A few days ago, Peruvian economist Iván Alonso published an article in the mainstream Peruvian newspaper “Commercial News” criticizing the Peruvian National Institute for Competition and Intellectual Property Protection (INDECOPI) for taking anti-dumping measures against China’s 34 clothing products with tax numbers. .
The article pointed out that the final report on the case recently released by INDECOPI did not fully reflect all the information covered by its 900-page technical report. INDECOPI decided to impose high anti-dumping duties on products with 34 tariff numbers under five categories: shirts, socks, pants, polo shirts, and underwear exported from China to Peru because the above-mentioned products “may cause damage to the local industry.” Notably, the Bureau did not use the phrase “determined harm.”
The report stated that 145 local garment companies will suffer “possible damage.” Compared with the total 16,000 textile companies in Peru, these more than 100 companies are just a drop in the bucket and insignificant. They cannot even be called “most companies in the industry”. Their statement that “textile output was affected from 2009 to 2011” Not representative. Even though these companies are representative, according to the survey, in recent years, the clothing output of these 145 companies has increased by an average of 15%, local market sales have increased by 19%, employees have increased, wages have increased, and the profits of the companies have not been “damaged.”
According to the INDECOPI report, the Peruvian domestic market has developed rapidly in recent years. However, due to the low price of imported Chinese clothing, Peruvian domestic manufacturers have lost their deserved market share and profits, and their inventories have increased. Taking 2007 as an example, the profit margin of Peruvian clothing companies was 15%. However, from 2009 to 2011, Chinese clothing entered the Peruvian market in a large scale, causing the profits of local companies to fall to between 9% and 10%. Although profit margins are low, Peruvian domestic garment companies have expanded production and hired more workers, indicating that profit margins are acceptable to these business owners.
INDECOPI’s assertion that local companies’ inventories have increased by 30% is biased, as it wants people to understand that unfair competition has caused the unsaleability of domestic products. But this calculation does not take into account the increase in production by local companies. In 2009, these companies produced 151 million pieces of clothing products, and in 2011 it reached 173 million pieces. The inventory-to-production ratio only increased from 13% to 15%. This inventory ratio does not reflect the damage to the clothing industry.
INDECOPI’s basic argument is that although the Peruvian market has grown, Chinese clothing has caused Peruvian domestic products to lose market share. However, the market develops because someone makes it bigger. It is natural that Peruvian importers can meet the needs of consumers with high-quality and low-priced Chinese products and have efficient sales channels, thereby gaining a larger market share. The cooperation between the two parties has enabled the secret clothing market to develop rapidly.
In short, INDECOPI has not proven that Chinese clothing products have caused “damage” to Peru’s domestic clothing production, and anti-dumping measures will definitely cause the clothing purchased by most consumers to be out of stock.
