2012R1072 — EN — 16.11.2012 — 000.001

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents





Corrected by:









▼B

COMMISSION REGULATION (EU) No 1072/2012

of 14 November 2012

imposing a provisional anti-dumping duty on imports of ceramic tableware and kitchenware originating in the People’s Republic of China







THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community ( 1 ) (‘the basic Regulation’), and in particular Article 7 thereof, After consulting the Advisory Committee, Whereas: PROCEDURE Initiation (1) On 16 February 2012, the European Commission announced, by a notice published in the Official Journal of the European Union ( 2 ) (‘the notice of initiation’), the initiation of an anti-dumping proceeding with regard to imports into the Union of ceramic tableware and kitchenware originating in the People’s Republic of China (‘the country concerned’, ‘China’ or ‘the PRC’). (2) The proceeding was initiated following a complaint lodged on 3 January 2012 on behalf of EU producers (‘the complainants’), representing more than 30 % of the total Union production of ceramic tableware and kitchenware. The complaint contained prima facie evidence of dumping of the said product and of material injury resulting therefrom, which was considered sufficient to justify the opening of a proceeding. Parties concerned by the proceeding (3) The Commission officially advised the complainants, other known Union producers, the known exporting producers in the PRC, importers, traders, users, suppliers and associations known to be concerned, and the representatives of the PRC of the initiation of the proceeding. The Commission also advised producers in the Russian Federation, which was proposed in the notice of initiation as a possible analogue country. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation. All interested parties who so requested and showed that there were particular reasons why they should be heard, were granted a hearing. (4) In view of the apparent high number of exporting producers and unrelated importers, the notice of initiation requested exporting producers and unrelated importers to make themselves known to the Commission and to provide basic information on their activities related to the product concerned during the period from 1 January 2011 to 31 December 2011. This information would allow the Commission, in accordance with Article 17 of the basic Regulation, to decide whether sampling would be necessary and if so, to select samples. (5) In view of the large number of Union producers involved in this proceeding, the notice of initiation announced that the Commission had provisionally selected a sample of Union producers for the determination of injury in accordance with Article 17 of the basic Regulation. That pre-selection had been made by using the information available to the Commission at initiation stage and it was based on the producers’ sales volume, size, geographic location in the Union and product segment. It included six Union producers covering all major product types and located in five Member States, out of which two where small and medium-sized enterprises (SMEs). That preliminary sample accounted for over 15 % of the estimated total Union production. However, one of the preliminary sampled producers did not wish to be part of the sample and several interested parties submitted that a Member State with large production volumes had been overlooked and should be included in a representative sample. In view of this, the Commission changed its preliminary sample and the resulting final sample included seven Union producers covering all major product types and located in six Member States, out of which two were SMEs. That sample represented over 20 % of the estimated total Union production. (6) Around 400 exporting producers or groups of exporting producers in the PRC who account for over 60 % of total exports provided the requested information and agreed to be included in the sample. On the basis of the information received the Commission provisionally selected a sample of five exporting producers with the highest export volume to the Union and invited all exporting producers known to the Commission to make comments on the proposed sample. Two exporting producers pre-selected to form part of the sample then corrected their sampling information such that their export volume was not sufficient for them to be included in the sample. The Commission then selected the final sample with the updated five largest companies in terms of export volume. The sampled companies account for almost 20 % of the exports to the Union of all cooperating exporting producers. (7) The companies or groups of companies finally selected to be included in the sample are: (a) Hunan Hualian China Industry Co., Ltd and its related companies, (b) Guangxi Sanhuan Enterprise Group Holding Co., Ltd and its related companies, (c) CHL International Ltd and its related companies, (d) Shandong Zibo Niceton-Marck Huaguang Ceramics Limited and its related companies (‘Niceton’), and (e) Guangxi Province Beiliu City Laotian Ceramics Co., Ltd (8) One company contested the selection of sampled companies and claimed that it should be included in the sample. It argued that its inclusion would not make the number of sampled companies unreasonable or cause delays to the investigation, especially since the company is a relatively small exporter. It further claimed that the company is foreign-owned and that the sample would not be representative without its inclusion. (9) The Commission recalls that the selection of sampled companies was made on the basis of the largest quantities of volumes in accordance with Article 17(1) of the basic Regulation taking into account the number of producers that could reasonably be investigated within the time available. Considering that the company is a relatively small exporter, its inclusion would not add any value to the representativeness of the sample in terms of volume exported. Furthermore, it is also noted that the company came forward very late — four months after the final selection had been communicated to all exporting producers and also after verification visits at the selected companies’ premises had taken place. The request to be included in the sample has therefore been rejected. (10) More than sixty unrelated importers replied by the deadline to the sampling questions and offered cooperation in the proceeding. From those companies, five were selected to form the sample. These five unrelated importers were selected on the basis of the volumes and value of imports and resales in the Union, their geographical location, their business model and their product segment. The sampled companies corresponded to the largest representative volumes and value of imports and resales in the Union which could reasonably be investigated within the time available. According to the figures reported at the sampling stage, they accounted for ca. 6 % of the imports of the product concerned during the IP. (11) In order to allow exporting producers in the PRC to submit a claim for market economy treatment (‘MET’) or individual treatment (‘IT’), if they so wished, the Commission sent claim forms to the Chinese exporting producers that had so requested and to the Chinese authorities. (12) Eleven Chinese exporting producers or groups of exporting producers requested MET pursuant to Article 2(7) of the basic Regulation, or IT should the investigation establish that they did not meet the conditions for MET. Three of these claimants were included in the sample whereas the other eight were not. One of these exporting producers, not included in the sample, subsequently withdrew its MET request while retaining its claim for IT. The remaining two exporting producers in the sample and four other companies, not included in the sample, requested IT only. (13) The Commission sent questionnaires to the five sampled exporting producers in the PRC and to almost 300 other exporting producers in the PRC that had so requested. Moreover, questionnaires were sent to the seven Union producers selected in the sample, the five importers selected in the sample, four associations of retailers and distributors and also to individual retailers and distributors who so requested. In addition, questionnaires were sent to exporting producers in India, Turkey, Brazil, Thailand and Russia, which were considered candidate countries for the selection of an appropriate analogue country. (14) Replies were received from thirteen exporting producers or groups of exporting producers in the PRC and from three producers from possible analogue countries (Brazil, Thailand and Russia). Furthermore, questionnaire replies were received from the seven Union producers selected in the sample and the five importers selected in the sample. Questionnaire replies were also received from one retailer, one distributor and two associations of retailers and distributors. (15) In addition, the Commission received submissions from more than 20 importers not related to an exporting producer, several retailers, a provider of marketing programmes and from the Chinese Chamber of Light Industrial Products and Arts-Crafts (CCCLA). (16) The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits were carried out at the premises of the following companies: Union producers (17) Verification visits were carried out at the premises of the seven sampled Union producers. (18) The sampled Union producers as well as other cooperating Union producers requested, on the grounds of the provisions of Article 19 of the basic Regulation, that their identities be kept confidential. They claimed that the disclosure of their identity could lead to a risk of significant adverse effects. (19) Certain complainant Union producers supply customers in the Union that also source their products from China, thus benefiting directly from these imports. Those complainants considered themselves therefore in a sensitive position since some of their clients might not be satisfied with their lodging or supporting a complaint against alleged injurious dumping. For these reasons they considered that there was a risk of retaliation by some of their clients. In addition, certain complainant Union producers are also exporting to China. Those companies deemed that lodging or supporting a complaint against alleged injurious dumping could represent a threat to their business in China. The request was granted as it was sufficiently substantiated. (20) The representatives of certain exporting producers, the CCCLA and some unrelated importers claimed that they could not properly exercise their right of defence because the identity of the complainants and supporters had not been disclosed. They argued that, in those circumstances, parties were precluded from commenting on standing, material injury, whether producers could be excluded from the Union industry according to Article 4(1)(a) of the basic Regulation and/or the representativity of the sample. However, it is noted that the Commission ensured that these issues could be verified and dealt with in the files available for inspection by interested parties, such as correspondence to interested parties, via notes on standing and the sample selection and via requiring properly documented submissions from other parties. The claim was therefore rejected. Exporting producers in the PRC — Hunan Hualian China Industry Co, Ltd, Hunan Hualian Ebillion Industry Co., Ltd, Hunan Liling Hongguanyao China Industry Co., Ltd and Hunan Hualian Yuxiang China Industry Co., Ltd (Hunan Hualian) — Guangxi Sanhuan Enterprise Group Holding Co., Ltd and Guangxi Sanhuan Lucky Xinda Export & Import Co., Ltd (Guangxi Sanhuan) — CHL International Ltd and CHL Porcelain Industries Ltd (CHL) — Shandong Zibo Niceton-Marck Huaguang Ceramics Limited, Shandong Silver Phoenix Company Limited and a related trader based in Hong Kong, Niceton International Limited (Niceton) — Guangxi Province Beiliu City Laotian Ceramics Co., Ltd — Fujian Dehua Hiap Huat Koyo Toki Co., Ltd — Shenzhen Baosanhe Ceramics Industrial Co., Ltd — Chaozhou Fairway Ceramics Manufacturing Co., Ltd — Chaozhou Mingyu Porcelain Industries Co., Ltd — Shenzhen Grand Collection Industrial Co., Ltd and Chaozhou Grand Collection Tableware Co., Ltd (Grand Collection) — Tienshan (Handan) Tableware Co., Ltd — Zibo Kun Yang Ceramic Corporation Limited Union importers — Symbol srl, Treviso, Italy; — Metro AG, Dusseldorf, Germany; — Ritzenhoff & Breker GmbH & Co. KG, Bad Driburg, Germany; — Joseph Maeser GmbH, Dornbirn, Austria; — IKEA Supply AG, Pratteln, Switzerland Exporting producer in the analogue country (21) The cooperating Brazilian producer requested that its identity should remain confidential as its disclosure could result in significant adverse effects on its business. The request was deemed warranted and hence accepted. Investigation period (22) The investigation of dumping and injury covered the period from 1 January 2011 to 31 December 2011 (‘investigation period’ or ‘IP’). The examination of the trends relevant for the assessment of injury covered the period from 1 January 2008 to the end of the investigation period (the period considered). (23) The complainants claimed that the period for assessment of injury should be extended by one year and start in 2007 whereas CCCLA claimed that it should be shortened by one year and start only in 2009. As concerns the first claim, it was not granted given that nothing on file substantiated that a period considered of five years would reflect trends better, as suggested by the complainants. As to the second claim, CCCLA referred in general terms to WTO case law which would have established that WTO members cannot select a baseline that results in a mere endpoint-to-endpoint comparison and that if a change in the baseline year can easily reverse a finding of injury, the WTO member might have difficulty establishing the existence of material injury. However, the investigation showed that reducing the period considered in this case would result in an unnecessarily short analysis period which moreover, in view of the impact of the economic crisis on certain indicators, could have offered a biased picture of injury trends. Thus, both claims were provisionally rejected. PRODUCT CONCERNED AND LIKE PRODUCT Product concerned (24) The product concerned is ceramic tableware and kitchenware currently falling within CN codes6911 10 00, ex691200 10, ex691200 30, ex691200 50 and ex691200 90 and originating in the People’s Republic of China (the product concerned). It can be of porcelain or china, of common pottery, stoneware, earthenware or fine pottery or other materials. The main raw materials include minerals such as kaolin, feldspar and quartz and the composition of raw materials used determines the type of the final ceramic product produced. (25) Ceramic tableware and kitchenware items are commercialised in a large variety of forms that have been evolving over time. They are used in a wide range of places, e.g. households, hotels, restaurants or care establishments. Claims for exclusion (26) During the investigation, several claims for exclusion of specific products from the product scope were submitted and analysed. The analysis of these claims is summarized hereunder. (Fine) bone china (27) In its representations CCCLA claimed that (fine) bone china should be excluded from the product scope of the investigation. Allegedly, (fine) bone china is fundamentally different from other kinds of table and kitchenware due to differences in physical characteristics, production processes, end-uses and consumer perception. Made of bull bone powder, its high levels of whiteness and translucency would be noticeable. With a very high mechanical strength and chip resistance, it would be produced in much thinner cross-sections and via a more sophisticated and costly production not typically used by Union producers. Also, only few Union producers would be manufacturing (fine) bone china. (28) With regard to these claims, the investigation revealed firstly that there is no universally accepted definition of bone china. (Fine) bone china is just one form of soft-paste porcelain, a big share of the raw materials being the same as for other ceramic items. In its submissions CCCLA contradicted itself as to the combination and share of the different ingredients. Secondly, the investigation could not confirm that (fine) bone china required a much more sophisticated production process. Thirdly, the use of (fine) bone china as tableware is identical everywhere, be it in China or in the Union. Also, hardness and robustness are not specific to (fine) bone china. For instance, also ceramic tableware for restaurants or catering is specially hard and robust. Last but not least, (fine) bone china is manufactured by a number of Union producers and it is in competition with imports of (fine) bone china originating in China. The claims for the exclusion of (fine) bone china from the product scope of the investigation are therefore provisionally rejected. Ceramic (kitchen) knives (29) Two exporting producers, CCCLA and various importers claimed that ceramic (kitchen) knives should be excluded from the product scope. This claim is based on the allegation that, in view of their specificities, such knives and other types of ceramic tableware and kitchenware could not be considered as forming one single product. Ceramic (kitchen) knives usually have a ceramic material made of zirconium oxide for the blade which is not used for ‘standard’ tableware such as cups and plates. Their degree of interchangeability with the main categories of the product under investigation would be limited. (30) The investigation revealed that ceramic (kitchen) knives have the same physical characteristics (shape and hardness), industry design and end-use (slicing) as metal (kitchen) knives. Consequently, they are different from the other products covered by the proceeding because the latter are mainly items aimed at retaining foodstuff due to their specific design and physical characteristics. (31) Moreover, it was claimed that the technology to produce those ceramic (kitchen) knives would be inexistent in the Union, so continuing the investigation with respect to ceramic (kitchen) knives would infringe Union and WTO law. The complainants acknowledged that, to their knowledge, there was no such production in the Union. (32) It was also added that ceramic (kitchen) knives are sold only in exclusive locations, while distribution channels (kitchen tools distributors) and the representative association (cutlery association) would also differ. However, the