Showing posts with label Chin Well. Show all posts
Showing posts with label Chin Well. Show all posts

Monday 15 March 2010

China shipping fasteners to Europe via M’sia to avoid duty


Monday March 15, 2010

China shipping fasteners to Europe via M’sia to avoid duty

By DAVID TAN



GEORGE TOWN: Domestic mild-steel (or carbon-steel) fastener manufacturers are facing intense competition in Europe from China-made mild-steel fasteners shipped via Malaysia to avoid an anti-dumping duty imposed by the European Union (EU).
China-made fasteners have been slapped with an anti-dumping duty rate of an average 87.3% imposed by the EU since February 2009.
Chin Well Holdings Bhd senior manager Richard Yeap Soon Thong told StarBiz that since then, the selling price of Chin Well’s mild-steel fasteners in Europe had to be lowered by at least 20% to compete against China-made fasteners.
“This eats into our profit margin. Otherwise, we could have marked up our pricing by 20% to 30% per tonne. The competition from Chinese fasteners has pressured Chin Well to lower its selling price of fasteners per tonne to RM4,000 and RM5,000,” he said.
Richard Yeap Soon Thong
Some local and foreign manufacturing companies are providing re-packing services for China-made fasteners and shipping them out with their generalised system of preferences (GSP) and made-in-Malaysia certificate of origin documents which enable them to enter Europe with respective duties of 1.2% and 3.7%.
“The profit to be obtained from such re-packing and shipping services is high, about 7% of the invoice for each shipment of container, which is about US$20,000 or about RM80,000.
“In the country presently, there are only six major steel fastener producers, of which four specialises in manufacturing mild-steel fasteners, producing collectively 4,000 tonnes to 5,000 tonnes of fasteners monthly.
“Since China was hit by the anti-dumping duty from EU, Malaysia’s monthly export of fasteners to the EU has increased substantially by about four to five times.
“This is the feedback we got from our distributors and wholesalers in Europe,” Yeap said.
In 2009 Malaysia exported 99,000 tonnes of all types of fasteners, comprising screws, bolts, nuts, coach screws, screw hooks, rivets, and cotter-pins, compared to 55,000 tonnes in 2008, according to data obtained from the Ministry of International Trade and Industry (Miti).
“We have informed and updated Miti on the matter, lest Malaysia is also slapped with anti-dumping duty from the EU. The Miti office from Penang has recently informed us that they are working with the EU Anti-Fraud Office (OLAF), the port authorities, and the customs to check the abuse,” he added.
ED Fastening Sdn Bhd managing director T.W. Teh said as a result of of the situation, the company had suffered a sizable loss of market share in Europe.
“Our revenue for 2009, due to price competition and loss of market share in Europe, has dropped to about RM5mil, otherwise the it could easily be 50% more,” he said, adding that Europe generated about 35% of the company’s revenue.
The European Anti-Fraud Office (OLAF) customs unit head, David Murphy, said in an on-line news report on Feb 9 that millions of euros worth of China-made goods were being fraudulently passed off as Malaysian-made by using the Port Klang Free Zone trans-shipment hub, where imported Chinese goods were transferred to another container and re-exported using the invoice of a Malaysian company.
“Some firms also use false documents to obtain certificate of origin, which declares that the goods are of Malaysian origin. OLAF is working closely with Miti to tackle the problem that also exists at other major trans-shipment hubs such as the Jebel Ali free zone in Dubai and Singapore,” Murphy said.
He added that the real risk to Malaysia was that commercial action might be taken by the EU against Malaysian companies, thereby affecting legitimate manufacturers.
When contacted, Miti, in a statement, said the ministry was scrutinising the applications for the export of fasteners to the EU.
“All exporters were required to provide additional documentation including letter of indemnity from the exporter for non involvement in transhipment or import-export activity using GSP form A in the Free Trade and Industrial Zone.
“The ministry also carried out on-site verification visits to the fasteners’ manufacturers premises to verify their capability and capacity of producing fasteners for export market.
“We are also work closely with other Malaysian authorities such as customs, port authorities, and free zone authorities to ensure there is no transhipment of fasteners from China,” it said.
The Miti statement also noted that “in a statement dated Feb 9, OLAF said it was highly satisfied with the cooperation from Miti and other government authorities relating to the evasion of anti-dumping duties.”
Malaysian Iron and Steel Industry Federation (Misif) president, Chow Chong Long, acknowledges the occurance of such transhipment cases due to the liberalisation of trade.
“We have tried in the past to obtain the monthly figures of steel products coming in and going out of the country from the Department of Statistics Malaysia. The figures would help us detect whether there is excess of steel products being brought in and leaving the country given our present capacity and allow us to follow up with the Government to take timely and appropriate action.
Chow added that “the Government should look into ways on how it can get Misif access quickly the latest data on the export and import of steel products into Malaysia.”
“The problem is that the Department of Statistics Malaysia is always three months late with its data,” he said.
The Federation of Malaysian Manufacturers’ northern region chairman, Datuk O.K. Lee, said Malaysian manufacturers should tap into their capabilities to produce high-value added products to compete against China-made goods and not resort to providing such re-packing and transhipment services that could undermine the country’s image.