Chinese aluminum alloy wheel-hub makers, with over a 30% market share globally, are to be the object of a recently announced anti-dumping probe by the European Union. This is the third anti-dumping case the EU has brought against China this year
 
The Association of European Wire Manufacturers (EWA), on behalf of six aluminum wheel-hub makers, submitted an application on June 29 to the European Commission for an anti-dumping investigation against Chinese aluminum makers. The European Commission delivered an official note to China on August 3, saying the investigation will be launched no latter than August 14. Once an anti-dumping judgment is made, the European Union may impose tariffs of up to 33% on Chinese aluminum hubs for a term of five years.
 
"How much can we earn from the wheel-hub business? A 33% tariff means we will have to quit the European market and can hardly enter it again in future, so any investment in this market will be lost," said Li Xiaoqing, secretary general of the wheel committee of the China Association of Automobile Manufacturers (CAAM). "If China's industry fails in this lawsuit, wheel makers, especially big ones, will be seriously injured."

According to CAAM, about 46 wheel manufacturers will be affected by this case. Qinghuangdao-based Dicastal Wheel Manufacturing Co. (Dicastal) and Zhejiang-based Wanfeng Auto Holding Group, a private enterprise, will be the most seriously affected. Dicastal is the world's largest aluminum wheel-hub maker, producing almost 20 million aluminum alloy hubs every year, 15 million of which are exported to Europe. If the company, which provides high-end car makers such as Audi and BMW with components, loses the law suit, the injury will be damaging. "The company is busy preparing for the law suit," said an insider.

Gao Xiangjun, an expert for the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, revealed that firms were preparing evidence that would prove they were not dumping. According to procedure, the anti-dumping investigation may last 15 months, during which the tariffs will remain unchanged. However, such a probe itself affects an enterprise's image as a whole.
 
China's Ministry of Commerce (MoC) openly displayed its discontent at the investigation on August 7, saying that, first, there were problems with the qualification of EWA as an eligible applicant, and second, Chinese companies are exporting aluminum hubs to Europe at prices higher than domestic prices, so the dumping does not really exist. Third, according to figures from China Customs, between July, 2008, and May, 2009, the market share of Chinese aluminum hub makers in Europe was less than 8%, and cannot have done much harm to the local industry. The MoC branded the anti-dumping investigation "unnecessary."
 
Xiong Chuanlin, vice-secretary general of CAAM, says it is the market economy that should protect normal competition, while trade protectionism protects laggard enterprises. The European Union should not conduct trade protectionism in the name of anti-dumping.
 
Xiong says that low prices do not necessarily equate with dumping. "Dumping means exporting products to other countries at a price lower than the domestic price. Well, currently Chinese hub makers are selling their products in other countries at prices higher than domestic prices."
 
A Dicastal insider said the company was mainly exporting mid- and low-end products and would never have a great affect on its counterparts in Europe.

China has long seen a large trade deficit in its auto component trade with the European Union. From July, 2008, to June, 2009, about $390 million worth of Chinese aluminum alloy hubs were exported to 27 European countries, while China imported a great deal of more expensive components such as brake discs and ABS systems from Europe.

Aluminum wheel-hub makers are very concerned about this issue. Win or lose, their image on the international market is certain to be affected. At present, no European automaker sourcing hubs from China has seen fit to comment.