investigation could not confirm that these issues would be tantamount to a different consumer perception as compared to other types of ceramic tableware and kitchenware. (33) It was further alleged that measures on ceramic knives would not restore fair market conditions for tableware but rather harm end consumers (of ceramic (kitchen) knives). Some parties stated that, ceramic (kitchen) knives not being produced in the Union, it was not possible that there was material injury to the Union industry in this respect. The Commission subordinated the analysis of these claims to a conclusion on whether ceramic (kitchen) knives and other types of ceramic tableware and kitchenware are considered as forming one single product. (34) On the basis of the considerations in recital (30) above, the investigation provisionally concluded that ceramic (kitchen) knives are fundamentally different from other kinds of ceramic table and kitchenware due to differences in physical characteristics, production processes and end-uses. Therefore, the claim to exclude them from the product scope of this investigation is provisionally accepted. Chinese/Oriental-looking items (35) Two importers claimed that Chinese/Oriental-looking tableware and kitchenware should be excluded from the product scope. The main reason alleged was that this kind of items would not be produced in the Union, that in the Union the demand for these goods had always been supplied by imports and that imports of this type would not have any negative impact on any market share held by the Union industry. (36) The investigation established that there is neither a universally accepted and objective definition of this category nor specific features to identify it. Moreover, Union producers can manufacture this style as well. In addition, Chinese/Oriental-looking tableware and kitchenware do not have a unique or different end use. Last but not least, the investigation pinpointed that in many Asian restaurants western styled tableware is used and that the products in question can easily be substituted. The claims for the exclusion of Chinese/Oriental-looking items from the product scope of the investigation are therefore provisionally rejected. Durable porcelain (37) On the one hand, it was claimed that durable porcelain should be excluded from the product scope because of its unique physical characteristics and production process. With higher endurance and strength, durable porcelain raw materials would include 6-10 % of alumina powder, while the preparation process of raw materials (kaolin) would be unique. Durable porcelain would require skilful workers and enjoy higher quality and price as compared to traditional tableware. Moreover, there would be no Union producers of it. (38) On the other hand, an importer submitted that durable tableware, typically used as hotelware, accounts for a substantial share of overall Chinese ceramic production, so its disregard would produce misleading results for the investigation. (39) The investigation found that there is neither a universally accepted and objective definition of durable porcelain nor uncontested features to identify it. Moreover, Union producers can manufacture this type of tableware as well and both Union-made and Chinese products are in direct competition. In addition, durable porcelain does not have a unique or different end use. The claims for the exclusion of durable porcelain from the product scope of the investigation are therefore provisionally rejected. Hand-made porcelain (40) A Swedish association representing relevant Swedish importers made representations in favour of excluding hand-made porcelain from the product scope of the investigation. It invoked the long history of such handicraft in China, its affordability and the different consumer perception between Chinese handmade items versus non-handmade items produced in the Union. (41) However, the investigation showed that, on the one hand, there is no universally accepted/objective definition of this category and that, on the other hand, several Union producers do manufacture hand-made porcelain. The investigation showed neither fundamentally different physical characteristics from other kinds of ceramic tableware and kitchenware nor a different consumer perception as compared to hand-made porcelain produced in the Union. The claim for the exclusion of hand-made porcelain from the product scope of the investigation is therefore provisionally rejected. Hand-painted tableware (42) Various importers made representations for excluding hand-painted tableware from the product scope of the investigation. The arguments put forward concerned the fact that hand-painted tableware is targeted at a certain kind of consumers, that it may be used for different purposes than traditional tableware (e.g. decoration), that it is not produced in commercial quantities in the Union, that it is neither directly competitive nor interchangeable with other kitchen/tableware, the different perception by consumers, its luxury and more fragile nature, along with its specific production process, more labour intensive and involving highly skilled workers. (43) The investigation showed that the product is absolutely identical to non-hand-painted tableware until the hand-painting takes place. It also made clear that the fact that the manufacturing process involves more manual handling does not render the product a different one; indeed, for most end-users hand-painted porcelain is difficult to distinguish, if at all, from non-hand painted porcelain. The investigation further showed that hand-painted tableware has normally the same end-use as other types of ceramic tableware and that it is not necessarily more fragile. It was also found that several Union producers do manufacture hand-painted porcelain and that Union-made and imported products are in direct competition. The claims for the exclusion of hand-painted tableware from the product scope of the investigation are therefore provisionally rejected. Underglaze figurative hand-painted tableware (44) An importer made representations for excluding underglaze figurative hand-painted tableware from the product scope of the investigation. The arguments put forward concerned the fact that underglaze hand-painted tableware entails a different production process, a different use (used for food and drink, whereas, allegedly, on-glaze painted products normally cannot) and different quality and physical characteristics, namely food-safe and 100 % dishwasher and microwave proof. The party also said that no Union producer is capable and willing to do commercial volumes of underglaze figurative hand-painted tableware and suggested that there is no circumvention risk, should underglaze figurative hand-painted tableware be excluded from the product scope of the investigation. It also argued that consumer perceive it in a different way, given that, rather than as part of a brand, it is seen as collector/lifestyle item and not sold in complete sets. (45) Yet, the investigation showed that, on the one hand, there is no universally accepted/objective definition of this category and that, on the other hand, several Union producers can manufacture it. In addition, it was noted that Union-made and imported products are in direct competition. The investigation disclosed that the product is physically absolutely identical to non-hand-painted tableware and that the average consumer does not make a difference between underglaze figurative hand-painted tableware and other types of decorated tableware. It also made clear that the fact that the manufacturing process involves more skilled labour does not render the product a different one and that underglaze hand-painted tableware has basically the same end-use as other types of ceramic tableware. The claims for the exclusion of underglaze hand-painted tableware from the product scope of the investigation are therefore provisionally rejected. Non-EU produced tableware items (46) Some importers’ representations claim that the investigation should be limited to markets currently being served by complaining Union producers. Otherwise duties would harm certain ‘specialised’ importers without them being able to source from Union producers. It was also submitted that Union producers with brands do not produce for other companies and that Union producers do neither serve small orders nor work with castings as required for certain shapes. Also, Union producers would not be flexible and would not offer gift presentations. (47) This claim is provisionally rejected as it is too wide and undefined and there is no objective basis for such exclusion. Moreover, Union producers have a wide range of products and do regularly offer new products, thus collections and products ranges vary continuously. The types of products and qualities produced by the Union industry are regularly also found with exporters. In addition, the investigation unveiled that there are Union producers that manufacture items under other parties’ brands. It has also been found that Union-manufactured and Chinese imported products are in direct competition, can be easily substituted and share the same end use, similar production processes and customer perception. The question of flexibility is addressed in the Union interest section. Stoneware (48) An importer with production in China claimed that imports of stoneware products, mainly consisting of kitchenware, should be excluded from the product scope. According to this party there would only be a marginal production of stoneware products in the Union and a strong likelihood that complainants included stoneware products to pre-empt circumvention. The importer alleged also that the prices it charged on imported products were much higher than those charged by any other producer in the Union and that these imports did not cause any price depression or injury. (49) Yet, the investigation has shown that the Union production of stoneware is significant. It is also concluded that Union-manufactured and Chinese imported stoneware products are in direct competition, can be easily substituted and share the same end use, similar production processes and customer perception and physical characteristics. Price-related allegations are dealt with in recital (240). The claim for the exclusion of stoneware from the product scope of the investigation is therefore provisionally rejected. (50) Alternatively, the party claimed that stoneware glazed and/or enamelled products or non-white and/or graded stoneware glazed and/or enamelled products should be excluded from the scope of the investigation. However a conclusion on this point could not be reached at this stage of the proceeding. Other claims (51) An importer claimed that the product scope of the investigation was too wide to allow for a reasonable comparison amongst product types. An importer with producing interests in China expressed a similar view. In this respect, some parties also referred to purely decorative items. (52) In this respect, it is noted that the relevant criteria applied in order to determine whether or not the product, subject of an investigation, can be considered a single product, i.e. its basic physical and technical characteristics, are set out in detail below. Purely decorative items are thus not covered. Furthermore, even though the various types of ceramic tableware and kitchenware may indeed have certain different specific characteristics, the investigation showed that, with the exception of ceramic knives, their basic characteristics remain identical. In addition, the fact that the product concerned can be produced with some variations in the manufacturing process is not in itself a criterion which could result in a finding of two or more distinct products. Finally, the investigation also revealed that the various types of the product concerned were generally sold via the same sales channels. While some specialised shops may focus on certain specific types, a big share of the distributors (retailers, department stores, supermarkets) sell various types of ceramic tableware and kitchenware, in order to offer a wide choice range to their customers. Claims that the product scope of the investigation was too wide are therefore provisionally rejected. (53) A party claimed that certain ceramic spice mill should be excluded from the product scope. However, the investigation could not come to a conclusion on their specificities, thus the claim was provisionally rejected. Conclusion on product concerned (54) The investigation has shown that all types of ceramic tableware and kitchenware, despite the differences in terms of properties and style, have the same basic physical and technical characteristics, i.e. ceramic ware primarily aimed at being in contact with food, they are basically used for the same purposes, and can be regarded as different types of the same product. (55) In addition to the fact that they share the same basic physical and technical characteristics, all those various styles and types are in direct competition and to a very large extent interchangeable. This is clearly illustrated by the fact that there are no clear dividing lines between them, i.e. there is quite some overlapping and competition between different product types and standard buyers do not often make a distinction for instance between porcelain versus non-porcelain goods. (56) However, as explained in recitals (29)-(34) above, it was also deemed appropriate to narrow down the product scope definition on the basis of which the current investigation has been initiated by excluding ceramic knives. Therefore, the product concerned is provisionally defined as ceramic tableware and kitchenware, excluding ceramic knives, originating in the People’s Republic of China, currently falling within CN codes ex691110 00, ex691200 10, ex691200 30, ex691200 50 and ex691200 90. (57) In conclusion, for the purposes of this proceeding and in accordance with consistent Union practice, it is therefore considered that all types of the product described above, with the exception of ceramic knives, should be regarded as forming one single product. Like product (58) The investigation has shown that ceramic tableware and kitchenware produced and sold by the Union industry in the Union, ceramic tableware produced and sold on the domestic market of the PRC and ceramic tableware and kitchenware imported into the Union from the PRC, as well as that produced and sold in Brazil, which serves as an analogue country, have the same basic physical and chemical characteristics and the same basic end uses. Claims (59) During the investigation, certain interested parties argued that ceramic tableware and kitchenware produced by the Union industry and sold on the Union market was not similar to the product concerned. They claimed that this is evidenced in particular by differences between products in terms of properties, quality, consumer perceptions, channels of sales and segmentation. It was further claimed that the consumers in the Union usually perceive the product concerned as being a cheaper product and that those products do not benefit from any brand premium. (60) The investigation revealed contradictory statements by importers in that respect. While some claimed that the product concerned is usually of inferior quality and remains in a different price category compared to Union made products, others claimed that brand ceramic tableware and kitchenware manufactured in the country concerned is imported at higher prices from China. (61) On the one hand one non-sampled importer submitted that German producers place particular emphasis to the quality profile ‘made in Germany’. The party stated that the quality of the flat tableware supplied by certain German brands is considerably better because of the manufacturing method, while other importers stated that they sourced from China because of the good qualities, casting capabilities and the skilled workers. The investigation confirmed that in the Union both low and high quality ceramic tableware and kitchenware are manufactured and sold via the same distribution channels as the product concerned, i.e. via independent retailers, non-specialised supermarkets, department stores, etc. Therefore, they compete at the same market. (62) In addition, ceramic tableware and kitchenware does not necessarily indicate its country of origin. It is therefore often very difficult for the consumer to make the distinction between ceramic tableware and kitchenware manufactured in the country concerned and Union-made products. Conclusion (63) For those reasons, it is concluded that, while there may be some minor differences, ceramic tableware and kitchenware produced in and exported from the country concerned, ceramic tableware and kitchenware produced in and sold on the Brazilian market and ceramic tableware and kitchenware produced in and sold in the Union share the same basic physical characteristics and end uses and are therefore considered to be alike within the meaning of Article 1(4) of the basic Regulation. DUMPING Market Economy Treatment (MET) (64) Pursuant to Article 2(7)(b) of the basic Regulation, in antidumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with paragraphs 1 to 6 of the said Article for those producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation. Briefly and for ease of reference only, these criteria are set out in summarised form below: — Business decisions are made in response to market signals, without significant State interference, and costs reflect market values, — Firms have one clear set of basic accounting records, which are independently audited in line with international accounting standards and are applied for all purposes, — There are no significant distortions carried over from the former non-market economy system, — Bankruptcy and Property laws guarantee stability and legal certainty, and — Exchange rate conversions are carried out at market rates. (65) As set out in recital 12 above, eleven exporting producers or groups of exporting producers from the PRC requested market economy treatment (MET) and replied to the MET claim form within the given deadline. One exporting producer, however, subsequently withdrew its claim for MET. (66) In its judgment in case C-249/10 P – Brosmann and others v. Council, the Court of Justice ruled that the sampling technique laid down in Article 17 of the basic Regulation may not be applied for the purpose of determining claims of individual market economy treatment made under Article 2(7)(c) of that Regulation. The Court found that under Article 2(7)(c) of the basic Regulation cooperating producers, which