Russia Details Chinese Bearing Import Investigations

Russia Details Chinese Bearing Import Investigations The Russian Ministry of Economic Development and Trade (MEDT) has laid out the reasons for and background of its investigation into imports of ball and roller bearings from the Peoples Republic of China. MEDT's probe has two points of focus for China-made bearings: those smuggled into Russia, and those bearings imported legally but then sold at artificially low prices ("dumped"). A European Bearing Corp. (EBC, Russia) spokesman said his government believes at least 2,000 bearing plants are currently operating in China, but only 400 or so are licensed and regulated. All the others, primarily located in rural areas, operate uncontrolled, unregulated and often illegally -- but are ignored or encouraged by local officials hungry for the income. A serious concern, said Russian officials, is the high volume of low-quality counterfeit branded bearings coming into the country from China. The final point under investigation is "identity masking," or a falsified country of origin. Identity masking is the situation where a company in China produces bearings for a client in Europe; the European company's name and trademark are on the bearings. But most importantly, those bearings made in China are marked with the European company's country of origin. To hide their origins, the bearings are actually shipped from China to a European warehouse and then back to Russia. The MEDT claims domestic bearing production plummeted 30% between 2002 and 2005, to 70% of the domestic market, almost entirely due to bearings from China. Meanwhile, the volume of Chinese bearing imports grew sixteen-fold. Compounding the lower sales, Russia's bearing manufacturing plants now report average capacity utilization has dropped from 51% in 2002 to the current 42%, and employment at Russian bearing plants is off by 32%. Part of the employment drop is due to necessarily increased productivity, but the remainder is blamed on Chinese imports. Ministry officials say no preemptive action will be taken; instead, they will wait until the investigation's results are available. At that time, the Chinese government may be offered various trade options. But if dumping is found, there will be a harder stance, minimum price enforcement, and special antidumping duties and tariffs on bearing imports.