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issue: January 2005 APPLIANCE European Edition

Guest Editorial
Free and Fair Trade with China


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by Peter Carver, director general, Association of Manufacturers of Domestic Appliances (AMDEA)

“Let China sleep,” said Napoleon, “for when she wakes the world will tremble.” Toward the end of last year, I shared a meeting with a Chinese refrigerator manufacturer I had never heard of. A colleague murmured in my ear, “Their capacity is big enough to supply the entire EU market.” Start trembling, baby.

Peter Carver

What brought us together in that room was a jointly-owned project we have called “Free and Fair Trade” between the EU and the People’s Republic of China. In Europe, the industry is fed up with the menace of copied or counterfeit product from China targeted at our markets, both here and throughout the world. Many Western manufacturers take an extra two managers with them to every international trade show, just to snoop on [mainly Asian] stands and pounce on products that have been copied, counterfeited, or contain “passing off” of their brands or otherwise infringes their intellectual property rights.
There are also complaints that some of the unbranded or unknown brand product imported into the EU doesn’t comply with all the necessary safety laws and—even worse—may even carry pirated third party approval marks.

One of AMDEA’s member companies, Strix, a kettle control manufacturer, has been targeted for years by copying manufactures, mainly from China. What is particularly galling is that Strix owns a plant in China, yet finds itself undercut by unscrupulous manufacturers that copy their product using workforces on worse pay and conditions. A double whammy. Recently, they have been forced to defend themselves against one of these companies, which claims that Strix’s design does not comply with Chinese variations in the international standard and is, therefore, “unsafe.” Wonder where they learned that little trick from.

Just more than 2 years ago, having fought piecemeal on a number of different fronts to keep the “copyists” out of our markets, AMDEA took the initiative and persuaded CECED, our European Association, to set up a special Counterfeiting Task Force under my chairmanship. We had severe problems defining the different wrongdoings, for each EU Member State has its own law and definitions; we also suffered from the perhaps understandable commercial coyness of manufacturers to detail their problems and the financial impact or to share their solutions with competitors. That’s beginning to loosen.

But we also got suggestions to broaden the agenda, and to include non-tariff barriers to trade which use devices such as deviations in standards, routines at landing ports, and certification rules.

Here, perhaps, was an Agenda we could persuade the Chinese authorities to share. Contact was made with the Chinese Household Electrical Appliances Association (CHEAA), which expressed interest. I drafted the Protocol of Co-Operation Between CHEAA and CECED. After some fine tuning, the Protocol was signed at a special ceremony in front of Chinese Administration and European Commission officials during a World Trade Organization (WTO) series meeting. And the rest, we resolutely hope, will be history in about 5 years time.

Why the confidence? It’s the renegades who give Chinese manufacturing a bad name. The country does have its own high-grade appliance companies: Haier, for instance, is a leading member of AMDEA; its representative in the UK is chairman of our major appliance committee. This company knows about Europe’s concerns in this area. And some of CHEAA’s other members are EU manufacturers. Part of their delegation to witness the signing of the protocol in Brussels in November was a refrigeration engineer from Bosch Siemens.

And those reputable manufacturers in China don’t like their product being copied any more than we do. Nor do they like markets being polluted by sub-standard product, regardless of the competitor. They are also apprehensive about some of this product being decidedly unsafe (i.e., a plastic kettle or coffeemaker whose control fails to function can burn your house down).

But the other big plus for the Chinese is that the Protocol commits both sides to removing barriers to trade that many countries are tempted to erect or cling onto. Among the commitments in the Protocol is that both parties will alert each other whenever they become aware of any proposal that could affect the rules covering design, manufacture, or marketing of domestic appliances.

During our “Protocol Week” of meetings with the Chinese, they made clear their commitment with a series of presentations about upcoming changes in standards and energy legislation and labeling regulations. I was a little surprised by their level of ignorance of what is being developed in what is, after all, the much open procedures adopted in the European institutions.

It’s now down to me, working with the secretary general of CHEAA, Ms. Jiang Feng, to start working on the details of our new collaboration. At the European end, we will also seek to establish an Alliance Against Counterfeiting, bringing the importers, distributors, and retailers together with the manufacturers to deal with copied product from whatever source, for we must remember that China is not the only country of origin.

It won’t be plain sailing, and there will be some conflicts and some tough talking as we work on this new agreement. But we have made a start.

About the Author

For 12 years, Peter Carver has been director general of The Association of Manufacturers of Domestic Appliances (AMDEA) based in the UK. He is also a non-executive director of ASTA BEAB, the UK Approvals Board, and of the Electrical and Electronic Servicing Training Council.

 

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