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Sunday, June 14, 2009

Chinese Manufacturers Accused of Predatory Pricing in India

I don't know the details of this beyond what's given in the article below, but it sounds like anti-dumping claims and calls for "tougher safety and quality checks" are being used in an attempt to protect domestic industries in India from competition from Chinese manufacturers:

China accused of ‘predatory pricing’ tactics, by Amy Kazmin: India’s small and medium enterprises have warned that they are suffering because of cheap imports from China. They are urging New Delhi to accelerate anti-dumping investigations and impose tougher safety and quality checks on Chinese products. The appeal for greater government protection came amid rising tensions between New Delhi and Beijing over trade, after a high-profile dispute over an Indian ban on Chinese made toys.

India’s Federation of Chambers of Commerce and Industry said ... a survey of 110 small and medium-sized manufacturers found that about two-thirds had suffered a serious erosion of their Indian market share over the past year, because of cheaper Chinese products.

In its statement, FICCI said the Chinese imports were between 10 and 70 per cent cheaper than comparable Indian products, a price differential that it said was “huge and difficult to explain”. Amit Mitra, the FICCI’s secretary-general, said Indian industries were being hurt by “typical Chinese predatory pricing” intended to drive rivals out of business so that Chinese companies could capture the market – and then raise prices to more normal levels. ...

Indian manufacturers face serious competitive disadvantages in comparison with China, including poor infrastructure and rigid labour laws... However, Mr Mitra said ...“Even if we do all these reforms, will we be able to fight Chinese price mechanisms of an artificial nature...? It will be very difficult,”... The industry body called for New Delhi to step up the pace of its anti-dumping investigations and impose more stringent safety and quality checks to shield Indian companies from cheap Chinese goods. ...

In January, New Delhi announced a six-month ban on the import of Chinese toys, citing concerns about their safety, after Indian toymakers complained that such playthings had grabbed the lion’s share of the country’s $2.5bn toy market. However, the ban was lifted after just two months, after Beijing threatened to take the issue to the WTO.

But according to Dani Rodrick, we shouldn't worry about an outbreak of protectionism:

The worst that could happen is a return to the 1930s, when countries put up high trade barriers and retreated into isolationism, to the detriment of all. Fortunately, this is a remote scenario today.

In fact, he's worried about just the opposite:

The financial crisis laid bare the soft underbelly of globalization. It would be a mistake to respond by trying to take globalization to the next level.

I'll settle for maintaining th eglobalization status quo for the moment, or minimizing the erosion, but once we get through this, I hope world integration picks up where it left off.

    Posted by on Sunday, June 14, 2009 at 04:17 PM in Economics, International Trade | Permalink  TrackBack (0)  Comments (3)


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