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An Overview of Wenzhou Enterprises Responding to Law Suits Abroad in 2010

an overview of wenzhou enterprises responding to law suits abroad in 2010

According to Wenzhou Bureau of Foreign Trade and Economic Cooperation, Wenzhou enterprises have encountered five international anti-dumping investigations in 2010 in seamless steel tube and low-voltage electrical equipment etc with the amount related to the suits reaching more than 100 million dollars. All enterprises involved responded to the suits, an uncommon practice in the history. Some Wenzhou enterprises sued even won anti-dumping suits, which seemed a fundamental change on their way of breaking trade barriers.

At the end of 2009, Japan planned to establish and implement CR regulations in the summer this year, which raised the curtain of Wenzhou enterprises meeting with trade barriers. Japan has been the largest export destination for cigarette lighters originating from Wenzhou. "The implementation of CR regulations in Japan will have an immeasurable effect on our lighter industry." Said by Li Jianjiang, president of Zhejiang Teling Light Industry. His company realized an output of RMB 160 million in 2009 and 90% of their products were exported to Japan. According to the statistics from Wenzhou Customs, the export of cigarette lighters from Wenzhou to Japan reached USD 58.0929 million in 2009, accounting for more than 50% of Wenzhou’s total lighter export.

In succession, India formal started the anti-dumping investigation on China's seamless steel tubes on January 12 this year. During the investigation period, the export of China's seamless steel tubes to India totaled USD 506 million, among which Wenzhou's export took up nearly USD 60 million. On August 26, 2010, India initiated an anti-dumping investigation on opal glassware originating from China. The total amount of Wenzhou export in 2009 related to the investigation was USD 2.08 million.

On September 3, 2010, General Protecht Group (Tongling Technology Group), a Wenzhou-based low-voltage electrical equipment manufacturer, was faced with another law suit. Within one week after Tongling won a suit regarding its breakers on August 26, US Leviton submitted to US ITC an application to launch a new-round 337 investigation on five breaker manufacturers in China including General Protecht Group.

On September 30, 2010, EU formally launched the anti-dumping investigation on seamless stainless steel tubes from China. The export of such products from Wenzhou to EU was around USD 16 million. It seemed the road of Wenzhou enterprises to the world was blocked with trade barriers one after another.

After analyzing the Marathon law suits between Tongling and US Leviton and Paxiximu, Zhang Pin, professor of Peking University Law School, pointed out that the successive suits filed by big US enterprises were aimed at restrain Chinese enterprises from entering the US market. In the previous anti-dumping cases related to Wenzhou, enterprises responding to suits were likely to reconcile themselves with their rivals and even won a zero duty, while those who did not respond to suits were burdened with duties as high as 200%.

Hence, responding to suits is actually an investment, one made to maintain and even expand the market share of export. General Protecht Group has spent hundreds of thousands of dollars on its five suits of intellectual property rights in recent six years, but the company still firmly chose to respond to the new suit. Moreover, General Protecht Group took the initiative on October 28 this year to sue Leviton to the Federal Court of New Mexico State for violating the reconciliation agreement and demanded compensation. This was the first time that a Chinese enterprise had turned itself from a defendant to a plaintiff in the United States.

With regard to Japan's scheduled CR regulations, Wenzhou Lighter Industry Association promptly set up a team after learning the news and went to Japan for lobbying. The result was satisfying in that refillable metal lighters, the main export of Wenzhou lighters, would be excluded from the practice of Japanese CR regulations which would be formally put in place in December 27, 2010.

Though Wenzhou enterprises have made some progress in responding to law suits abroad, it is obviously more effective to strengthen early warning and take preventive measures by mastering market situation abroad so as to eliminate trade frictions in the bud. Thus, export-oriented industries in Wenzhou have started to set up trade alarming sites to cover most export industries. In order to obtain the first-hand trade alarming information, some industry associations have extended their alarming networks abroad. For example, Wenzhou Optometric and Optical Association has established an alarming site in Turkey. "Based on the alarming site, once there is any sign in Turkey regarding anti-dumping, we will cooperate with our partners in Turkey to eliminate those small frictions."

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