are not part of the sample, are entitled to have their claims for market economy treatment examined, regardless of whether an individual dumping margin was to be calculated for those companies outside the sample ( 3 ). In view of this judgment it was decided to examine not only the MET claims of the three exporting producers or groups of exporting producers that are included in the sample but also the seven exporting producers or groups of exporting producers, which were not included in the sample. The Commission sought all information deemed necessary and verified information submitted in the MET claim at the premises of the companies in question. (67) It is the Union’s established and consistent practice to examine whether a group of related companies as a whole fulfils the conditions for MET. Therefore, in cases where a subsidiary or any other company related to the applicant in the PRC is involved, directly or indirectly, in the production or sales of the product concerned, the MET examination is carried out in respect of each company individually as well as to the group of companies as a whole. (68) Accordingly, the MET claims of ten exporting producers, comprised of sixteen legal entities, were verified. (69) None of the ten cooperating exporting producers or groups of exporting producers in the PRC was found to meet the criteria to be granted MET. The MET investigation revealed, in particular, that none of the exporting producers, either individually or as a group, have a clear set of basic accounting records, which are independently audited in line with international accounting standards. The investigation also established that seven companies, or group of companies, could not demonstrate to the Commission that there were no significant distortions carried over from the former non-market economy system. In addition, three of the ten companies failed to demonstrate that business decisions were made in response to market signals, without State interference and that costs reflect market values. (70) Moreover, during the verification visit of one of the above companies it was established that it had provided misleading and deficient information in its MET claim form, particularly in relation to a related company. Its overall cooperation was severely deficient and the company was therefore informed that article 18(1) of the basic Regulation may be applied and was asked to submit its comments. The comments received confirmed the lack of cooperation, particularly with regard to the related company. It is therefore provisionally decided that it can no longer be deemed a cooperating exporting producer and that any provisional or final findings would be made on facts available pursuant to Article 18 of the basic Regulation. (71) The Commission officially disclosed the results of the MET findings to the companies concerned in the PRC, the authorities of the PRC and the complainant. They were given an opportunity to make their views known in writing and to request a hearing if there were particular reasons to be heard. (72) Several companies argued that the Commission had failed to reply to their MET claim within three months, as required by Article 2(7)(c) of the basic Regulation. Therefore, the investigation would be vitiated by a procedural error and the Commission should, in accordance with the Brosmann judgment ( 4 ), terminate the investigation. (73) The Commission acknowledges that due to the large number of MET claims examined and verified on spot in China, in this particular case, it was not possible to make a determination on the MET claims within the stipulated period. However, it is recalled that the General Court has recently held that a MET determination made outside the three month deadline laid down in Article 2(7)(c) of the basic Regulation is not in itself sufficient to lead to an annulment of a regulation imposing anti-dumping measures ( 5 ). The claim is therefore rejected. (74) Moreover, six companies contest the Commission’s assessment that they do not have a clear set of accounting records, which are independently audited in line with international accounting standards. The Commission carefully examined these claims and found that the explanations provided were not such as to rebut the overall findings made following the on the spot verifications. More particularly, in some cases the new information provided contradicted the information previously given whereas in some other cases the companies submitted new supporting evidence that had not been provided or made available during the on the spot verifications (75) Five companies also contest the Commission’s findings that they failed to demonstrate that no significant distortions were carried over from the former non-market economy system. The comments received are however not of such character that they could alter the Commission’s findings following the verification visits. In particular, the companies did not provide any evidence that were liable to dispel the Commission’s original findings that distortions have been carried over from the non-market economy system in respect of, e.g. assets and land-use rights. (76) Finally, two companies contest the findings that they failed to demonstrate that business decisions were made in response to market signals, without State interference and that costs reflect market values. In particular, the comments received from one company were not such as to rebut the Commission’s finding that the State interfered in its recruitment policy whereas the other company provided new and contradictory information regarding raw material purchases. (77) It follows from the foregoing that none of the arguments brought forward were such as to alter the findings with regard to the MET determination. (78) On the basis of the above, neither of the ten cooperating exporting producers or groups of exporting producers in the PRC that had requested MET could show that they fulfilled the criteria set out in Article 2(7)(c) of the basic Regulation. Individual Treatment (IT) (79) Pursuant to Article 2(7)(a) of the basic Regulation a country-wide duty, if any, is established for countries falling under that Article, except in those cases where companies are able to demonstrate that they meet the criteria set out in Article 9(5) of the basic Regulation. Briefly, and for ease of reference only, these criteria are set out below: — In the case of wholly or partly foreign owned firms or joint ventures, exporters are free to repatriate capital and profits, — Export prices and quantities, and conditions and terms of sale are freely determined, — The majority of the shares belong to private persons. State officials appearing on the Boards of Directors or holding key management positions shall either be in minority or it must be demonstrated that the company is nonetheless sufficiently independent from State interference, — Exchange rate conversions are carried out at the market rate, and — State interference is not such as to permit circumvention of measures if individual exporters are given different rates of duty. (80) Three exporting producers, which were included in the sample and seven exporting producers that were not included in the sample and which requested MET, also claimed IT in the event it would not be granted MET. In addition, two exporting producers in the sample and four exporting producers not selected in the sample requested IT only. In accordance with Article 17(1) of the basic Regulation, only the IT claims of the sampled companies were examined. (81) Given the fact that all MET claims have been provisionally rejected and based on the information available, it has provisionally been established that all sampled companies that have requested IT met the criteria for being granted IT. Individual Examination (IE) (82) Claims for individual examination pursuant to Article 17(3) of the basic Regulation were submitted by seven cooperating exporting producers or groups of exporting producers not selected in in the sample. (83) At this stage of the proceedings the Commission has not taken any decisions in respect of the requests for individual examination, which will be taken in due course. Normal value Choice of the analogue country (84) According to Article 2(7)(a) of the basic Regulation, normal value for exporting producers not granted MET has to be established on the basis of the domestic prices or constructed normal value in an analogue country. (85) In the notice of initiation, the Commission indicated its intention to use the Russian Federation as an appropriate analogue country for the purpose of establishing normal value and interested parties were invited to comment on this. (86) The Commission received numerous submissions stating that Russia was not an appropriate analogue country. In particular, the information received indicated that Russia is a premium porcelain market specialised in ornamental porcelain with expensive materials while the domestic production of the product concerned is relatively small compared to domestic consumption. In addition, the Russian market is protected by non-tariff barriers, e.g. the GHOST certification systems. It was therefore considered that Russia is not an appropriate analogue country. (87) Accordingly, the Commission examined whether other countries could be a reasonable choice of analogue country and sent letters to known producers in several countries including Thailand, India, Malaysia, Turkey, Brazil, Ukraine, Indonesia, Egypt, Colombia, South Korea, Bangladesh and Argentina following which producers from India, Turkey, Brazil and Russia confirmed their willingness to cooperate with the Commission. However, only three producers from Brazil, Thailand and Russia respectively submitted a questionnaire reply. The investigation demonstrated that Brazil has a competitive domestic market for ceramic tableware and kitchenware with numerous producers and a relatively low customs duty. In addition, the data submitted by the cooperating Brazilian producer were analysed and found to be reliable information on which a normal value could be based. (88) In view of the above and considering all information available at this stage of the proceedings, Brazil has provisionally been chosen as an appropriate and reasonable analogue country in accordance with Article 2(7)(a) of the basic Regulation. Determination of normal value (89) In view of the fact that all requests for MET were denied, normal value for all Chinese exporting producers was established on the basis of information received from the producer in the analogue country, pursuant to Article 2(7)(a) of the basic Regulation. (90) In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the sales of the like product in Brazil to independent customers were representative. The sales of the Brazilian cooperating producer of the like product were found to be sold in representative quantities on the Brazilian domestic market compared to the product concerned exported to the Union by the exporting producers included in the sample. (91) The Commission subsequently examined whether these sales could be considered as having been made in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. This was done by establishing the proportion of profitable sales to independent customers. The sales transactions were considered profitable where the unit price was equal or above the cost of production. The cost of production of the Brazilian producer during the IP was therefore determined. (92) For those product types where more than 80 % by volume of sales on the domestic market of the type in question were above cost and the weighted average sales price of that type was equal to or above the unit cost of production, normal value, by product type, was calculated as the weighted average of the actual domestic prices of all sales of the type in question, irrespective of whether those sales were profitable or not. (93) Where the volume of profitable sales of a product type represented 80 % or less of the total sales volume of that type, or where the weighted average price of that type was below the unit cost of production, normal value was based on the actual domestic price, which was calculated as a weighted average price of only the profitable domestic sales of that type made during the IP. (94) As regards the types of product that were not profitable, normal value was constructed using the cost of manufacturing of the Brazilian producer plus SG&A and profit for the product types of the Brazilian producer that are profitable. Export prices for the exporting producers granted IT (95) As all cooperating exporting producers granted IT made export sales to the Union directly to independent customers in the Union, the export prices were based on the prices actually paid or payable for the product concerned, in accordance with Article 2(8) of the basic Regulation. Comparison (96) The normal value and export price were compared on an ex-works basis. The dumping margins were established by comparing the individual ex-works prices of the sampled exporters to the domestic sales prices of the analogue producer or to the constructed normal value as appropriate. (97) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. Adjustments were made, where appropriate, in respect of level of trade, differences in physical characteristics and for other factors affecting price comparability, notably ‘branding’. (98) First, it was examined whether a level of trade adjustment under Article 2(10)(d) of the basic Regulation was warranted. In this respect it was found that the Chinese exports were essentially made at wholesale level whereas the sales in the analogue country were also made at retail level. The investigation further established that on both markets the different distribution chains affected the price level thus affecting fair price comparability between export price and normal value. Furthermore, the investigation also demonstrated that the majority of Chinese export sales were made in large quantities while the majority of domestic sales in the analogue country were made in smaller quantities resulting in price differences on the same level of trade on the two relevant markets. Accordingly, in order to make a fair comparison between the export price and the normal value, the normal value was adjusted on the basis of the price differences within the same level of trade in the analogue country and, where appropriate, on the price differences found in respect of the quantities sold at each level of trade. (99) Second, it was examined whether an adjustment under Article 2(10)(a) of the basic Regulation for differences in physical characteristics was warranted. In this regard the investigation established that Chinese exporting producers qualify their products in up to five different grades ranging from A to E with significant price differences. The vast majority of export to the Union consists, however, of A-grade, B-grade or C-grade or a combination thereof. This grading is however not universal or based on any general industry wide standards but is rather company specific and allows for price differentiation. On the other hand, the analogue country producer only sell the equivalent of grade A on the domestic Brazilian market and price comparability was therefore found to be affected. Accordingly, the export price was adjusted upwards to Chinese A-grade level in order to be comparable with the product sold by the analogue producer on the Brazilian market. (100) Third, the investigation established that the Brazilian producer only sells branded products on the Brazilian market whereas the Chinese exporting producers do not sell branded products but rather — so called - ‘private label’ products or generic ceramic tableware and kitchenware. Branded products are normally perceived by customers to be products signifying a certain prestige, assured quality and design thus commanding higher market prices whereas generic (private label) products, whilst having the same physical and technical characteristics, are usually sold at considerably lower price levels. While the additional value of a branded product cannot generally be exactly quantified as it depends on many different factors, such as customer perception, brand recognition and other non-quantifiable factors, the Brazilian producer has, in this particular case, confirmed that its ceramic branded products can be sold at significantly higher prices on the Brazilian market than other non-branded (generic) products. Accordingly, a further adjustment was made to the normal value pursuant to Article 2(10)(k) of the basic Regulation. (101) Further adjustments were made, where appropriate, in respect of transport, insurance, handling and ancillary costs, packing, credit, bank charges and commissions in all cases where they were found to be reasonable, accurate and supported by evidence. Dumping margins (102) Pursuant to Articles 2(11) and 2(12) of the basic Regulation, the dumping margins for the exporting producers granted IT were established on the basis of a comparison of a weighted average normal value established for the analogue country, as adjusted with each company’s weighted average export price, as adjusted, expressed as a percentage of the CIF Union frontier price, duty unpaid. (103) A weighted average of the sampled exporting producers’ dumping margins was calculated for the cooperating exporting producers not selected in the sample. On this basis the provisional dumping margin for the non-sampled exporting producers, expressed as a percentage of the CIF Union frontier price, duty unpaid is 26,6 %. (104) In order to calculate the country-wide dumping margin applicable to the non-cooperating or unknown exporting producers in the PRC, the level of cooperation was first established by comparing the volume of exports to the Union reported by the cooperating exporting producers with the equivalent Eurostat statistics. (105) In this investigation, cooperation from the PRC was considered high for a fragmented industry since the exporting producers that came forward represent over 60 % of total exports from the PRC to the Union of the product concerned. Therefore, the country-wide margin applicable to all other exporting producers was established by using the weighted average of the highest dumping margins established for representative product types and volume of the sampled exporting producers. On this basis the country-wide level of dumping was provisionally established at 58,8 % of the CIF Union frontier price, duty unpaid. (106) On this basis, the provisional dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are:



