The US Pencil Association determined that there was dumping, namely, exported commodities being allegedly sold at a price less than their normal value.

Li's company has been dealing with such dumping charges initiated by the US since 1993, yet this is the first time a suit has been lost - her company failed to provide sufficient figures on its transit trade volume via a third country.

Although statistics on the extent of the damage caused by the anti-dumping duty are not available, Li estimates that it has affected at least 20 per cent of the company's US-targeted exports, valued at up to $8 million annually.

The company is now waiting for final arbitration of the Department of Commerce, due in May, hoping that it will then be able to pull its feet back from the hot waters of the anti-dumping duty.

"We will of course try our utmost to regain what we deserve, but it's really hard to say what will be the outcome," she said.

A fair number of domestic enterprises are in a difficult situation: on the one hand, they are eager to expand into overseas markets through exports; on the other, they are unsure whether they will suffer heavy blows in the name of anti-dumping measures, which have the power to shut them out of the desired foreign market. Such concerns have intensified with China's World Trade Organization accession.

Dumping charges

Statistics show that Chinese enterprises were the subjects of as many as 300 anti-dumping cases throughout the 1990s, involving more than 4,000 types of commodities ranging from colour TVs to steel products. Insiders estimate that such anti-dumping charges affected the related enterprises' combined export volume valued at $10 billion.

With an average annual growth rate of nearly 13 per cent over the past two decades, China's robust foreign trade has made domestic export-oriented enterprises easy targets of anti-dumping charges.

Given the lingering economic recession worldwide and cut-throat competition on the global market, trade protectionism often gets the upper-hand, making anti-dumping a common measure for self-protection.

On the other hand, as many Chinese enterprises fail to turn out high-value-added commodities, rendering export quantity as well as low production and low labour costs their major advantages.

More expected

Since China has not been fully recognized as a market-economy country, its enterprises' export commodities must undergo a discriminatory price comparison with a substitute country, whose comparatively higher production costs often result in alleged dumping.

Dubbed China's economic powerhouse, Shanghai has witnessed an increasing number of anti-dumping cases involving local enterprises.

According to statistics from the Shanghai Economic Commission, local enterprises have been involved in 20 such cases over the last five years, including six suits in which local companies initiated dumping charges against their foreign counterparts.

Among the remaining 14 suits initiated by foreign companies, three are still proceeding. Local enterprises won six, involving enterprises like Baosteel Corp and Shanghai Chemical Plant Co, while three ended in acceptable results like comparatively low anti-dumping duties for the Shanghai side.

Guan Weiyong, director of trade and marketing under the commission, admits that such figures may be incomplete, as some enterprises are reluctant to report their bitter experiences to the government.

"WTO entry will definitely give birth to more anti-dumping cases and involve more domestic companies," Guan said.

Active response

In Guan's eyes, the management models and industrial structure of quite a number of local enterprises are scarcely able to meet the requirements of a global business operation and fail to gather sufficient updated information on the developments of the related sectors abroad.

Some enterprises turn out not to have adapted very well to the latest international trade and marketing rules, especially given the country's WTO membership, which often results in a disadvantageous position for those enterprises that encounter overseas dumping charges, said Guan

"It won't work if enterprises stick to a defensive stance in the hope of staving off anti-dumping lawsuits," Guan said. The best solution is to sharpen their competitive edge on the global market with upgraded management mechanisms, cutting-edge technologies and products, as well as sufficient knowledge of related trade and marketing rules, he added.

As auxiliary measures, the government is determined to encourage local intermediaries like industrial associations or law firms to play a bigger role in helping local enterprises deal with anti-dumping matters.

More training programmes will be available in the near future to enable top executives and staff of these enterprises in charge of anti-dumping issues to better prepare for probable dumping charges, Guan said.

Yue Wenhui, chief partner and anti-dumping expert with Shanghai Zhongyuan & Lantian Law Firm, believes that an urgent task is to help some enterprises become less reluctant to respond to dumping charges in consideration of the long duration, complex procedures and high costs involved as well as the seemingly dim judicial prospects.

"If they fail to stand up and fight for their rights, they will have no chance of entering the overseas market, and that will be a heavy blow to their business in general," said Yue.

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