection officials for a long time on this issue during the inspection, but because the materials we prepared fully explained This, coupled with the patient and meticulous explanation work of the participants, finally made the EU officials accept our statement, which is really a narrow escape.” During the EU sales inspection process, the inspection officials randomly checked 20 For ticket sales, the verification materials include the sales contract, sales invoice, certificate of origin, bill of lading, payment collection information, freight invoice and other information for each ticket sales. All the materials are shown to be true and credible. There are as many as 478 votes in the table, and the data involved include product management code, invoice number, voucher number, bill of lading number, customer name, payment terms, shipping terms, quantity, amount, discount, commission, insurance, freight, packaging, credit More than 40 data such as costs, under the guidance of lawyers, Xinhai mobilized the capable forces of various departments to sort out all relevant materials, appointed special personnel to check, checked back and forth several times, and basically completed sales contracts, sales invoices, receipts Payment certificate, certificate of origin, bill of lading, packing list, production task list, customs declaration form, customs clearance form, and insurance policy. It can be said that the workload of this work is quite large. 3.Cost verification during the investigation is the key point of the key. The success of all the previous work is the basis of the anti-dumping inspection work. In this half-year-long anti-dumping preparation work, cost accounting is the most workload and the most difficult part. "For example: I have done financial work Familiar people will be familiar with it. The domestic financial system only requires the production cost to be subdivided into three items: materials, labor and expenses, while the EU questionnaire requires us to add more than 20 items, and only the list of raw material purchases reaches 3226 lines. The data includes: purchase date, branch factory, certificate number, product name, place of origin, category, unit, quantity, amount, import tariff, transportation conditions, etc. 15 columns, if printed out, it will take more than 100 pages to print, so that before we check It is impossible to print out all the written materials when providing written materials. According to the usual practice, we only print out the first three pages and the last three pages for verification by EU officials; the expenses allocated to the cost, according to international practice, also need to calculate the packaging contained in each product. Fees, research and development costs, shipping costs, insurance costs, advertising costs, etc., the shipping costs must be subdivided into sea or land transport, material consumption must be detailed to each small screw, or even waste, and the credit cost must be calculated. Financial accounting is not considered at all, but we must prepare all possible verifiable data in strict accordance with international practice.” Xinhai’s excellent preparation work was finally recognized by EU inspection officials. Report 4: Experience of responding to anti-dumping lawsuits. Through responding to the anti-dumping lawsuit, Xinhai came to a conclusion: abandoning the response undoubtedly admitted the fact of dumping.Abandoning the practice of responding to anti-dumping investigations will often increase the suspicion of dumping in the exporting country and become the basis for enterprises in the importing country to request anti-dumping investigations. "At the same time, it also left some trade protectionists with the impression that Chinese companies are weak and deceitful, so they intensified their anti-dumping lawsuits." the same.Facing international trade barriers, Xinhai has personal experience: First, we must have courage, not be afraid of difficulties, dare to challenge, be familiar with and flexibly use WTO trade rules, and safeguard the interests of the country and enterprises. Second, it is necessary to have confidence, practice internal skills hard, strengthen strength, and continuously improve various internal management centered on financial management, so that the company's financial accounting system can be in line with international standards. Third, we must have vigor, persevere, fight to the end, actively cultivate professional international trade and legal talents, and prepare for trade disputes. Fourth, we must use "external brains" to reduce twists and turns, increase the number of wins, and hire legal institutions with practical experience as attorneys. Fifth, establish an anti-dumping early warning mechanism. The government guides enterprises to establish an anti-dumping information network and realize resource sharing. Anti-dumping is both a challenge and an opportunity. This is an old case, but it can still clearly reflect to people that encountering anti-dumping is undoubtedly a disaster for a company. In such a disaster, some companies were not so lucky, lost the market, and even But after a setback, they disappeared from people's field of vision; and the lucky ones can be regarded as surviving a catastrophe, and whether they will have future blessings depends on their "good fortune".In this old case, we saw Xinhai's final victory. Xinhai's victory is not only what we saw in the previous article, but also their efforts and wisdom in dealing with this war. "outside" practice.