Company Provisional dumping margin Hunan Hualian China Industry Co., Ltd; Hunan Hualian Ebillion Industry Co., Ltd; Hunan Liling Hongguanyao China Industry Co., Ltd and Hunan Hualian Yuxiang China Industry Co., Ltd 26,8 % Guangxi Sanhuan Enterprise Group Holding Co., Ltd 31,2 % CHL Porcelain Industries Ltd 30,0 % Shandong Zibo Niceton-Marck Huaguang Ceramics Limited; Zibo Huatong Ceramics Co., Ltd; Shandong Silver Phoenix Co., Ltd; Niceton Ceramics (Linyi) Co., Ltd and Linyi Jingshi Ceramics Co., Ltd 17,6 % Guangxi Province Beiliu City Laotian Ceramics Co., Ltd 23,0 % Non-sampled cooperating exporting producers 26,6 % Country-wide dumping margin 58,8 % INJURY Union production and Union industry (107) All available information concerning Union producers, including the data reported in the complaint and subsequent submissions in respect of the producers that did not come forward in this investigation was used to establish the total Union production. The total Union production of the like product was estimated by extrapolating data provided by the European and national associations, cross-checked with data provided by individual producers and also with research and statistical sources. (108) During the IP, the like product was manufactured in the Union by more than 200 Union producers. On the basis referred to in the previous recital, the total Union production was estimated to be around 240 200 tonnes during the IP. The Union producers accounting for the total Union production constitute the Union industry within the meaning of Article 4(1) of the basic Regulation and will be thereafter referred to as the ‘Union industry’. The Union industry was divided into two segments: SMEs and larger companies. SMEs accounted for 42 % of the total Union production in that period. Indeed, the Union production is highly fragmented, though concentrated in Czech Republic, French Republic (France), Germany, Italy, Republic of Poland (Poland), Portuguese Republic (Portugal), Romania, Kingdom of Spain (Spain) and the United Kingdom of Great Britain and Northern Ireland (United Kingdom). Union consumption (109) The Union consumption was established on the basis of Eurostat import statistics for the product under investigation and submissions regarding Union industry sales on the Union market. (110) On this basis, the Union consumption developed as follows:



