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Chinese TV Makers Say Duty Charges Won't Affect Earnings
Nov 26, 2003
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Two major Chinese television manufacturers listed in Hong Kong said Tuesday any possible U.S. anti-dumping duty charges will have minimal impact on their earnings.

"The impact is minimal. We are looking at an impact of 1%-2% of our total revenue," a TCL International Holdings Ltd. spokeswoman said.

The U.S. Commerce Department reported on Nov. 24 in a preliminary ruling that some Chinese television makers are dumping their products in the U.S. market to the tune of 27.94 to 45.87 percent.

The department said TCL was exporting at a dumping margin of 31.35 percent, while rival Skyworth Digital Holdings Ltd. was accused of a dumping margin of 40.84 percent.

The Commerce Department defines dumping as the sale of an export good at a price below the home-market or a third-country price, or below the cost of production. The dumping margin is the price difference expressed as a percentage of the export price.

The TCL spokeswoman said that the products in dispute, cathode-ray tube televisions of 21-in and above, account for 20 to30 percent of its TV exports to the U.S., or about 200,000 to 300,000 units a year. Exports to the U.S. account for 30 percent of TCL's total exports, which in turn contribute about 15 percent of the company's total revenue.

TCL also has production bases outside China, which will not affected by the latest U.S. ruling. It has production lines in Vietnam and has subcontractors in the Philippines and Indonesia. And its recent joint venture agreement with Thomson S.A. (TMS) means that the French company's plants in Thailand and Mexico will be accessible if needed.

Skyworth Digital Investor Relations General Manager Maggie Mak said the U.S. decision would have little impact on the company.

"We haven't really entered the U.S. market in a big way," she said.

In the financial year ended March 2003, Skyworth sold 5,000 TVs in the U.S. It sold a total of 1.85 million units overseas. In the 6 months to September this year, total TV exports to the U.S. totaled fewer than 1,000 units.

Skyworth intends to enhance its existing production lines in Mexico, or develop production lines in Southeast Asia as part of strategies to tackle the U.S. market, Ms. Mak said. It will also explore possibilities of cooperating with U.S. companies with extensive sales and marketing networks, with the aim of developing original equipment manufacturing (OEM) business.

The U.S. Commerce Department said it plans to hand down its final ruling on April 12, 2004. If the Department maintains its ruling then, and if the U.S. International Trade Commission also acknowledges injury to U.S. TV makers following that, the antidumping penalties will be finalized.

The petition was filed in May by a Tennessee electric appliance company, Five Rivers Electronic Innovations, and two U.S. labor unions of television assembly workers. Five Rivers had been demanding the imposition of tariffs of up to 84 percent on Chinese products. (Dow Jones)

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