Table 1 Volume (tonnes) 2008 2009 2010 IP Union consumption 826 896 687 609 750 830 726 614 Index (2008 = 100) 100 83 91 88 (111) The consumption of ceramic tableware and kitchenware in the Union overall decreased during the period considered by 12 %. The main decrease by 17 % happened between 2008 and 2009. (112) This overall decrease in consumption during the period considered has to be seen in conjunction with a recovery situation following the 2009 economic crisis. There are good prospects for the market for ceramic tableware and kitchenware. ( 6 ) Imports from the country concerned Volume, price and market share of dumped imports from the country concerned (113) Based on Eurostat data, the volume, market share and average prices of imports of the product concerned developed as set out below:



Table 2 Imports from the PRC 2008 2009 2010 IP Volume of imports (tonnes) 535 593 449 346 516 618 485 814 Index (2008 = 100) 100 84 96 91 Market share 64,8 % 65,3 % 68,8 % 66,9 % Average import price (EUR/tonne) 1 274 1 307 1 473 1 499 Index (2008 = 100) 100 103 116 118 (114) The volume of total imports from China decreased by 9 % over the period considered and amounted to 485 814 tonnes during the IP. However, in percentage terms, it should be noted that imports from China decreased less than the overall EU consumption. Indeed, when analysed from the perspective of the whole period considered, the market share of Chinese imports increased from 64,8 % in 2008 to 66,9 % in the IP. (115) The import price increased by 17,7 % during the period considered, from 1 274 EUR/tonne to 1 499 EUR/tonne. This is the average import price per tonne of all imports of the product concerned and therefore, the trend could be affected by changes in the product mix. Price undercutting (116) For the purposes of price undercutting, the weighted average sales prices of the sampled Union producers to unrelated customers on the Union market, adjusted to an ex-works level, i.e. excluding freight costs in the Union and after deduction of discounts and rebates, were compared to the corresponding weighted average prices of the cooperating exporters from the PRC to the first independent customer on the Union market, i.e. net of discounts and adjusted where necessary to CIF Union frontier price and also duly adjusted for existing customs duties, customs clearance costs and post-importation costs. Prices of lower-grades products were adjusted to A-grade level prices as lower grade products were, from a consumer perspective, found to be competing with A-grade products as also concluded in recital 61 above. Union industry prices were also adjusted for differences in level of trade and to neutralize the price element linked to branding, if applicable. (117) The comparison showed that during the IP the dumped products concerned originating in the PRC sold in the Union undercut the Union industry’s sales prices, when expressed as a percentage of the latter, by 26,3 % to 47,6 %. Situation of the Union industry General (118) Pursuant to Article 3(5) of the basic Regulation, the Commission examined all relevant economic factors and indices having a bearing on the state of the Union industry. (119) The macroeconomic indicators (production, production capacity, capacity utilisation, sales volume, market share, employment, productivity and magnitude of dumping margins) were assessed at the level of the whole Union industry. The assessment was based on the information provided by European and national associations, cross-checked with data provided by Union producers and available official statistics. (120) The analysis of microeconomic indicators (stocks, sale prices, profitability, cash flow, investments, return on investments, ability to raise capital, wages and cost of production) was carried out at the level of the sampled Union producers. The assessment was based on their information, duly verified. (121) For some microeconomic indicators (sales price, profitability, return on investments and cost of production) the results of the sampled companies in the specific segment have been weighted in accordance with the share of that segment in the total Union production (using the specific weight in terms of production volumes of each segment in the total ceramic tableware sector – 42 % for SMEs, 58 % for non-SMEs). As a consequence it has been ensured that the results of large companies did not distort the injury analysis but that the situation of the smaller companies, collectively accounting for a large share of the Union production, was properly reflected where possible. Macroeconomic indicators Production, production capacity and capacity utilisation (122) Over the period considered, the production, production capacity and capacity utilisation of the Union industry developed as set out below.



Table 3 2008 2009 2010 IP Production volume (tonnes) 281 300 230 300 235 700 240 200 Index (2008 = 100) 100 82 84 85 Production capacity (tonnes) 371 540 361 253 326 573 324 072 Index (2008 = 100) 100 97 88 87 Capacity utilisation 75,7 % 63,8 % 72,2 % 74,1 % Index (2008 = 100) 100 84 95 98 (123) The production of the Union industry decreased by 15 % over the period considered. In overall terms, the reduction is more pronounced than the decrease of Union consumption over the same period. Production did not pick up in the same way consumption did in 2010. (124) The Union’s industry production capacity decreased by 13 % over the period considered. In spite of this, the industry’s capacity utilisation rate further decreased during the period considered, overall by 2 % to 74,1 %. Sales volume and market share (125) Sales of the Union industry on the Union market to unrelated customers fell at a higher rate (8 % more) than the decrease in consumption during the period considered. It is noted that between 2009 and 2010 the sales volume continued to fall while Union consumption increased by 8 %.



Table 4 Volume (tonnes) 2008 2009 2010 IP Sales in the Union 190 332 156 798 152 609 152 095 Index (2008 = 100) 100 82 80 80 (126) The market share held by the Union industry decreased by 9 % over the period considered, or by 2.1 percentage points.



Table 5 2008 2009 2010 IP Market share in the Union 23,0 % 22,8 % 20,3 % 20,9 % Index (2008 = 100) 100 99 88 91 Employment and productivity (127) The employment decreased throughout the period considered and fell by 21 %. The trend follows the same pattern as the decline of sales volumes on the Union market to unrelated customers.



Table 6 2008 2009 2010 IP Number of employees 31 559 26 146 24 993 25 093 Index (2008 = 100) 100 83 79 79 (128) Productivity of the Union industry’s workforce, measured as output per person employed per year, increased by 8 % over the period considered. This is partly due to the efforts of the Union industry to respond to the pressure derived from dumped imports from China.



Table 7 2008 2009 2010 IP Productivity (tonnes/employee) 8,9 8,8 9,4 9,6 Index (2008 = 100) 100 99 106 108 Magnitude of the dumping margin (129) The dumping margins are specified above in the dumping section. All margins established are significantly above the de minimis level. Furthermore, given the volumes and the prices of dumped imports, the impact of the actual margin of dumping cannot be considered negligible. Microeconomic indicators Stocks (130) The level of closing stocks of the Union industry decreased in absolute terms by 14 % over the period considered. The investigation revealed that this is not a crucial indicator for this type of industry, which basically works on orders.



Table 8 2008 2009 2010 IP Stocks (tonnes) 7 754 6 647 7 611 6 647 Index (2008 = 100) 100 86 98 86 Sales prices (131) Sales prices of the Union industry on the Union market decreased by 12 % during the period considered.



Table 9 2008 2009 2010 IP Average sale price in EU to unrelated customers (EUR/tonne) 4 103 3 818 3 811 3 615 Index (2008 = 100) 100 93 93 88 Profitability, cash flow, investments, return on investment, ability to raise capital, and wages (132) Over the period considered, the profitability, cash flow, return on investment (ROI), ability to raise capital, investments and wages of the Union industry developed as follows:



Table 10 2008 2009 2010 IP Net profit of Union sales to unrelated customers (% of net sales turnover) 4,2 % 2,2 % 0,1 % 3,5 % Cash flow (EUR) 10 531 970 6 205 824 9 267 381 11 998 647 Index (2008 = 100) 100 59 88 114 Net investments (EUR) 13 686 363 9 423 983 10 805 215 9 690 923 Index (2008 = 100) 100 69 79 71 ROI (net profit in % of net book value of investments) 19,2 % 14,8 % –51,3 % 5,5 % Index (2008 = 100) 100 77 –267 29 Annual labour cost per employee 20 436 20 526 21 619 20 832 Index (2008 = 100) 100 100 106 102 (133) The profitability of the Union industry dropped by 0,7 percentage points during the period considered. Profitability was at its lowest in 2010 when the magnitude of the fall reached 4,1 percentage points between 2008 and 2010. (134) It should be highlighted that the Union industry was already in a fragile state at the beginning of the period considered, due to the huge volumes of low-priced imports from China on the Union market which increased strongly in 2002-2004 and which had reached a very significant market share after the elimination of the import quota for such imports as from 2005. This had caused a major restructuration of the sector which was in its ending phase at the beginning of the period considered. (135) Therefore, in view of this development prior to the period considered, the profit achieved in the beginning of the period considered cannot be considered as a normal profit. In the absence of any submission in this regard, it is considered that the normal profit level for another widely used and important consumer product which has been subject to an anti-dumping investigation, leather footwear, can instead provisionally serve as a valid benchmark. That profit level is 6 % ( 7 ). It is thus clear that overall the Union industry, throughout the period considered, was never able to reach a profit level which can be deemed acceptable for this product. (136) Overall, the cash flow of the Union industry significantly increased during the period considered. However this is to be attributed to some bigger and well-established companies – this was not the case of SMEs. The level of net investments went down by 33 %. However, it should be noted that by the end of the period considered for SMEs the level of investments became almost inexistent. Only two non-SMEs could afford making some significant investments over the period considered. The drop of the return on investment was higher than the shrinkage of profitability over the whole period considered. (137) Between 2008 and the IP, the average wage per employee increased by 2 %. This labour cost increase is significantly below the overall labour cost development in the Union during the period considered, which suggests that the Union industry made efforts to keep labour wages as low as possible. Cost of production (138) Over the period considered the cost of production fell by 10 %.



Table 11 2008 2009 2010 IP Cost of production (EUR/tonne) 3 578 3 583 3 514 3 230 Index (2008 = 100) 100 100 98 90 Conclusion on injury (139) The investigation has shown that the injury indicators such as production volume, capacity, sales to unrelated customers and employment deteriorated during the period considered. (140) In addition, the injury indicators related to the financial performance of the Union producers, such as profitability, investments and return on investments developed negatively during the period considered. (141) Overall, not only did the profitability never reach a satisfactory profit level for the sector, but it also deteriorated over the period considered. The continuous decreases in sales prices made by the Union industry entailed that at a point the industry was almost unable to make any profit. (142) Although the productivity of the Union industry increased over the period considered, this is mainly due to its significant efforts to compete against the highly present dumped Chinese imports. (143) Considering the above, it is provisionally concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation. CAUSATION Introduction (144) In accordance with Article 3(6) and 3(7) of the basic Regulation it was examined whether the dumped imports from China had caused injury to the Union industry to a degree sufficient to be considered as material. Furthermore, known factors other than dumped imports, which might have injured the Union industry, were examined to ensure that any injury caused by those factors was not attributed to dumped imports. Effect of the dumped imports (145) The investigation showed that the Union consumption decreased by 12 % over the period considered. At the same time while the volume of dumped imports from China decreased by about 9 %, their market share increased. Moreover, sales volume of the Union industry decreased by 20 % and market share dropped from 23 % in 2008 to 20,9 % in the IP. (146) In the period from 2009 up to the end of the IP, Union consumption increased while the Union industry market share dropped, in contrast to an increase in dumped imports from China which market share increased significantly in that period. (147) Prices of dumped imports from China increased in the period considered. Even if in the period considered the average import price from China increased by 18 %, these prices consistently remained significantly lower than sales prices of the Union industry and in particular during the IP, thus keeping pressure on the prices in the Union market. Consequently, the shrinkage of sales prices of the Union industry on the Union market and its profitability can be attributed to the price depression caused onto the Union market by dumped imports from China. The fall of the Union industry’s cost of production and employment level demonstrate the efforts it made to respond to such imports. (148) Based on the above it is concluded that the presence of Chinese imports and the increase of the market share of dumped imports from China at prices constantly undercutting those of the Union industry have had a determining role in the material injury suffered by the Union industry, which is reflected in particular in its poor financial situation and in the deterioration of most of the injury indicators. Effect of other factors (149) The other factors which were examined in the context of the causality are: the development of demand on the Union market and its segmentation, the export performance of the Union industry, the imports from other countries of the product under investigation, anti-competitive practices on the Union market, differences in production methods and the second-hand market. Other factors were also analysed. Imports from third countries other than the country concerned (150) The volume of imports from other third countries during the period considered is shown in the table below. The quantity and price trends are based on Eurostat data.



Table 12 2008 2009 2010 IP Volume of imports from all other third countries (tonnes) 100 971 81 464 81 602 88 706 Index (2008 = 100) 100 81 81 88 Market share 12,2 % 11,8 % 10,9 % 12,2 % Average import price (EUR/tonne) 2 378 2 354 2 591 2 522 Index (2008 = 100) 100 99 109 106 Volume of imports from Turkey (tonnes) 36 952 33 275 32 887 40 553 Index (2008 = 100) 100 90 89 110 Market share 4,5 % 4,8 % 4,4 % 5,6 % Average import price (EUR/tonne) 2 027 2 014 2 171 2 058 Index (2008 = 100) 100 99 107 102 (151) The imports from third countries decreased by 12 % over the period considered, while the market share of these imports remained rather stable. (152) It should be noted that average import prices from other third countries increased by 6 % during the period considered, remaining consistently higher than the average selling price of Chinese export sales (by 68 % during the IP). (153) CCCLA observed that imports from Turkey would have increased by 8 % between 2010 and 2011, the import prices from Turkey being allegedly only around 20 % higher than import prices from China. (154) With regard to this claim, it is noted that when comparing the situation at the beginning and at the end of the period considered import volumes from Turkey increased by 10 % or 1.1 percentage point, but also that their average prices remained consistently much higher (from 37 % to 60 %) than Chinese import prices. Moreover they never represented more than a 5,6 % market share. Thus it is difficult to conclude that the material injury suffered by the Union industry is due to Turkish imports. (155) For the above reasons, it is concluded that imports from other third countries did not materially affect the situation of the Union industry. Market segments (156) A Germany-based association of importers and some of its members submitted that, on the basis of end-customer prices, product qualities and sales channels, the market for the ceramic products under investigation is to be divided into at least the following three segments: premium (high quality, high prices), medium/low (medium/low quality, medium/low prices) and special products (such as decorative items, souvenirs, pots and hotel porcelain). Allegedly, most Union production would be sold on the premium and/or special product markets, whereas Chinese imports predominantly serve the low price market segment. The Union industry would target mostly boutique sales rather than places where standard consumers do shopping. Chinese imports, therefore, would not directly compete with the Union production. (157) However, the investigation did not confirm the allegations. Firstly, it is noted that the like product does not cover certain items referred to by these parties, such as purely decorative items (see recitals (51) and (52)). Secondly, the investigation showed that currently Union production serves all markets, as do Chinese imports. In fact a relevant part of Chinese imports would fall under the so-called premium or special products segments. A British importer claimed to be importing premium products from China, while a group of EU companies with production interest in China also referred to the very high prices it charged on the Union market for its China-origin stoneware products. (158) Finally, reference is made to section B.1.2 above where it was concluded that all types of the product concerned and the like product were regarded as forming one single product. Thus the analysis should be carried out at the level of the product concerned and the like product. Therefore, any claim regarding certain segments could not be retained. Consumption and demand (159) A European association of importers and retailers and CCCLA pointed at a contraction in demand in the Union. One non-sampled importer stated that demand for porcelain, particularly in the side and ancillary ranges and in the private sector, has fallen sharply and that the remaining demand is extremely diversified. Likewise several parties claimed that due to changing fashions, consumers nowadays are looking for affordable ceramic tableware and kitchenware. In a wholesaler’s view, the high end premium market is decreasing and will decrease over next years. (160) According to the above-mentioned European association of importers and retailers, contraction in demand would explain the drop in sales and production by Union producers during the period considered. (161) CCCLA stated that the complaint showed a substantial fluctuation in the level of consumption within the Union throughout the period considered, in line with general macroeconomic conditions. According to CCCLA, during the period considered injury factors developed in parallel with the fluctuations in demand in the Union and other markets and both sales by Union producers and Chinese imports followed changes in demand. (162) A Germany-based association of importers and some of its members submitted that Chinese import figures following the enlargement of the Union in 2004 and the lifting of import quotas for this product as of 1 January 2005 indicate a huge demand for cheaper tableware on the Union market between 2002 and 2005, which was followed by a decrease between 2005 and 2010. Allegedly, Union producers were not willing and/or not capable to satisfy such demand. (163) As to these claims, firstly, reference is made to section B.1.2 above where it was concluded that all types of the product concerned and the like product were regarded as forming one single product. Any claim regarding certain ranges is therefore not relevant and the analysis should be carried out at the level of the product concerned and the like product. (164) Secondly, the allegation that injury factors developed in parallel with the fluctuations in demand in other export markets is contradicted by the fact that the export performance of sampled Union producers developed positively during the period considered. (165) Thirdly, as concluded in section D.2 above, consumption has decreased over the period considered. There was no evidence confirming that Union producers were not willing and/or not capable to satisfy a huge demand for cheaper tableware in the Union. On the contrary, the investigation established that throughout the period considered Union producers were meeting demand of various types, including for cheaper tableware. Even if there were fluctuations in the level of consumption within the Union through the period considered which may have contributed to the Union industry’s poor performance at some stage, overall, it cannot be considered to have an impact such as to break the causal link between the dumped imports and the injurious situation of that industry suffered during the IP. (166) The claims were therefore rejected. Exports by Union industry (167) According to data from Eurostat (export volume) and the sampled Union producers (average export price), exports by the Union industry developed as follows during the period considered:



Table 13 2008 2009 2010 IP Volume of exports (tonnes) 90 968 73 502 83 091 88 105 Index (2008 = 100) 100 81 91 97 Average export price (EUR/tonne) 3 136 2 983 3 462 3 125 Index (2008 = 100) 100 95 110 100 (168) In the complaint, exports by Union producers increased substantially between 2009 and 2011, CCCLA observed. This party submitted that injury factors developed negatively when the export performance of Union producers decreased. Therefore, the injury would have been caused by the unfavourable development of the export sales of the EU industry. (169) In this context, it should firstly be noted that the injury analysis focuses on the situation of the Union industry on the Union market. Therefore changes of the export performance, if any, does not have any impact on most of the indicators analysed above, such as sales volume, market share and prices. Secondly, exports by the Union industry can be interpreted as a way to compensate decreasing sales on the Union market, i.e. where injury is being suffered. Thirdly, as the above table shows, overall exports from the Union decreased by 3 %. Lastly, the exports prices of the cooperating sampled producers sales remained stable over the period considered. (170) The claim was therefore rejected and it is concluded that the export performance of the Union industry did not cause any material injury. Elimination of the import quotas (171) Until 1 January 2005, for the Members States that were members of the Union at the time the products originating in China and falling within the CN codes referred to in recital (56) were subject to quantitative quotas of which altogether amounted to 84 473 tonnes in 2000 and which were gradually increased to 147 744 tonnes in 2004. Available statistical data indicate that in 2004 imports of the product concerned by the 27 countries that are now Member States amounted to 173 809 tonnes. One year later, once the quotas lifted, those imports went up to 530 294 tonnes. Since then, Chinese imports have never been less than 449 000 tonnes per year. (172) As concerns the role of the import quotas in the injury observed during the period considered it should first be noted that, given that the quotas were gradually increased and removed 3 years before the beginning of the period considered and 6 years before the beginning of the IP, there had already been a severe restructuring in the Union market as from 2002 to account for these changed market circumstances. This is also corroborated by information submitted by the complainant on closures and insolvencies of European ceramic tableware producers. As a result, the Union industry had been, by the beginning of the period considered, converted into a downsized and performing sector. (173) Consequently, one might argue that the effects of the ending of the import quotas for the product concerned in 2005 may have negatively affected the health state of the Union industry before the beginning of the period considered. But even if this is the case, it is still the dumped imports which have caused the injury in the IP. Therefore, the elimination of the import quota as from 2005 does not break the causal link between the dumped imports and the injurious situation of the industry during the period considered and the IP. Anti-competitive practices on the Union market (174) Several parties alleged that injury is caused by anti-competitive practices on the Union market and it was also stated that this anti-dumping proceeding was launched to recuperate losses produced by fines for illegal cartels. CCCLA stated that the presence of collusive practices on the Union market may render the injury data (namely sales prices, sales volumes, market share and profits) both in the complaint and collected throughout the investigation unreliable given that they do not represent a situation that reflects the normal operation of the market. (175) On the one hand, it is noted that in 2010 the Commission fined seventeen bathroom fixtures and fittings undertakings for a price fixing cartel between 1992 and 2004 affecting six Member States: Germany, Austria, Italy, France, Kingdom of Belgium (Belgium) and the Kingdom of Netherlands (Netherlands) ( 8 ). The practices in question took place before the period considered and concerned other products. In addition, the only undertaking concerned which was also active in the ceramic tableware and kitchenware sector during the period considered filed an action for the annulment of that fine with the General Court of the European Union. This action remains pending. On the other hand, the German authorities launched a cartel investigation on some German tableware producers in February 2011. The outcomes of the investigation have not been made public by German authorities yet, so no conclusions can be drawn on this point. Moreover, that investigation concerns only one Member State, while the Union industry is quite widespread. The claims were therefore rejected. (176) As to the reference made by some parties to the fact that some manufacturers in the Union changed their activities and became also traders of China-origin products, this is a business option which cannot be labelled as being anti-competitive. Production methods (177) According to certain parties, the choices made by Union producers as far as production methods are concerned clearly contributed to the injury suffered by the Union industry. These parties underline that Union production methods are by far less efficient than Chinese ones – Union production methods are fully automatic which would entail high re-setting costs when runs are short, expensive mould making, more costly raw materials and, due to a two-firing process, higher energy costs. Moreover, unlike Union producers, Chinese manufacturers would work on the basis of orders, bear less storing costs and sell their total production in batches without grading and coupled with price discounts. Also the cost for decal transfers for in-glaze decoration would be almost double in the Union. On the other hand, certain parties pointed at the efficiency of Union production methods for instance as regards longer runs. (178) The investigation showed the existence of relevant technology transfer worldwide. It could not establish a link between a specific production method and success in the business. It could not establish either that having opted for a specific production method was significant enough to have an impact such as to break the causal link between dumped imports from the country concerned and the injury suffered by the Union industry. Second-hand markets (179) According to a non-sampled importer households have become smaller over the last decades and dispose of unnecessary items via flea markets, web auctions or other forms of second-hand markets. For this party, second-hand tableware and kitchenware serve a significant part of current demand and are in direct competition with newly-manufactured tableware and kitchenware. The non-sampled importer provided supporting documentation on web auction values for several product lines of well-known German porcelain manufacturers. (180) However, no reasonable basis could be found for extrapolating the volumes and prices from a German speaking platform on very specific collections of three German companies to other Union countries or other product ranges. It was, therefore, impossible to quantify this market and the investigation could not establish that second-hand sales were significant enough to have an impact such as to break the causal link between dumped imports from the country concerned and the injury suffered by the Union industry. Economic crisis (181) According to CCCLA, the alleged injury is caused by the impact of the financial crisis, economic recession and sovereign debt crisis on consumer budgets. The complainants being, allegedly, profitable at the operating level, CCCLA considers that the losses reported are to be attributed to financial speculation (such as losses on equity or on sovereign bonds) and non-operating expenses linked to the financial crisis. (182) The economic crisis may explain contraction in consumption during parts of the period considered. However, it is noteworthy that in a situation of decreasing consumption in the period considered and in a situation of increasing consumption in the period between 2009 and the IP, the performances of the low-priced dumped imports contrast with those of the Union industry. (183) The investigation clearly shows that the dumped imports from China have intensified the effect of the economic downturn. Even during the general economic recovery, the Union industry was unable to recover and to regain significant sales volumes and lost significant market share throughout the period considered whereas the Chinese dumped imports gained more market share. (184) Therefore, although the economic crisis may have contributed to the Union industry’s poor performance, overall, it cannot be considered to have an impact such as to break the causal link between the dumped imports and the injurious situation of that industry suffered during the IP. Other factors (185) An association pointed at other factors that, in its view, would break the causal link. This party referred to intra-Union competition (on the basis that prices within the Union differ considerably) and to the Union safety and health requirements, which are becoming more stringent, thus causing increased production costs. Other factors cited included counterfeiting by some Chinese manufacturers and the existence of non-tariff barriers in a number of non-EU markets, which would hinder exports by Union manufacturers. (186) As regards the inter-Union competition argumentation, the investigation did not show any link between injury, the location of Union producers and prices in that Member State. As to the Union safety and health requirements, it is noted that they are applicable to Union-made and imported products, thus impact prices of all operators. Given that no information to substantiate the counterfeiting claim was submitted, the effects of that claim could not be analysed. The claim regarding the existence of non-tariff barriers in a number of non-EU markets could not be retained: such barriers could prevent Union producers from exploiting their export potential, however it has no impact on decreasing sales on the Union market, i.e. where injury is being suffered. (187) CCCLA pointed at other factors namely shortages of skilled labour on the Union market and self-inflicted injury, on the basis that some Union manufacturers import the product concerned. However, based on the information available, it is concluded that overall the whole Union industry was in a poor situation and the fact that the number of business models has spread did not cause any injury to the Union industry and should rather be interpreted as a way to compensate decreasing sales on the Union market. As regards any shortage of skilled labour in the ceramic tableware and kitchenware sector in the Union, no interested parties located in the Union claimed to be concerned. (188) An importer invited the institutions to analyse the impact of other types of tableware and kitchenware, such as plastic, aluminium, melamine and glass. However, no information was submitted to substantiate the claim. The investigation could not establish any finding about this issue. (189) Some parties link the injury suffered by the Union industry to the situation of the Union industry before the period considered. In this respect, several importers alleged that the deterioration of the Union industry started already in the period 1975-2002. However, the Commission’s analysis could not possibly go back so far, inter alia, because of the unavailability of reliable data for that period. That was also the case for another event which took place long before the period considered: the state aid received by the German porcelain industry and which, according to a non-sampled importer, would prove that the Union industry did not increase its efficiency ( 9 ). (190) The examination of the other known factors which could have caused injury to the Union industry revealed that these factors are not such as to break the causal link established between the dumped imports from the PRC and the injury suffered by the Union industry. Conclusion on causation (191) Based on the above analysis, which has properly distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports, it is provisionally concluded that the dumped imports from China have caused material injury to the Union industry within the meaning of Article 3(6) of the basic Regulation. UNION INTEREST Preliminary remarks (192) In accordance with Article 21 of the basic Regulation it was examined whether, despite the provisional conclusion on injurious dumping, compelling reasons existed for concluding that it is not in the Union interest to adopt provisional anti-dumping measures in this particular case. The analysis of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users of the product concerned. Interest of the Union industry (193) The Union industry consists of more than 200 producers, with factories located in different Member States of the Union, directly employing more than 25 000 people in the IP in the production and sale of the like product. (194) The investigation established that the Union industry has suffered material injury caused by the dumped imports from the country concerned during the investigation period. In particular, injury indicators relating to the financial performance of the Union industry, such as production, profitability and return on investment, showed a declining trend in the period considered. SMEs were suffering the most: in the period considered, they were loss-making since 2010. In the absence of measures, it is considered that the efforts already made in the sector will not be sufficient to allow the recovery of the Union industry’s financial situation which might deteriorate further. (195) The findings of the current investigation are not put into question by the fact that certain Union producers are doing better than others or by the situation of the Union industry before the period considered. (196) It is expected that the imposition of measures will restore effective and fair trading conditions on the Union market. That would, in its turn, have a further positive impact on its economic situation and profitability. (197) Some importers claimed that if measures are imposed the product concerned will be replaced by other types of products (than Union-made ceramic tableware and kitchenware), such as textiles (e.g. for gift-oriented items) or plastic tableware, thus benefiting non-ceramic sectors. However, the investigation could not confirm that such substitution would be significant. (198) It was therefore concluded that the imposition of provisional anti-dumping measures on imports of ceramic tableware and kitchenware originating in China would be in the interest of the Union industry. Interest of unrelated importers (199) As mentioned in recital 4 above, in view of the apparent high number of unrelated importers sampling was applied. (200) Overall, during the IP the sampled importers sourced their supplies mainly from the country concerned and employed some 350 people in the importation and resale of ceramic tableware and kitchenware. They were active in different kinds of products, ranging from gift porcelain items through branded earthenware to simple tableware for households. Their level of cooperation varied. For instance, the two largest importers in the sample, which also have major retail activities, did not provide full profitability data and the margin between purchase and resale prices to unrelated customers and one of them even denied access to its accounts. These parties only provided transfer purchase prices and/or transfer sales prices. Therefore, although repeatedly requested, no meaningful information was received which enabled an estimation of a representative importers’ gross and net margin on the product concerned for the sample as a whole. (201) In the same vein, the data provided by the two sampled importers/retailers, as it was deficient in many aspects, did not enable an estimation of the gross and net margin of profit of retailers of the product concerned. Therefore, on the basis of the cooperation of the importers in the sample, no determination could be made as regards the ability of the EU supply chain to absorb the proposed anti-dumping duty and, consequently, the impact of such duty on the retail price and, thus, consumers. (202) However, firstly, as concerns importers, the vast majority of the importers which replied to the importers’ sampling questions reported a gross margin between purchase and resale price ranging between 50 % and 200 %. The verified figures of the pure importers in the sample confirm that such gross margins are representative. Secondly, publicly available documentation would suggest that the supply chain in the Union (i.e. importers and subsequent channels) would be perfectly capable of taking in an anti-dumping duty at the proposed rate, without jeopardizing the viability of the economic operators concerned. According to a recent publication ( 10 ), a Chinese ceramic mug which is purchased by EU distributors for USD 0.70 would retail, in the EU, for USD 3.50 — with a mark-up of more than 150 % for the distributor/retailer. In such scenario, the anti-dumping duties as proposed would result for most imports in an extra charge of EUR 0,16 (and of EUR 0,36 for non-cooperating producers) for the EU supply chain which would have, overall, a gross margin of EUR 2.08 on this particular product. Moreover, the 2009 CBI market survey on ‘tableware, kitchenware and other household markets’ referred to in recital 112 above reports EU border CIF – consumer prices ratios ranging between 2,6 and 5,3 (